www.irna.com

Tehran, Jan 10, IRNA -- Iran's former president Akbar Hashemi Rafsanjani said here Friday that US faced many troubles at home, including a whopping foreign trade deficit and insecurity, but it was trying to preserve its hegemony over the world by resorting to threats and terror.

"One should not be intimidated by America which is grappling with economic, cultural, social and educational problems at home," he told thousands of worshipers at weekly Friday prayers.      
           
"The country (US) which always used to have massive surplus trade revenues, is now faced with about 4,500 billion dollars of foreign trade deficit, with interest rates not included."     
            
Rafsanjani, who is the chairman of the arbitrative Expediency     

Council, said that the American government's budget deficit had piled up to 4,000 billion dollars over the past 20 years. Its debts to the private sector amounts to 32,000 billion dollars and current unemployment rate in the US stands at six percent, he added.

"America's security condition has also worsened very much. Phone taps have increased, surveillance cameras have been set up in sensitive junctions and subways of the country to control people and travel to America has become more problematic," Rafsanjani added.     

"All these together have led to a 60 percent decline in foreign investments in America," the cleric said.  
                       
Rafsanjani said the American bullying had scared many countries, including certain individuals in Iran who believed in a concession to the United States.
                                             
"Many have now become scared. Even in Iran, there are certain puppets who think nobody can confront America and thus there must be a concession," he said, adding "America has instilled this terror into many hearts and is trying exploit this atmosphere of terror". 
    
Rafsanjani denounced US' controversial policies, especially in the case of Iraq which Washington has threatened to attack if Saddam Hussein failed to expose the country's alleged weapons of mass destruction.  
                                                    
"America claims that it wanted to set the people of Iraq, Iran, Saudi Arabia, Pakistan and Venezuela free, but these people will never tolerate American hegemony.                   
              
"If Iraq is released from the yoke of the Baath party, will the freedom-seeking Muslim Iraqi people tolerate a hand-picked government in their country?       
                                          
"Either disintegration of Iraq or its transformation into a federal or free government will prejudice American interests," Rafsanjani said.      
                                            
"America has many problems in view of all these controversies and its dreams will never come to reality. Meanwhile, we will definitely  gain victory if we pay the cost of remaining on the divine track with fortitude," the cleric added.  

BH/AR
End

Posted on Wed, Jan. 08, 2003 By TIM JOHNSON and ANDRES OPPENHEIMER Miami Herald

BEING REASSIGNED: Otto Reich failed to win Senate approval as the State Department's top official in charge of Latin American affairs. MIGUEL ROJO/AFP FILE

WASHINGTON - The Bush administration is expected to announce a reorganization of its Latin America policy team that will include the appointment of diplomat Otto Reich as a ''presidential envoy'' to the Americas, thus avoiding a confirmation battle with the Senate, administration officials said Tuesday.

The Cuban-born Reich, who had to step down last month as the State Department's top official in charge of Latin American affairs after failing to win Senate confirmation, would move to the White House and report directly to National Security Advisor Condoleezza Rice, the officials said. The announcement could be made as early as this week, they said.

Replacing Reich at the State Department's top job in charge of Latin American affairs will be Roger Noriega, another political appointee currently serving as ambassador to the Organization of American States, the sources said. It was unclear whether Noriega himself would have difficulty being confirmed.

Noriega is a former Latin American affairs staffer for former Sen. Jesse Helms, R-N.C., who retired last month.

Reich and Noriega are considered hard-liners on Cuba, and on several other Latin American issues. Reich, a former ambassador to Venezuela, had been effectively vetoed in the Senate by Sen. Christopher Dodd, D-Conn., and other Democrats who oppose the U.S. embargo on the island.

Ever since Reich's tenure at the State Department came to an end recently -- when he was obliged to step down by law because of a failure to win Senate approval -- it was unclear whether a new confirmation effort would be made this year.

The Bush administration decision to place Reich in a position that does not require Senate confirmation avoids the necessity of another battle in the Senate, where the outcome was uncertain even though Republicans control the chamber in the new Congress.

But Reich supporters saw it as a positive move nonetheless. ''It's a victory of the hard-liners,'' said one U.S. official.

Secretary of State Colin Powell is said to have wanted a career diplomat, U.S. ambassador to Colombia Anne Patterson, for the State Department Latin American affairs job. Well-placed State Department sources said Powell did not want to risk a fight with Congress -- where the administration will need every possible vote in the event of a war on Iraq -- over a lesser issue such as the Reich nomination.

The new position for Reich would amount to a somewhat diminished version of a ''presidential envoy'' office for Latin America created during the Clinton administration, and abolished by Bush.

Clinton tapped his boyhood friend and former chief of staff, Thomas ''Mack'' McLarty, to the Latin envoy post in 1996, giving him virtual Cabinet-level rank and an office in the West Wing of the White House. McLarty served until 1998.

Reich will have a small office and staff in a building adjacent to the White House, and will report to Rice, officials said. But supporters say he may play a powerful role because he will work close to Rice, and thus have potentially easy access to the Oval Office.

Press offices at both the State Department and White House said they could neither confirm nor deny any change in Reich's status.

Since the sudden end of Reich's State Department job, when he was given a temporary slot as Powell's ''special envoy'' to Latin America, Powell has kept him at arm's length.

Reich did not accompany Powell on a trip to Colombia Dec. 3-4, nor was he present at a White House meeting in mid-December with incoming Brazilian President Luiz Inácio Lula da Silva, who now heads South America's most powerful nation.

''Otto wasn't even in the room. He was the most senior official to have met with Lula but he wasn't asked to come,'' said a colleague ''disappointed'' at White House treatment of Reich.

On Monday, Reich did not attend a meeting Powell held with Oswaldo Payá, Cuba's leading opponent to Fidel Castro. But Reich met with Payá separately because he had a long-scheduled speech at the time of the meeting, said an official familiar with Reich's schedule.

Indeed, Reich's future in the government has been the subject of such a tug of war between the White House, the State Department and Congress, one source continued to express a measure of skepticism over the new appointment Tuesday.

''Until I hear somebody announce it standing on a podium with a seal on it, I won't believe it,'' said a close friend of Reich, who spoke on condition of anonymity. ``We've heard so many things.''

Powell and the White House had sounded out Reich about taking several lesser jobs, sparking angry chatter on Spanish-language radio stations in Miami and complaints from leaders in the Cuban-American community that one of its most prominent members was being treated poorly by the Bush administration.

Reich was first asked if he wanted to represent the United States in Geneva as its human rights representative, a position that normally serves to criticize the Cuban government's poor human rights record, sources said. Later, he was approached about serving in the National Security Council to replace Elliott Abrams as senior director for democracy and human rights, after Abrams left to become director of Middle Eastern affairs. Reich declined both jobs because he considered them a step down.

Another staffer said Reich supporters want the White House to assign Reich policy issues that he can handle separately from John Maisto, the career diplomat who is assigned the Western Hemisphere portfolio at the National Security Council.

''You have to give him specific assignments like free-trade issues, or hemisphere security issues, or Cuba and Venezuela,'' said one staffer, who declined to speak on the record.

Advice from an intel vet. January 6, 2003, 9:00 a.m. By Herbert E. Meyer

Like every American, I offer you my prayers and best wishes as you go about the business of figuring out why we suffered the worst intelligence failure in our country's history, and of recommending what we now must do to assure that this kind of thing doesn't happen again. I don't mean to be presumptuous, but — since none of you has actually worked at the CIA — may I offer a piece of advice?

Drill fast, drill deep. By doing so — and only by doing so — will you be able to pinpoint precisely where the failure lies.

Before explaining what I mean by drilling, allow me to set the stage by outlining just what it is our country's intelligence service actually does and how precisely it works: To really grasp this, for a moment forget about the CIA, the FBI, and the other agencies. Just think about what it is that makes human beings so different from other species. Simply put, we have foresight — the ability to see into the future and to take action that changes the future before it happens. For example, imagine that you are standing outside a supermarket, chatting with a friend. Nearby a toddler is bouncing a rubber ball. Out of the corner of your eye you see him lose control of the ball and watch it bounce into the road. Almost without thinking, you run over and grab that little boy's arm. Why? Because you realized that child probably would run into the road after his ball, and possibly be hit by a car. Did you know for sure he would bolt? No. And if he did bolt, were you certain he would be hit by a car? Of course not. But if you waited to be sure, it would have been too late. So you followed your instinct — which is the combination of experience and judgment — to project the probable future and change it before it happened. We humans do this sort of thing all the time.

Our government does precisely the same thing, only on a larger and more-complex scale. It looks into the future at those trends and developments relevant to our security. And if it doesn't like what it sees, it acts to change the future before it happens. The individual responsible for projecting the future is the director of Central Intelligence, who also heads the CIA itself. Most people don't realize it, but these are two separate jobs. Let's take them one at a time: As director of Central Intelligence, the DCI has oversight responsibility for the whole alphabet soup of agencies that comprise the U.S. intelligence community. This includes the CIA itself, the various Defense Department agencies, the National Security Agency, the FBI, and several others. To the DCI, the CIA is merely one of these agencies. The DCI's analytic staff is the National Intelligence Council, whose members are the government's senior intelligence analysts. They are the ones the DCI relies on to connect the dots into a pattern that projects the future of key trends and developments relevant to our country's security.

These patterns are outlined in the form of National Intelligence Estimates (NIEs), which are the top-secret interagency projections that go to the president and his top advisers. This means they include the best thinking not just of the CIA's own leaders but of those officials who lead all the agencies charged with our security. An NIE may look at the possibility that China will attack Taiwan, at Latin America's economic problems, at the prospects for war between Israel and Syria, at Iran's stability — or at the outlook for anti-U.S. terrorism. Each NIE is drafted by an analyst at one of the other of the agencies, under the direction of whichever National Intelligence Officer is responsible for that issue or country. Part of the NIO's work is to coordinate that draft among the various agencies, and to make sure that each agency contributes whatever raw intel it has. The actual meeting at which each Estimate is finalized is attended by a senior representative of each agency that is part of our Intelligence Community, and chaired by the director of Central Intelligence himself. (And since the DCI also is director of the CIA, that agency is represented separately, by its deputy director.) These meetings often are lengthy, highly contentious, and utterly fascinating.

Some DCIs have preferred that estimates reflect a consensus, in which case the final drafts tend to be watered down to the point where everyone can agree. What you get, of course, are judgments that are so vague as to be worthless to policymakers. ("We judge that in the coming years several Latin American economies will falter and thus increase the likelihood of political instability on that continent.") Other DCIs prefer to actually highlight differences, in which case you trade consensus for specificity. ("We believe that economic instability in Latin America will force the collapse of several governments in the coming year, including those of Venezuela and Brazil. However, the Director of Naval Intelligence dissents and believes that both the Venezuelan and Brazilian governments will emerge intact from their current difficulties. Please see Attachment B for a more detailed explanation of his position.")

During the Reagan administration, when William J. Casey was DCI, the NIEs were very specific and filled with dissents. Casey thought the president had a right to know when his various intelligence agencies were at odds, and he went out of his way to assure that dissenting opinions not only were included, but written out as clearly as possible so the president could see not only where the agencies disagreed, but why. (I know this, because it was part of my job to actually help write those dissents for Casey, even when they ripped his own position to shreds.)

Now, the DCI is also the CIA director, which means he has direct operational and management control of that agency. Under his leadership, the CIA produces its own range of products, including the President's Daily Brief, the Intelligence Assessments prepared by the agency's own analysts, and raw intelligence collected by the CIA's clandestine service. (Keep in mind that the "C" in CIA stands for "Central," which means that to produce its various reports the agency is supposed to have access to raw intel not just from the CIA's own clandestine service, but from throughout the Intelligence Community.)

Broadly speaking, the NIEs provide an overview of looming trends and developments, while the various CIA products are more narrowly focused and more "operational." It is this combination of high-altitude and ground-level intelligence that comprises the Intelligence Community's "deliverables" — its total output for the president and his advisers. And this leads to the first question you must ask: What intelligence reached the president in the months prior to 9/11?

Get your hands on everything the DCI delivered during this period, or at least that part of its output relevant to terrorism. (Good news here: The DCI's office keeps meticulous records of just which pieces of intelligence went to which officials, and on what dates. If anyone tries to block your request for the "deliverables" by insisting they aren't able to put together a complete package of what went to the president or any of his key advisers, they're lying.) Read through the estimates, the PDBs, the CIA's assessments, the memos, the DCIs personal talking points, and whatever raw intel might have been delivered, and find out precisely what the president and his key advisers were told.

What you are looking for is any evidence that our intelligence service did in fact provide the kind of early warning that the administration could have acted upon to prevent the attacks. For instance, there might be an NIE delivered four months before 9/11, entitled "Prospects for Terrorist Activity in the Coming Year," whose key judgment was that

Al Qaeda now has the strength, the organizational sophistication and the financial acumen to plan and launch massive terrorist attacks within the US itself in the coming months.

There might be an assessment from the CIA's Intelligence Directorate dated July 2001 warning that

Al Qaeda now has operatives within the US who are planning operations, possibly involving the use of hijacked commercial airliners

There might have been a private briefing for the president and vice president in August at which the DCI revealed raw intelligence — intercepts, for example — pointing to a big operation in early September against major U.S. landmarks, perhaps involving hijacked airplanes.

In other words, you want to find out if the DCI gave the president enough information, early enough, that in the judgment of reasonable people should have enabled him to take actions that would have thwarted the attacks. If so, you have made a major discovery. Namely, that there was no intelligence failure at all, but rather a failure of political leadership. I am not suggesting this is the case, but merely pointing out its possibility and urging you — begging you — to deal with it. If the president was not given sufficient warning to thwart the attacks, you owe it to him, and to history, to make this clear. There are still scholars who insist that FDR knew about Pearl Harbor before December 7, and that Churchill had advance word of the air attack on Coventry. Please don't let President Bush suffer the same fate if he's not at fault.

Let's just assume that after getting your hands on all the relevant intelligence, you conclude that, in fact, the DCI did not provide the kind of intelligence the President would have needed to prevent the attack. In this case, you know for sure there really was a failure of intelligence. And now you can turn your attention to the intelligence service itself and ask the next question:

Was the intelligence failure one of output, or of input?

Get your hands on the raw intelligence the CIA's analysts, the National Intelligence officers, and the senior analysts at the other agencies used to produce whatever they did produce on the subject of terrorism in the months prior to the attack. This includes electronic intercepts, reports from spies (I'm just assuming we had some at the time), field reports from other U.S. government agencies, such as the FBI, and from friendly foreign-intelligence services. Did the analysts do a good job with what they had to work with? Or were the reports they wrote less valuable than they should have been in light of what they had on hand? In other words, was "two-and-two" sitting on their desks, and they failed to see that it equaled "four"? Or did they not have "two-and-two" at all, in which case it isn't their fault that they failed to see "four."

If the raw material was there and the analysis was faulty, what you have identified is a failure of output. In other words, the analysts blew it. But if the raw material wasn't there to work with, then it's an input failure. It means our analysts weren't given the raw material they needed to see the looming danger and thus be able to warn the President.

And if it is an input failure, go on to the next question:

Why did our analysts not get the raw material they needed to see the looming danger?

It could be that the raw material was on hand somewhere in one or another of the agencies that comprise our intelligence community, but not made available to the analysts who needed to know. If so, then you have identified a major management failure. Or, it could be that the raw material just wasn't there at all; that our intelligence collectors — the CIA's clandestine service, the NSA, the FBI, and so forth — were working very hard to get that information, but lacked the financial resources to succeed. In this case, whose fault is it that they were under funded? It could be they had enough money, but were hobbled by rules and regulations that prohibited our collectors from going where they wanted to go and talking to whomever they needed to talk with. If so, why?

On the other hand, if could be that the CIA's leadership put too much of its money and manpower on issues other than terrorism, for instance on issues of economic stability and environmental damage. Perhaps the CIA had remained too focused on Russia, even though the Cold War was over, and had failed to reorient toward the new threat of terrorism. If so, then who was responsible for the agency's failure to reorient?

Drill fast, drill deep. And let me tell you, it won't be easy and it won't be pleasant. To be sure, you will find throughout the intelligence community some of the nicest, smartest, hardest-working and patriotic people you will ever meet. But you also will find some of the most mediocre, obstructionist, bureaucratic games-players anywhere in our government. Especially at the CIA, these guys play rough, and they fight dirty. Remember, espionage is their business. They will block you, lie to you, mislead you, and not hesitate to smear you through leaks to the press. (Bob Woodward is not — repeat, not — their only contact.) In short, you are in for a vicious, nasty fight, and the sooner you understand and accept this, the better.

I don't want to carry this analogy too far, but as members of the 9/11 Commission you are in somewhat the same position as the U.N.'s Iraq weapons-inspection team. Your job is to find stuff the people who have it don't want you to find. It's going to be a mess, and as members of the commission you will have to get your hands dirty to succeed. Forget about sitting in your offices, thinking big thoughts about intelligence, while sending members of your staff out to Langley to sift through reports or rifle through hard drives. They'll get creamed. Only you — members of the commission — have the weight, the muscle, and the political oomph to knock down doors, shove people aside and get your hands on the real stuff. If you aren't willing to give some very important people some bloody noses — and to suffer a few yourselves — you won't get to the bottom of it. You will wind up as hapless, and as worthless, as Hans Blix.

Seriously, this has got to be a helicopter-raids-at-dawn, break-down-the-doors, kick-their-rear-ends sort of operation. Nothing less than that will work. Among other things, you will need to find those analysts and collectors who really, really know what went wrong and who's to blame. They are there, waiting for you and desperate to tell you what they know. But don't expect them to spill the beans just because you ask. They have to live there, and long after the commission's report is published and you are basking on the talk-show and lecture circuits, they will still be there — getting their brains kicked in and their careers destroyed. Just as the Iraq inspection teams must get that country's key scientists and their families to safety, so too must you bring to safety, and then protect, those men and women in our intelligence service who know what you need to know. You had better figure out how you plan to do this even before you start.

Do all this, and you will have rendered our country a great service. You will have figured out why, precisely, we suffered such a costly failure of intelligence. And then, with your collective experience and judgment, you will be able to make the kind of recommendations that will protect us from another such horrific blow.

One last point: When you have finished drilling down, climb back up and get yourselves to an altitude high enough to let you see the big picture. Here's why: Back in 1915 Europe was at war but the U.S. was neutral and hoping to remain out of it. But in May of that year a German U-boat sunk a British luxury liner — the Lusitania. More than 200 Americans on board were killed — commentators at the time said it was the worst intelligence failure in our history — and we found ourselves in the middle of a world war. In 1941 much of the world again was at war, and again we were neutral. Then we got hit on December 7, with about 2,000 Americans killed. This became the worst intelligence failure in our history, and for the second time we found ourselves in the middle of a world war. The September 11 failure cost the lives of more than 3,000 Americans, and for a third time we find ourselves in a world war.

Do you see a pattern here? Three times in a row we have been caught with our pants down, which is at least two times too many. And each time the number of casualties has risen sharply. Clearly, there is something very wrong about the way we Americans do business with the world; about the way we ignore threats to our survival until we get hit so hard we cannot help but notice that someone out there wants to kill us. In an age of nuclear weapons, biological agents and deadly chemicals, we cannot let this happen a fourth time.

That's why it is no exaggeration to say that our lives are in your hands. Good luck, and Godspeed to you all.

— Herbert E. Meyer served during the Reagan administration as special assistant to the director of Central Intelligence and vice chairman of the National Intelligence Council. He is president of Real-World Intelligence Inc., which designs intelligence systems for companies worldwide

By ALAN CLENDENNING, Associated Press

New Brazilian President Luiz Inacio Lula da Silva speaks during his first meeting with government ministers in Brasilia, Brazil, on Friday, Jan. 3, 2003. BRASILIA, Brazil (January 2, 4:35 p.m. AST) - Breakfast with Hugo Chavez, dinner with Fidel Castro.

The first day in office for Brazil's new president, Luiz Inacio Lula da Silva, projects the image of a leftist alliance in Latin America - one that Chavez, Venezuela's president, has already nicknamed the "Axis of Good."

Such an alliance could hinder U.S. efforts to create a Free Trade Area of the Americas stretching from Alaska to the tip of Argentina by 2005.

Despite the perception of a new Latin American troika, doubts abound that Silva really wants to form a bloc with such close ties to Chavez and Castro, Cuba's leader.

But by giving Latin America's other two leftist leaders such a warm welcome a day after his inauguration, Silva gets huge political mileage in Brazil, where Castro and Chavez are revered by the far left of his party.

The United States sent Trade Representative Robert Zoellick to the inauguration, seen by the Brazilians as something of a snub because Zoellick suggested last October that Brazil's only trading partner would be Antarctica if it did not join the hemispheric trade zone.

Silva responded by calling Zoellick "the sub secretary of a sub secretary of a sub secretary" during his election campaign.

At the breakfast meeting, Chavez asked Silva to send technical experts from Brazil's state-owned oil company to replace some of the 30,000 Venezuelan state oil workers who have joined a crippling nationwide strike. Silva said he would consider the request.

And before dining Thursday night with Silva, Castro told Associated Press Television News that Brazilian-Cuban relations will grow stronger now that Brazil has its first elected leftist president.

Arriving at Silva's rural retreat 20 miles outside Brasilia for dinner, Castro shook hands and signed autographs for about 50 cheering Silva supporters. He did not speak with reporters.

Castro and Chavez had front-row seats in Congress at Silva's inauguration Wednesday, where an estimated 200,000 Brazilians waved red flags. Many were dressed in red and white clothes, the colors of Silva's Workers Party.

The Cuban and Venezuelan leaders had dinner together, and talked until 4 a.m. Thursday at the Brasilia hotel where Castro is staying.

But experts said Silva's efforts to accommodate Castro and Chavez in Brasilia could be carefully calculated political window dressing.

Silva angered his party's left wing by appointing fiscal moderates to key cabinet posts, but needs its help to push programs through Congress, where he lacks a majority.

"Embracing Castro and Chavez, the symbols of anti-U.S. influence in Latin America, gets Silva political capital in Brazil," said Stephen Haber, a Latin American expert at the Hoover Institution at Stanford University. "But this is a dangerous game, you go too far one way or the other and this will blow up in your face."

Silva doesn't want to scare away investors, who already sent the value of the Brazilian currency, the real, down 40 percent last summer over fears that his administration might not follow responsible economic policies.

So far, Silva seems to be pleasing his supporters without spooking financial markets. The real, which ended down 35 percent last year, finished stronger Thursday as the market reacted positively to second-tier finance ministry appointments.

Named to the posts were a mix of left-leaning, moderate and liberal economists with strong credentials, along with officials from the administration of former President Fernando Henrique Cardoso who will keep their posts.

Chavez coined the "Axis of Good" term after Silva was elected in October, hailing the victory and saying Venezuela, Brazil and Cuba should team up to fight poverty.

"We will form an 'axis of good,' good for the people, good for the future," Chavez said at the time.

But Brazilian political scientists dismissed the possibility of an "Axis of Good" being created by the meetings between Silva, Castro and Chavez.

"There is no way this represents the beginning of Chavez's 'Axis of Good' and much less the 'Axis of Evil' imagined by right-wing Americans," said Luciano Dias, a political scientist at the Brasilia-based Brazilian Institute of Political Studies.

Silva, who is popularly known as Lula, "would never even consider creating a nucleus of leftists in Latin America, he is too smart for that," Dias said.

U.S. State Department spokesman Richard Boucher would not comment Thursday on the possibility of the alliance.

Chavez left his strikebound and politically riven country despite the crippling work stoppage aimed at toppling him from the presidency of the world's fifth largest oil producer.

Silva also has a compelling reason for staying on friendly terms with Chavez: The long border the two countries share.

"Brazil worries very much about violence in Venezuela spilling over into Brazil," Haber said. "So you want to have peaceful relations with the Venezuelan, regardless of who is in charge."

During his breakfast with Silva, Chavez also brought up the idea of increasing cooperation among Latin American state-owned oil industries and setting up a company called Petro-America.

"It would become a sort of Latin American OPEC," Chavez said. "It would start with Venezuela's PDVSA and Brazil's Petrobras," and could come to include Ecopetrol from Colombia, PetroEcuador from Ecuador, and PetroTrinidad from Trinidad and Tobago."

Last week, Cardoso's outgoing administration sent a tanker to Venezuela carrying 520,000 barrels of gasoline, but that barely dented shortages around the country.

If Silva decides to help Chavez with Brazilian oil workers, it probably won't accomplish much either, said Albert Fishlow, who heads Columbia University's Brazilian studies program.

"If he does, it will be minimal and not enough to affect the situation," Fishlow said.

Business news   (Filed: 06/01/2003)

The President wants us to know he means business. Tomorrow he will deploy his economic task force, designed to rout the forces of recession.

Tax cuts, some of them mounted on dividends, will drive deep into no-man's-land and lead a general advance. It will be all over before the hot weather, or if not, the Federal Reserve will launch its secret weapon.

The task force will rely on conventional weaponry, used on an all-American scale. These "package" tactics have been tried on our own economy from time to time, although not lately. On the battered terrain of Japan, the general staff has now sent a dozen packages over the top, and none of them has got beyond the barbed wire.

The Fed, too, has had to think again about its weapons and tactics. Interest rates are its standard equipment, and Alan Greenspan, its veteran commander, has fired off a long barrage of interest-rate cuts at assorted enemies. He has sometimes been given the credit for saving the world, but he is still on the defensive.

Two months ago he brought the Federal funds rate down by 0.5pc to 1.25pc. That was a bold move but not one that he could go on repeating indefinitely. He is short of ammunition. After three more cuts like this, he would be paying the banks to take money away from him. New thinking would be needed.

It has come from Ben Bernanke, who was recruited from Princeton to the Federal Reserve Board and seems to have brought the plans with him. They make the Fed's secret weapon resemble a printing press, and Mr Bernanke says that it is one. The government, so he explains, can use it to produce as many US dollars as it wishes, at virtually no cost.

What would it do with all these dollars? Hand them out? Drop them from helicopters? Not exactly, although it could achieve much the same effect by less flamboyant means. The Fed could, so Mr Bernanke suggests, buy Treasury bonds and other securities from the banking system. It could lend the banks money at low rates of interest or none, and not be too choosy about the security it takes.

Mr Bernanke clearly brings his own perspective to his work. He is a learned economist, a student of money and credit, and the author of a new book on the Great Depression of the 1930s. He has no wish to write the sequel, and if a loosening of monetary rectitude is what it now takes to ward deflation off, he would be for it.

From a central banker, even a new recruit, this is quite something. Ever since William Pitt tried to ravish the Old Lady of Threadneedle Street, central bankers have been supposed to believe in monetary virtue, not in organised debauchery. A mother superior might as well announce that her convent would be open to free love, or love on reasonable terms.

No wonder that Barton Biggs, the sage of Morgan Stanley, suggests that this declaration is an era-changing event. The Fed now has a vigilante on its board: not so much a super-dove as a deflation hawk. His presence goes to show how far deflation has moved up the central bankers' worry-lists.

They can see that in Japan, where deflation is entrenched, the central bank has long ago run out of ammunition and ideas to combat it. They will want to be sure that this fate does not happen to them. Mervyn King, the Bank of England's governor-designate, has said that central banks around the world will do their best to prevent deflation.

Thanks to Mr Bernanke, they have the technology, and Professor Tim Congdon at Lombard Street Research says that there is nothing new about it. (Another ground-breaking British invention, developed in America . . . )

Twenty years ago the Bank was trying to mop up excess money in the system by selling more government stock than the Treasury needed to issue. The process would work just as well in reverse, and it has.

This was one reason why Britain once led the world in stagflation: a sluggish or stagnant economy in which inflation persisted. A hint of stagflation today is that all the world's four major currencies are perceived to be too strong. They cannot all be over-valued against each other, but they may be in terms of the goods and services they buy. So the prices of oil and of gold have been rising.

Such are the perils that go with the happy illusion that policy-makers can exchange the economic cycle for an endless escalator. Here, chancellors claim to have broken the mould or to have abolished booms and busts.

Mr Greenspan never claimed that, but he did not need to. In the new economy, the rules seemed to have changed for the better. Now here it is, all set to keep the escalator running, and with an advanced set of tools in his bag. In the Great Depressiom, his predecessors at the Fed were trying to stabilise the economy.

Friedrich Hayek, the great liberal economist, thought they were making things worse, by repeating, in a slump, their mistakes from the boom: "Monetary policy all over the world has followed the advice of the stabilisers. It is high time that their influence, which has already done harm enough, should be overthrown."

We have yet to hear Mr Bernanke's gloss on that, or to see his weaponry in action. Perhaps his smart bombs would do all that he hopes of them, but few bombs are smart as all that, and none is smarter than its aimer. Stand well clear.