http://en.wikipedia.org/wiki/Cloud_seeding
Your friend is not exactly insane, but they are not doing it to hurt anyone. They are doing it to keep food on your table by diverting water to areas that are in severe drought.
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Cloud seeding, a form of intentional weather modification, is the attempt to change the amount or type of precipitation that falls from clouds, by dispersing substances into the air that serve as cloud condensation or ice nuclei, which alter the microphysical processes within the cloud. The usual intent is to increase precipitation (rain or snow), but hail and fog suppression are also widely practiced in airports.
This image explaining cloud seeding shows the chemical either silver iodine or dry ice being dumped onto the cloud which then becomes a rain shower. The process shown in the upper right is what is happening in the cloud and the process of condensation to the introduced chemicals.
Sources for image: http://www.fletcherboland.com/photos/mountains/11.php
The most common chemicals used for cloud seeding include silver iodide and dry ice (solid carbon dioxide). Liquid propane, which expands into a gas, has also been used. This can produce ice crystals at higher temperatures than silver iodide. The use of hygroscopic materials, such as salt, is becoming more popular[citation needed] after promising research.[1]
Seeding of clouds requires that they contain supercooled liquid water—that is, liquid water colder than zero degrees Celsius. Introduction of a substance such as silver iodide, which has a crystalline structure similar to that of ice, will induce freezing nucleation.
Are they dropping chemicals, yes. They are therefor chemtrails, yes.
No one is denying that there is cloud seeding, and it is certainly not secretive at all. A quick google search will bring up several cloud seeding/weather mod companies, all eager for business.
There is a big difference between cloud seeding and this chemtrail conspiracy though.
-1st: To "seed" a cloud, there must first BE a cloud. You will not see them cloud seeding on a blue skies day. The process only serves to give the moisture in a cloud a particle to latch onto so it will grow large enough to fall. It DOES NOT make clouds.
-2nd: Cloud seeding is done at much lower altitudes, then the altitudes where contrails are created... ie In the clouds.
-3rd: Most cloud seeding planes are not passenger or cargo jets. They are usually light singles or twins.
-4th: Cloud seeding is usually done by the burning of silver iodine flares (the smoke containing the nuclei for raindrops to form on) not spraying anything. And even if you could see the trail of smoke (which you wouldn't because they're flying in the clouds remember) it would look noting at all like a contrail/chemtrail.
Cloud seeding is an accepted agricultural process that has happened for decades, there is nothing secretive or conspiratorial about it. I is by and large done by private entrepreneurs, and is most definitely NOT run by some secret government kabal, new world order, or illuminati.
Cloud seeding = legitimate business
Chemtrails = conspiracy BS