“The central banking-warfare investment model” is really a control model, through which a small group of people can control the most resources on the most profitable basis. Essentially what happens is: Central banks print money and then the military makes sure that other parties accept it and that the financial system continues to have liquidity.
Catherine Austin Fitts is a graduate from the University of Pennsylvania (BA) and the Wharton School (MBA). At the Chinese University of Hong Kong she studied Mandarin. She served as a managing director and member of the board of the Wall Street investment bank Dillon, Read & Co, Inc. (now part of UBS). Later, she was Assistant Secretary of Housing and Federal Housing Commissioner at the U.S. Department of Housing and Urban Development (HUD) during the presidency of George Herbert Walker Bush. As such, she was responsible for the operations of the Federal Housing Administration (FHA), the largest mortgage insurance fund of the world.
After leaving the Bush Administration, Fitts founded The Hamilton Securities Group, Inc., an investment bank and financial software developer named after the first U.S. Secretary of Treasury, Alexander Hamilton. In 1996, she and her successful company became targets of a vicious, longlasting “qui tam lawsuit”, that resulted in the closing of Hamilton Securities.[1] Fitts was ultimately successful in Court of Claims litigation asserting that the government had no right to withhold monies owed to Hamilton.
In the years afterwards, Fitts spoke publicly about the degree of fraud endemic in the federal mortgage operations, trillions missing from government agencies and the connections to drug trafficking and “black budgets.”[2] Moreover, with her mentioned expertise, she was one of the first to warn of an approaching housing bubble. Her prediction that the ”strong dollar policy” would lead to a weakened federal credit is currently being proven correct.
Fitts is the president of Solari, Inc., publisher of “The Solari Report” (www.solari.com), and managing member of Solari Investment Advisory Services, LLC. She serves on the board of directors of the Gold Anti-Trust Action Committee, GATA (www.gata.org), and writes “The Real Deal” column for Scoop Media in New Zealand (www.scoop.co.nz).
Catherine Austin Fitts lives in Tennessee, U.S.A.
The following interview was conducted, while she sat in her car and drove across the U.S.-state of Montana.
In your highly impressive e-book “Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits” you mention as a prime factor that governs our lives on planet earth for roughly the last 500 years “the central banking-warfare investment model.” Can you describe to us at the beginning of this interview some of the essential characteristics, rationales and goals of that “model”?
“The central banking-warfare investment model” is really a control model, through which a small group of people can control the most resources on the most profitable basis. Essentially what happens is: Central banks print money and then the military makes sure that other parties accept it and that the financial system continues to have liquidity. The question many people ask with regards to a fiat currency, which is a paper currency, is: Why would anybody take paper, which has no value? They take the paper, because it’s part of the enforcement and military supervision, if you will, of the network that is printing the money. The system has created a fantastically profitable way of controlling large populations and access to resources very cheaply.
Let’s say for a second that Mr. Global is in charge of “the central banking-warfare investment model”: Mr. Global prints money and then people take that paper and give him in essence what he needs to buy up and control the national resources. The population is dependent on his paper and then he controls all the real things. Also through the military, he can steal whatever he wants. And organized crime is a very important component as well, because it can be expansive to drop an army and to occupy a place. If he can take over a place and buy that place with the place’s own money, it’s much more efficient, and that’s where the drug business traditionally comes in. It’s basically part of a model for controlling a territory with huge resources in the cheapest way possible.
One aspect of the model, that you have just described, is to attract and launder a lot of “liquid cash flow” through the American financial system that is generated by drug trafficking. The UN-chief on drugs, Antonio Maria Costa, stated something interesting in that respect last year. He said:
“In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor … Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities ... There were signs that some banks were rescued that way.”[3]
He said moreover, that drug money is by “now a part of the official system” as if this was something new. What do you think about these “revelations”?
I think that the drug business is a very old model. For the North-American continent I would take it all the way back to the Opium Wars with China, though I think it certainly goes back longer than that. But when the British Empire almost went broke trading with the Chinese, the way the Britons fought back was by smuggling opium into China that they were growing in India.
When you look at the families involved in this trade, it tends to be an inter-generational business. And in North-America, when you look at the families who were running the narcotic trafficking during the time of the opium trade as part of the trade with Asia, it looks to me, that these were pretty much the same families and networks involved in the governance of it, not necessarily doing it, but certainly in the governance today from the financial side.
So it’s a very old business and it again goes back to the question of how you control the most territory with the fewest players as possible. I look at the drug business on an integrated basis for the pharmaceutical drugs and narcotics. One has to look at illegal and legal drugs, because the line between what is legal and illegal is very much moved back and forth according to what optimizes strategic control and profit.
In case he was interested in it: could you tell Mr. Costa please, that the involvement of both the American Government and the American financial system with drug trafficking began, to say the least, a long, long time ago with the invasion of Sicily by American troops during World War II and that the ties to organized crime from then on were never cut back?
Yes, the Office of Naval Intelligence (ONI) used the Italian Mafia to help with the landing in Sicily during World War II, and you can see a lot of the relationships between ONI and the intelligence community that came out of that operation and continued. After World War II the decision was made to open up the US population to drug trafficking as a way of pooling capital to finance the rise of the multinational corporations and to finance of what I call the “Black Budget”, which is covert development of technology by corporations and all sorts of non-transparent projects.[4] A lot of it is high-tech, but some of it is simply the funding of covert-warfare that is going on all over and above the planet. So you needed large amounts of capital in order to lead the switch to corporate governance and to finance new technology and covert wars. Thus the decision was made to open up the U.S. for drugs.
Now, I don’t think that this was really the beginning of it, just a significant increase in scale. There’s a wonderful book by Dan Russel called “Drug War”[5], which has a great description of how the drugs came in following the creation of the Federal Reserve Bank. If you watch the pattern, it makes you wonder whether the decision to do the Federal Reserve was in part undertaken to bring in the drugs as two parts of a multi-facet strategy. The relationship between government and organized crime has always been intimate, because if you’re a ruler and there’s a high-margin business, you cannot afford to not control that high-margin business or you won’t be the ruler for very long. If you go back and study the history of piracy and the monarchy in Europe, they were very much in bed with each other, but pretended otherwise.
Essentially, I would say the governments run the drug trade, but they’re not the ultimate power, they’re just one part, if you will, of managing the operations. Nobody can run a drug business, unless the banks will do their transactions and handle their money. If you want to understand who controls the drug trade in a place, you need to ask yourself who is it that has to accept to manage the transactions and to manage the capital, and that will lead you to the answer who’s in control. But the funny thing is, when you look at all those different parts involved, what you find out is, that it is a very fractured system. I’m always amazed when I hear Americans say “the government.” Anybody who ever worked in a government knows, that there is not one government. On the overt side, there is one budget and one major financing mechanism. Otherwise, it is quite fractured. For example, in the United States we have scores of intelligence agencies and I expect that there are even ones, we’ve never heard of. There are all sorts of syndicates that cooperate, collaborate and compete. Jon Rappoport once called it “the fractured kingdom.”
Two essential steps to get a strong hand on the extremely lucrative nature of global drug money were the National Security Act and the creation of the C.I.A. Is it by chance that most of the key figures of the latter organization have a background in high finance and investment banking? Would it be an exaggeration if one would assume that the C.I.A. was created to shield long-term Wall Street interests in the world?
The C.I.A. was created shortly after World War II really to provide an intelligence and covert capacity. The provisions related to money in the National Security Act and the C.I.A. Act gave the agency very significant sources of non-transparent cash flow outside of the governmental appropriations process. That was the basis in the long run of enormous power. I think they came out of World War II with the plan to build a global empire and they needed an intelligence capacity to do that. So in that sense you’re correct. It was the recognition that when everybody else is doing this, we have to do this too, and we got to be the best at it.
The thing that I find most interesting about the financial provisions related to the C.I.A. is that ultimately they didn’t so much empower the intelligence agencies as they did private corporations. Through Executive Orders in the 1980’s private corporations were authorized to do classified military and intelligence functions. With these changes they created a non-transparent way for corporations to get as much money as they needed to manage, control and develop the most powerful technology on the planet without any accountability whatsoever. As a result the government literally lost control of the most powerful technology. That’s part of our problem today. If the government had kept control of the funding and technology, I think we would looking at a very different picture. What we got is a world in which private interests are in control, including of the governmental mechanisms, and they’re answerable to no one despite the fact that they can continue to get open-ended amounts of funding through the governmental financing mechanism.
So it gets back to “the central banking-warfare investment model”: the Fed, our central bank, which is a private bank, can print money and then private corporations with guns can force nations, institutions and people around the world to take that money. We have complete centralized profits for an unaccountable syndicate of entities, who are running and governing the world. I call it a financial coup d’etat, and I think that’s what we got. If you look at the big bailouts that occurred here in this country, those bailouts meant that this syndicate just got 12 trillion dollars on a completely unaccountable basis. It seems at this point as if they got more than enough money to run the world.
Can you explain to us from a banking point of view about the “high yield investment” nature of drug money? What’s so special about it?
To answer this, let me give you an example of the economy. It’s an oversimplified example. Let’s say I want to take over a county in America, which is run by about a hundred small business people and a local municipality - that’s the leadership. I can bring drugs into that county in a way that has little costs. I can even teach the kids there to make the drugs in case I want to use meth. But for the most part I bring the drugs in and proceed to get lots of people, particularly the kids, in that place taking drugs in a way that completely distracts the small business people. The small business people are trying to keep their businesses from being robbed or they having to go down to the jail and bail their kids out of the jail.
So I keep them busy dealing with all the dysfunction, while in the meantime I’m making money that finances my bringing in franchises or big box stores and other businesses that take away their market share. I’m buying them with their own money. Think of it as a leveraged buyout of a place. Through their children I’m accessing their financial resources and then using those financial resources to take over their market share, which means that they’re financing their own economic destruction. I pass laws that require that the government deposits and contracts are much more likely to go to the big banks and large companies. I pass more laws that cause the small businesses and local pension funds to invest their employee retirement savings in the large companies that are taking away their market share. Meantime, I have an infinite rate of return because I am financing the take over of the place with the places own income and capital. A very important component to kick start the process is making money on the drugs. The drug money helps me buy control of the local governmental and enforcement machinery. And that helps me get control of the government grants and all sorts of other government monies, which I then direct back through the banks and companies that my syndicate controls.
Thus it’s an infinite rate of return, because I’m taking control of the whole place for no money down, and as I do, I switch the bank deposits, the store purchases, the contracts to my businesses, and all I need to kick start it are the drugs. Not just as a source of cash flow, but as a source of distraction, that enervates the dreams of my enemies. Sun Tsu’s The Art of War says: “Always eat your enemy’s food” – in other words, a pound of food that you steal from your enemy is worth many multiples of food that you need to provide yourself. So by using this kind of leveraged buyout of the entire economy and political structure with their money in a way that makes them weak, you’re eating their food. And then the control of the territory gives you an unending cash flow and further access to different resources. Not to mention, the more control you have the more you can insist that their children work in your banks or go to war in your army. Ultimately the richest resource is human capital. The kids you’re not destroying with drugs, you’re sending to your army to fight your wars or sending to your colleges to train to work for your banks.
I know the next question sounds almost stupid, but I think we need to address this to get things straight: isn’t the criminalization of drugs the basis for the whole business that you’ve just described in the first place?
Yes, you have to criminalize drugs to get the profit margin. Also by making it illegal you make it more interesting for certain types of people like kids, who then think it’s mysterious and secret. The criminalization is essential. But of course there is a whole world of pharmaceuticals, which are not illegal and are very, very useful to control people. The most profitable business on planet earth is slavery. And the most efficient kind of slavery is to control the people by controlling their minds, particularly if you can control them, without them knowing that they’re controlled. Drugs are a critical part of creating this kind of mind control.
Yes, like Goethe wrote, I quote from memory: “No one is more of a slave than the one, who considers himself to be free, without being it.”
Exactly. – So if I want to take over a place, I need the illegal drugs, because I need the margins. They are unbelievably profitable. But once I’ve got the control, I really need the pharmaceuticals, because when I have everybody on a wide variety of drugs from Valium to Ritalin, that’s very helpful to me, when I combine that with all kinds of other programming to get people basically being obedient, but still being productive. If everybody takes Heroin or Cocaine, at some point I will have labor problems. Pharmaceuticals are more effective in that respect, and so that’s where they come in.
During the 1980’s, there was something important going on at a small airport in Mena, Arkansas. For those who have never heard about it: what kind of business was taking place there, Ms. Fitts? And what can it tell us in a nutshell about the leadership of the two party system in the U.S.A.?
Well, there’s a great deal that’s been written about Mena, Arkansas. The intelligence agencies were using a small airport in Arkansas to ship out arms and bring back drugs. So they were operating drug running and arms trafficking, two businesses which tend to go side by side. One of the operatives was a guy named Barry Seal, and there’s been a lot of research about his operation. Apparently he was alleged to have run as much as four billion dollars in arms and drugs through Mena.
Because of a series of different researchers, particularly a state-government employee and an IRS employee, there’s been a lot of documentation of what happened at Mena, Arkansas. If you read through all the various allegations, it appeared that the National Security Council under the leadership of Vice-President George H. W. Bush and the State under the leadership of Governor Bill Clinton basically were providing the political support. George H. W. Bush had jurisdiction from an Executive Order when the Reagan-Administration began to oversee enforcement and intelligence, and of course Clinton as Governor oversaw the State enforcement.
So you really had a partnership, and by studying the operation you get a much clearer picture of how these types of operations were put in effect during that time period. For many years I’ve struggled trying to help people see the bipartisan nature of how the system really works. Many of us are distracted by various divisions such as Right vs. Left, Republican vs. Democrat. These divisions are just a kind of movie, that keeps people distracted. But here you see the bipartisan nature of the system. And you also see the extent to which politicians, who want to rise or want to hold important positions, essentially have to go along with these things and have to be good at these businesses, because they have to switch back and forth between the covert and helping to manage the covert, and playing the games involved with “the War on Drugs” such as: “We’re against drugs, drugs are terrible”, which is so important, insofar we spend a fortune on “the War on Drugs” and it’s essential to get the population to support that kind of enforcement against drugs, because otherwise you have a lot of difficulty managing the drug business without all that government funding.
For somebody who wants to understand how the business works, Mena is a great story to help you understand how the drug business works in America.
Would you suggest then if someone in Hollywood would like to make a good movie, that really gets down to the nitty-gritty with regards to drugs, he or she should do a movie about Mena?
Well, here’s the thing: nobody gets to the top of the ladder, without playing ball on these issues, because they are so essential to the economic model. Nobody gets a movie broadly distributed, without the Pentagon saying: “Okay.” So I am not sure a movie about Mena is going to get far these days.
You’re probably right. – In 1996, you and your company The Hamilton Securities Group ran into huge problems. How were these difficulties related to the services you provided to the U.S. Department of Housing and Urban Development (HUD) and a software programme named “Community Wizard”? What was so threatening about it for certain powerful groups and what you coined as the “American Tapeworm”?[6] And can you also put it for us into the context related to the “Dark Alliance” revelations published by investigative journalist Gary Webb?[7]
Sure. The Department of Housing and Urban Development (HUD) had a large portfolio of defaulted mortgages. These were mortgages on homes and apartment buildings. The owners had defaulted on their mortgage, and the question was what to do with those mortgages. Within that portfolio there were a significant number of mortgages that had been fraudulently issued. Within the portfolio there were neighbourhoods in South Central, L.A., which was the topic of Gary Webb’s “Dark Alliance” series on drug running by the American intelligence community – you see neighbourhoods where you’re bring in drugs and then you increase your profit by laundering it through HUD-financed properties which you can leverage with all sorts of mortgage securities fraud. I can turn a dollar of drug money into twenty dollars after I get through with all the mortgage fraud and the mortgage securities frauds.
My company was helping HUD auction and sell these mortgages. At the same time I had decided to make a software-tool called “Community Wizard”, that we were doing privately at the company, that would allow people to see how all the federal government money and financing worked in their neighbourhoods. A little secret of control in America is that it’s not economically efficient. It’s great for implementing centralized control, in that sense it is very efficient. But in terms of economic efficiency, corporations are receiving massive, massive amounts of governmental subsidies, which is invisible to most people. You really don’t see it, because it’s hidden behind government rules and regulations, government subsidies, government purchases, government contracts, special tax benefits and on and on – there are hundreds and hundreds of ways where the economic advantages get channelled to special interests, particularly large banks and corporations.
Now, if you look at the government money on a place-based basis, which very few people do – most of our accounting and governmental reporting, certainly in America, is on a functional basis and very rarely on a place-based basis – but when you do show financial statements for places, then you allow the people in those places to see how uneconomic things are AND you give them the ability to change it. Under the law much of what’s going on is in violation of either the Constitution or federal laws related to financial management. And as a political matter it is extremely difficult for government officials to say: “Oh, I think it’s fine to spend five times more for a house than we need to.” It’s not only a violation of the law, but also of all common sense, and politically it gets real hard to get away with it.
So, we were making a software-tool, and if that software-tool had caught on, there’s no way that the housing bubble could have occurred. And there’s no way that the level of mortgage fraud that took place during the last 15 years could have happened. So it was essential to stop and steal the tool and get control over it, and also to brand us as the bad guys. If you want to get rid of the honest people, there’s a common tactic in America to have a phony scandal branding the honest people as the bad guys.
During that process I got a real instructive education in how easy it was for them to get everybody to go along with them. It is pretty appalling to think that America was eager to have the kind of housing bubble we have experienced. If you go and look in every community and all the people who made money on that short-term, we were all happy to have our country, communities and households wiped out financially in exchange for a surprisingly small amount of money in the short run.
If you said to me: Okay, let’s reengineer all the government money and instead of controlling things centrally, let’s optimize the economy, so that we produce the most abundant wealth, including environmental wealth – a lot of our problem is the destruction of the environment, which is priceless – let’s run Planet Earth to optimize total wealth, human wealth, living wealth and financial wealth, and that total wealth is – we put a number on “X” – and you ask me what the total wealth is right now: It’s less than one percent of what it could be.
We’re living in abject poverty compared to what could be, whether it is financial poverty, poverty of the soul, poverty of the environment or poverty of community. If you look at what’s possible, there’s no economic problems on Planet Earth, the only problem we have is a political problem, and that’s why to solve anything we think is an economic problem, what we need to do is to ask: Who’s in charge?, and: Why are they behaving this way? Because the wealth that we are sacrificing to that group of people, it’s extraordinary.
I agree, that’s the saddest thing to observe that mankind doesn’t nearly outlive its true potential.
The potential is unbelievable. Just unbelievable.
Coming back to the topic of drug money: in light of all of this that you’ve explained, what does the U.S. and the German’s governments willingness to resort to illegal means to catch individual tax evaders, while simultaneously refusing to stop drug and criminal money laundering at the international banks that operate within their jurisdictions, say about the relationship between bankers and governments?
Well, there are several things going on at once. Let me first talk about the system. If you’re running narcotics trafficking, then you need “the War on Drugs” to keep the profits up, but you also need “the War on Drugs” to make sure you have control. Because you’re talking about managing a business, where you got a lot of very aggressive, ambitious people, who are extremely hard to manage and to control. Many of them would prefer to start their own operations, being independent and to compete with you. That means you’re constantly facing the problem of all sorts of personal issues. And a major one is that you’re involved with a lot of people, who think that they can be independent. So “the War on Drugs” and going after tax evaders is a way to take care of your competition, so to speak. A way of managing the personal and managing competition. But it gets tricky, because these are smart, ambitious people and they have weapons, the ability to hack computers and such things, that can become pretty nerve-racking.
Furthermore, as part of “the War on Drugs” you have all these wonderful hardworking people that you hire in law and in enforcement, and they don’t know, they really don’t know, that it’s all governed from the top. You want them to believe, that what they’re doing is really trying to stop it, because that helps you. There’s a wonderful movie called “The International,” that came out about a year ago. And there you have an Interpol Investigator, who’s really hardworking and sincere and thinks that he’s supposed to be stopping illegal arms trafficking and money laundering. So you see all these nice people, who really don’t know how it works top-down, and they occasionally get someone. When you’re at the top, it’s a bit like managing livestock. Let’s say you have twenty guys doing a certain kind of money laundering and you just gonna figure that half of them get arrested and taken out, then that’s perfectly fine, because you believe in Darwinism. That’s the way of testing that those people are smart and really made it. That’s all part of the organic system that you use to manage it.
Then there’s another thing going on related to tax evasion, which is we’re trying to tighten up the financial system, so that it is much more centralized than it has been. There is a whole layer of what I call “middle-management” – executives, whether in the banking arena or in the drug dealing arena that are not longer necessary. Think of it as squeezing of middle management.
Now, when I want to implement much greater digital control of the banking settlement systems, for example when powerful countries like Germany or the United States want to move in on a place like Greece and want to exercise control of their banking settlement systems and data systems, they do not say: “I am Germany or the United States, and I want to control the planet, and I am powerful, and now is the chance for me to exercise more control over the little guys.” That’s not how you do it. That’s a non-starter. What you do instead is that you finance a number of activists, who run around to get features on how the problem in our world is that there’s too much money off-shore and tax evasion and we need to stop it. That gives the big guys the excuse to go in and squeeze out more of the middle-management. I think what you see related to tax evasion is one method to build the digital control that you need to bring out a One-World-Currency.
Yes, and I firmly believe by the way that we’re in a transition phase towards a common Global Currency or at least we see definitely ambitions to get it.[8] But anyway: despite prominent cases with regard to the laundering of drug money (e. g. Citigroup, American Express, Wachovia), why do you think that the vast majority of citizens are still ignorant of these highly immoral activities undertaken by the world’s largest banks?
Well, there’s a delicate balance between most people and The Powers That Be. Most people feel that if they just pretend that this really is not going on and continue to live in their little bubble, that’s the way they can have the best life and all that stuff stays away from them, and in fact, because they’re part of the Empire that’s doing all of this, they think they can get a benefit financially and can pretend at the same time that they have nothing to do with it, because they’re not directly involved.
That’s based on fear. That’s based on a belief that if they try to do anything, because the system is so invisible to them, that they would get hurt, that it would hurt them professionally or physically. You know, America is a very violent and dangerous place, and for those people, who try to do something, the consequences can be devastating.
I usually quote “Enemy of the State,” a great movie with Will Smith. He plays a successful lawyer, who gets targeted by an intelligence operation that destroys at first his reputation. These guys kill your name, before they can kill you. It’s a process that I lived through and eventually overcame, but it’s very expansive and time consuming and pretty dangerous to deal with this kind of legal and physical harassment. In fact, many people have died, were disabled or seriously harmed in America, because they tried to do something about this. For example one of the researchers related to Mena, Arkansas, was seriously poisoned with Anthrax. The IRS Investigator was devastated financially. So it’s a dangerous environment.
What’s hard for many people to understand, Lars, is: If you’re trying to stop the drug dealing in your community, you’re dealing with the centralized power that’s running it in every community globally, or just about the exception perhaps being those few countries still outside the central banking system like North Korea, Iran and such places. They can’t afford for your community to be an exception. Literally, a Soccer Mom, who tries to get drugs out of her neighbourhood, she will find herself dealing with Black Helicopters and James Bond, because that’s who enforces.
There’s a book, The Boys on the Tracks: Death, Denial, and a Mother's Crusade to Bring Her Son's Killers to Justice by a marvelous reporter, Mara Leveritt about Linda Ives, a housewife in Arkansas, who’s son was murdered by the people involved in the Mena drug operation.[9] She is just trying to find out what happened to her son, and before she knows it, she’s up against the whole National Security Council, because nobody can afford for this to come out. The power and money that is arrayed against her over the death of her son in the middle of rural Arkansas is just astonishing.
So this is very dangerous business. These covert cash flows are leveraged by the financial system. With derivatives and globalization that leverage becomes greater and greater. This creates a real management problem. How do you keep the overt and covert world separate for purposes of operations and understanding while integrating and leveraging them financially? How do you manage the “Black Budget” world in a way that the overt world can’t hiccup it in terms of day-to-day operations? How do you handle things when the real economy veers in very different ways than the future you had organized through the derivatives market, as happened when the Gulf oil spill got out of hand? That’s one of the reasons why we see so much effort to assert unbelievable control.
Ms. Fitts, since we’re talking about criminal activities in high ranks and since you have written about it extensively: was the scandalous bankruptcy of Enron thoroughly investigated and aren’t there signs that Enron was also “up to its nose” involved in drug money operations via Enron Online?
Here’s my theory. I did a series of interviews and articles on Enron,[10] and if you go to my website – www.solari.com – under the “Article”-section and then link into the “Tapeworm Economics”-section, you can find under “Enron” an interview I did with Dan Armstrong and another interview that I did with Dennis Bernstein on a special national show for Pacifica radio, called “Enron: Anatomy of a Cover Up.” I recommend those, because I go through the details of why I say there was no serious investigation into Enron.
I believe that Enron was laundering money that was being stolen from the U.S. government. Between Fiscal 1998 and Fiscal 2002 over Four trillion dollars that we know of disappeared from the federal government. I expect it was even more. Now, people ask: How can four trillion dollars disappear? Well, securities fraud, that’s how it can disappear. With the kind of mortgage securities, that the U.S. government issues, and the loop-holes in the issuing Treasury Security off-balance sheet, it’s very possible to steal trillions of dollars pretty quickly from the U.S.-government, especially with the military backing up the ability of people to liquefy those securities.
Anyway, so about four trillion dollars went missing during Enron’s hay day. The reason I first looked into Enron was that I was trying to figure out how the money moving out of HUD and the Pentagon was being laundered and where it was going. The other thing that I should mention is that folks say: How can the bailouts appear, that require twelve trillion dollars? That amount of money is more than would have been needed to retire all the outstanding mortgages in the country. Well, if you’re issuing four trillion dollars of fraudulent paper to steal four trillion, then you can see why you would need a bailout to come in and refinance out that fraudulent paper.
But coming back to Enron: I think they had an operation separate in the Enron business. There was apparently a special area where only the Chief Financial Officer and a few people had access. There are reports of a team of former employees of the C.I.A. and F.B.I. with access to Echelon and PROMIS-software. These are different components needed to run a significant money laundering operation. So I started looking at Enron, because of the different money that began disappearing from the US government, to find out where the money was going. If you look at the companies that were allied with Enron or involved in their governance, it was a lot of the contractors and investors who were running the accounting and financial system and involved with the agencies, where the money was going missing.
Like Lockheed Martin and DynCorp?
Yes. The big one was DynCorp. One person with a very senior position at Enron, Pug Winokur, an executive on Enron’s board, was also a member of the Harvard Corporation, which made a lot of money shorting Enron’s stock. For years, his investment company was the lead investor in DynCorp. After he sold most of the position, he shifted from being Chairman of DynCorp to Chairman of the board compensation committee. There were other relations with Lockheed Martin, which had the lead on systems at HUD and many at DOD, and various other groups at Enron, too.
Basically, if you look at the networks between investment interests and board positions, the money is disappearing in the one end and showing up in the other. And the question always is: Where did all the cash in Enron come from? You can do a lot of fraud on accounting statements and accounting fraud, however, the problem is the accounting fraud doesn’t necessary get you cash, and they had an enormous cash flow for some period of time. My intuition was they were pulling money out of HUD as the mortgage bubble grew.
If one would perceive the whole drug business as a problem: what were your proposals to fix it?
The drug business is a symptom of the model, “the central banking warfare model,” and if we’re gonna leave that model, then we need a model which is an alternative. To keep the “the central banking warfare investment model” going requires two things: more central control and depopulation. The model is unbelievably inefficient and you can’t keep it going, unless you have even more top-down control and more depopulation, which is what we’re now experiencing on an accelerating basis.
If you don’t want to do that model, then you have to come up with a model that says: Okay, we can run the planet in a way that is peaceful and adopts an economic model that supports peace and supports people who are taking responsibility and enjoying freedom. So you’re talking about a radically different culture, Lars, than the one we’re now a part of. If you’re going to leave the existing model, we need a vision of what that new model looks like, and ways to prototype it and try it, particularly with young people, that tests out a lot of the issues. To me, to leave something you require an alternative, to have an alternative you have to invent one, to invent one you first need to come up with a vision and start prototype on a decentralized basis.
If you look at the kind of new economic model that might work, I think you need first and foremost a sound currency, and I would say you need multiple currencies - both local currencies and global currencies. You need sound money, because the key to communication between people is that they can communicate effectively with little or no cost to their time and transactions. The problem with fiat currency we’re using is, that they are very useful to steal everything, but they’re not very useful to help you manage a real economy efficiently, because there is so much misinformation and miscommunication in the middle of a manipulated currency. So that’s what you need: a sound currency.
Number two: You need transparency. If people are going to take responsible and be accountable, then they need to be able to see how their resources are used, particularly in the area contiguous to where they live and work and vote for political representation. If actions they’re taking are harming somebody else on the other side of the planet, then they need to be able to see and to understand that. So transparency is critical. As part of transparency you also need individual privacy, because right now, the people who manage centrally can have every access to my data and your data, but we can’t have any access to data related for example to taxes we pay. You need to switch that, you need to make individual data private and make it possible for data about shared resources to be public. If I want to make any information about me private, I must have the power to do it, whether it’s my money or other data about me. Privacy is at the heart of individual sovereignty.
The third thing you need is optimize government money according to classic return on investment standards, as opposed to what generates jobs and general fees for political insiders. So the allocation and use of government money has to be held to standards traditionally applied to private investment. Part of creating this type of process is the transparency as it is applies to government money.
And the next thing you need to do is to allow equity circulation according to market principles as opposed to political control. So, for example, a neighbourhood can do venture funds and mutual funds and other things if that is how they choose to invest their resources. Technology should advance the small guy up against the big guys, but it’s not doing this. One of the reasons is capital controls that continually force centralization of capital rather than letting capital flow where it would in a free market.
Finally, in any legal or financial system ultimately the question is: Who enforces? Now, if I create a government to enforce, ultimately that government can be corrupted or being bought, particularly given the nature of our invisible weaponry and surveillance systems. We have to go to a system where culture enforces. Essentially what this means is: I am morally responsible for my actions, and my actions in a world where I can see my actions and the implications of my actions across the board. So if I am an American and I use a lot of plastic bottles and that’s creating all sorts of environmental damage in places where I don’t live, the transparency needs to help me to understand this.
I need to be morally responsible not just for my actions, but more importantly and this is a very big change: I need to be responsible for my financial actions. I need to understand where my money is going and what it is doing in my name, because I need to enforce against bad behaviour and reinforce the good behaviour. So if I’m own stock in a corporation and that corporation is trying to control the global seed supply, then I need to sell that stock or I need to go to the shareholders meeting and insist that they stop. I need to view my moral responsibility not just with my own personal actions, but also with the actions that I support with my bank deposits, my purchases and my investments.
We are going to have to go to a world where all of us enforce and where all of us are responsible for enforcement. What we have to leave is the multiple-personality disorder world, which says: I am responsible morally for my actions, but I’m not responsible for what I finance with my money. That way I can finance the most evil, destructive practices on the planet, make a lot of money from it, get my piece of profits of crime, but pretend I don’t know and still think of myself as a good person. That’s the tricky one: the enforcement has to come down to people everywhere. And the reality is, that most people have remarkably good intentions for the rest of the human race, and I think we’ll do it. It’s will be quite a learning journey. The price of freedom, whether free people or free markets, is responsibility.
We have to have an intention that says: Just working harder in the current model or just hiding and running away, isn’t going to work. We need a new model, and then the conversation begins, which is why you’re doing this interview. We need to connect up globally, because this will be a global model. We need to connect up and we need a conversation, that says: It’s time to give up the central banking-warfare model, and ask ourselves: What’s the model? We will invent it together.
Thank you very much for taking your time, Ms. Fitts, and come safe to the place you’re heading to!
Thank you!
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