November 3, 2001
Narco News 2001
Part III: Drugs as Currency
in the Illicit
Here to Read Part
Here to Read Part
By Catherine Austin
Special to the Narco News Bulletin
Narco News Publisher's
Austin Fitts is
a former managing director and member of the board of directors
of Dillon Read & Co, Inc, a former Assistant Secretary of
Housing-Federal Housing Commissioner in the first Bush Administration,
and the former President of The Hamilton Securities Group, Inc.
She is the President of Solari, Inc, an investment advisory firm.
Solari provides risk management services to investors through
Sanders Research Associates in London.
can compete with the government?"
John Gotti, Jr.
Food Franchise Pop
things helped me understand money laundering
in America. First, as I drove from Hickory Valley to Philadelphia
once a month and drove around the country with my dog Forest
all sorts of people started to teach me about how the money worked
- truckers and the ladies who run the brand-name motels and the
folks who work the late shifts at the gas station food marts.
Second, I read "Black Money", a mystery novel by Michael
Thomas, a former partner of the Wall Street firm, Lehman Brothers.
In "Black Money" a government
investigator investigating S&L fraud starts to look into
the revenues and expenses of a fast food chain, which is experiencing
far more deposits from sales than it is selling pizzas. As Thomas
walks you through a handful of the near infinite number of possible
money laundering schemes known to mankind, you start to get a
sense for some of the economics of fast food franchises that
have nothing to do with feeding people.
After I finished "Black Money"
I started to pay attention to "how the money works"
at the fast food and motel franchises at every interstate exit
between Tennessee and Philadelphia. What I noticed about them
was that no matter when I drove by - day or night, weekday or
weekend - some of them were suprisingly empty. Indeed, one or
two name brands were defined by their perpetual emptiness. Conversations
every time I stopped filled in a lot here and there about how
much cash was coming in and going out on the food and retail
Some quick estimation on what was being
spent per interstate exit to start up and operate all the retail
establishments versus what was coming in the door in terms of
legitimate business said that some businesses had to be an excuse
- an excuse to generate stock market capital gains by combining
laundered money or phony profits with retail franchises - or
The problems this presents to people trying
to run an honest business are numerous. The problems it creates
for our work ethic and culture are numerous too. It increasingly
puts the low performance people in charge, and everyone starts
to behave like and follow them.
For example, I drove ten miles to Bolivar,
our county seat, one night to go through the car wash at the
local big chain publicly traded gas station. I tried to pay for
a three-dollar car wash with quarters. I was told they would
not take coins. It was a policy. Counting coins was too much
work, the person at the register and then the manager said as
they sat and gossiped with their friends, no other customers
in sight. So I got back in my car and drove ten miles home and
washed the car with a hose and some paper towels, the symbolic
economy being too busy to care about steady customers or to do
the real work in the concrete world.
If you are feeling energetic, go drive
around to a few areas with a heavy concentration of retail fast
food and motel franchises. Try estimating out the numbers. See
how they work for you in your place. Are your local businesses
in the retail business or the money laundromat business or both?
Another quick and dirty estimation technique
for your neighborhood is to take the Department of Justice's
figure of $500 billion- $1 trillion and divide by 281 million
Americans for a "per American" estimate of money laundering
market share. Now multiply that times the number of people in
your area. Now divide by the number of local banks. What do the
numbers say to you?
The next time you are out on the streets,
see if you can guess where the money is. It's bound to be there
Heart of the Double Bind
tend not to get bogged down in discussions
about how the various police, enforcement and prosecution industries
relate to narco dollars.
Here is my bottom line on how the money
works on enforcement and the war on drugs.
Every year since I was a child the
Solari Index goes down and the budgets that I pay for as
a taxpayer to fund more enforcement, prosecution and incarceration
go up. If you look at what taxpayers are paying, you would think
we were picking up all the narco dollar industry's expenses.
The more we pay for enforcement, the more
the Solari Index goes down and drug profits go up. The more we
pay for national security, the more thousands of boat loads of
white agricultural products seem to have no problem moving back
and forth across the borders.
After fifty years, the correlation is
documented and clear.
What is also clear is that the person
who has inside help from the national security, intelligence,
enforcement and prosecution bureaucracies will have the biggest
BIG PERCENTAGE cash margin (see Parts I
& II for background on BIG
vs. SLIM PERCENTAGE).
John Gotti, Jr, not a reliable source,
when asked by a reporter whether or not the New York Gotti family
was dealing in narcotics said, "No, who can compete with
The CIA, also not a reliable source, backs
up Mr. Gotti's postion. According to the CIA's own Inspector
General, the government has been facilitating drug trafficking.
Indeed, according to the CIA and DOJ (Dept. of Justice), the
CIA and DOJ created a memorandum of understanding that permitted
the CIA to help its allies and assets to traffic in drugs and
not have to report it.
Where I come from powerful people pay
for performance. I can only presume that the narco dollars are
getting the performance they want from the expenditure of our
tax dollars for more and more enforcement. After all, enforcement
keeps profit margins up and the franchise controlled.
The best example I know is my own case.
My estimate is that the federal enforcement establishment may
have spent more to target me over the last six years then they
spent to get Bin Laden before September 11. They clearly were
not hampered in my case by having to respect the spirit or the
letter of the law. I deduce from that only that the Solari model
is not as good for the narco dollar and money laundering businesses
as Bin Laden was - at least until recently.
of challenges of doing the numbers
on the narcotics business is that narcotics are not always a
commodity -- sometimes narcotics are a currency used to pay for
The arms industry sometimes markets to
third world countries, or groups such as terrorists, who cannot
pay with cash, but can pay with drugs. So, for example, it is
not unusual to see arms-drugs transshipment operations, in which
payment for arms is taken with drugs and then the drugs retailed
in the US to facilitate the arms trading and profits.
A case in point is the Iran-Contra operation
at Mena, Arkansas. It has been alleged that Oliver North and
the White House (National Security Council) were dealing drugs
through Mena not to make money, but to facilitate arms shipments.
Mena has received attention as a result of its alleged financial
contribution to Bill and Hillary Clinton's rise to national prominence.
You also see the arms-drugs relationship
as you estimate how the money works on the private profits from
various taxpayer funded wars. Vietnam, Kosovo, Plan Colombia,
Afghanistan, what do they all have in common? Drugs, oil and
gas, arms. Add gold, currency and bank market share and you have
the top of my checklist for understanding how the money works
on any war or "low intensity conflict" around the globe.
Many of the members of our global leadership
were trained in wartime narcotics trafficking in Asia during
WWII. George H. W. Bush and his generation watched our ally Chang
Kai Shek finance his army and covert operations with opium. I
am told that the Flying Tigers were the model that taught Air
America how to fly dope.
If you trace back the history of the family
and family networks of America's leaders and numerous other leaders
around the world, what you will find is that narcotics and arms
trafficking are a multigenerational theme that has criss-crossed
through Asia, North America, Europe, Latin America and Eurasia
and back through the City of London and Wall Street to the great
pools of financial capital. Many a great American and British
fortune got going in the Chinese opium trade.
One of the benefits of learning how narco
dollars work is that it will help you sort through the money
laundering and insider trading news on the War on Terrorism.
Terrorism and narcotics trafficking often get linked through
narcotics as currency. Terrorists need guns. Narco dollars need
private protection and covert operations.
1947. You want to make sure that America
wins in the great game of globalization. The winner will be the
country that accumulates the largest pool of capital to finance
its corporations and investment in new technology. That is a
problem because Americans vote for leaders who help them spend,
not save. No matter how hard Sam the sugar man works and no matter
how much he saves, how much capital can be pooled at SLIM PERCENTAGE?
It is fair to say it is not enough to beat the investment network
that can pool capital at BIG PRECENTAGE growth rates. (See Part I for the story of Sam and
Indeed, what a history of narcotics trafficking
and piracy and various other forms of organized crime over the
last five hundred years show is that our leaders have been in
a double bind for centuries. The only thing more dangerous than
getting caught doing organized crime, is not being in control
of the reinvested cash flows from it. This is why monarchs played
footsie with pirates in Elizabethan times and no doubt have been
doing so ever since.
After taxation, organized crime is a society's
way of forming lots of pools of low cost cash capital. Organized
crime is a banking and venture capital business.
So the reality is that if you want to
control the cash flow and capital that controls the overworld,
you've got to control the cash flows getting generated by the
underworld. Indeed, you've got to have an underworld. If it does
not exist, you need to outlaw some things to get one going.
Here is the bottom line on how the money
works on narco dollars. Unless Sam switches to dope, Dave will
win his wife, his mistress, his banker, buy his company, buy
his Congressman and be the star at the local charities. Everyone
will admire and pay attention to Dave.
It's the power of compound interest.
It's 1947. If you don't do it, you will
be the loser. What would you do?
Pogo Problem: We Have
the Enemy and It is Us
Sam and Dave dilemma of "to deal
or not to deal" is made worse by the power of popular opinion.
Last summer, I made a presentation called
"How the Money Works on Organized Crime" to a wonderful
group of about 100 people at an annual conference for a spiritually
focused foundation in Philadelphia. This is a group of people
who are committed to contributing to the spiritual evolution
of our culture.
After walking through the various Sam
and Dave dilemmas with Sam's SLIM PERCENTAGE profits sugar business
and Dave's BIG PERCENTAGE profits drug business, as well as the
intersection between the stock market and campaign fundraising
and narco dollars for about an hour, I asked the group what would
happen to the stock market if we decriminalized or legalized
The stock market would crash, they said.
What would happen to financing the government
deficit if we enforced all money-laundering laws? Since most
of the bank wire transfers are batched and run through the New
York Federal Reserve Bank, this should not really be that hard,
Their taxes might go up. Worse, yet, their
government checks might stop, they said.
I then asked them to imagine a big red
button at the front of the lectern. By the power of our imaginations,
if they pushed that button they could decriminalize narcotics
trafficking and stop all money laundering in the United States.
Who would push the button?
It turns out that in an audience of approximately
100 people committed to spiritually evolve our society that only
one person would push the button. Upon reflection, 99 would not.
I asked why.
They said that if they pushed the button,
their mutual funds would go down and their government checks
I commented that what they were proposing
is that an entire infrastructure of people continue to market
narcotics to their children and grandchildren to ensure that
their mutual and pension funds stay high in value.
They said, yes, that's right.
Which is why I say that America is not
addicted to narcotics as much as it is addicted to narco dollars.
National Security Council's
Bind in 1996
is the acid test.
It's August 1996. Gary Webb has just broken
the story in the San Jose Mercury News about the CIA helping
to deal drugs into South Central LA. He has put the legal documents
up on their website. The proof is hard. The government is dealing
Catherine Austin Fitts's company is publishing
a tool on the web called Community Wizard that shows maps with
Geographic Information Systems software that include patterns
of defaults on HUD mortgages in the areas of LA with the heaviest
concentration of CIA supported Iran Contra drug trafficking.
The patterns between HUD defaulted mortgages
and narco dollars are much too close for comfort.
What would you do if you were Bob Rubin
(Secretary of Treasury, now Co-Chairman of Citicorp), Larry Summers
(Deputy Secretary of Treasury, now President of Harvard), John
Hawke (Undersecretary of the Treasury; now Comptroller of the
Currency), Al Gore (Vice President, now teaching) and John Deutch
(Director of the CIA, now teaching) sitting on the national security
council or the related narco dollars task force?
Would you target Webb and get him fired
and the story discredited or would you let the story grow and
Would you target Fitts and have her business
and her software tools and databases destroyed or would you let
her business flourish, allowing every community to see and track
the narco dollars that were helping to drive their Solari Index
to 0% while driving the Dow Jones Index higher?
Which will it be in an election year?
Will you do everything you can do to attract the reinvestment
of the narco dollars into your campaign and into the stock market
or will you let Fitts and Webb continue to illuminate "how
the money works" on narco dollars in a way that might crash
the stock market and make it harder and more expensive for the
government to finance the deficit?
Before you answer, let me tell you one
In 1999, I was at a revival for Christian
women. One of the presidential candidates made a guest appearance.
A friend of mine, an Afro-American minister, who used to work
for the Drug Enforcement Agency (DEA), leapt to her feet to applaud
him with tremendous enthusiasm. I was surprised at her response
given that she understood his success in attracting narco dollars
- not to mention his and his colleague's silence on Gary Webb's
Dark Alliance reports and the subsequent CIA admission of drug
dealing by the government.
She looked at me and said, "He is
going to be the winner." So I said, "You mean, I am
a loser because I tried to stop the corruption and he is a winner
because he profited from it and helped it grow. So you will clap
for him and not for me." She replied, "That's right.
You are a loser. He is a winner"
Not such an easy decision to vote for
the "rule of law" is it?
Indeed, Webb got fired and Fitts' was
targeted and, after spending $6 million on legal and related
expenses, my fortune sank down to the same 0% as the Solari Index.
But whatever I do, I can't blame it just
on the top guys. Whatever they did, whoever it was, they were
doing what it took to please and win the crowd.
Americans love a winner.
Index Up, Dow Up, Debt Down
good news on all of this is that there
are solutions. New technology blesses us with the potential tools
we can use to radically increase productivity in a way that can
"jump the curve" on our narco dollar addiction.
Will it happen? I don't know.
My pastor says, "If we can face it,
God can fix it." The question is can we face our addiction
to narco dollars? Can we do it in a way that entrepreneurs like
me can build successful businesses and transactions that profit
from getting the Solari Index and the Dow Jones Index to go up
Sound impossible? Far from it. It's quite
possible. Add up all the current income generated by small businesses
in America. It is currently valued at a multiple of 1-5 times
because it is private-not publicly traded in a liquid stock market.
Investors have no way to invest in a liquid publicly traded stock.
The creation of a solari, a local knowledge
manager/databank that publishes neighborhood financial statements
and information and tracks the Solari Index in your place, can
make it possible for your neighborhood to create a mutual fund
that could channel capital to the profitable small businesses
in your neighborhood so that participating small business income
could start to trade at a multiple of 10 times - even 20 times
or 30 times eventually. The potential capital gains are in the
trillions of dollars.
That is a lot of low cost capital that
local entrepreneurs can use to create jobs and to build their
businesses - even start new ones.
Better yet, while your doing that how
about reengineering billions of federal, state and local government
investment that has a negative return on investment to both taxpayers
and communities to a positive return on investment. More big
capital gains that can be securitized and traded in a liquid
stock market---again the potential profits are in the trillions.
Finally, add up the value of all the homes
and real estate in your community. OK, what would happen to the
value of that equity if the Solari Index went back up to 100
percent? Real estate financed through a local trust or REIT or
mutual fund that could be traded in the stock market would create
a way for investors to start to "trade places." That
means they would profit from the Solari Index going up along
with local real estate owners, homeowners and small business
folks. Add some more trillions to the potential capital gains.
Solari Index rise back to 100% is the biggest capital gains
opportunity in America, particularly when combined with reengineering
government investment and pooling small business equity in a
manner that provides competitive access to the stock market.
Generations of accumulated narco dollars could do very well investing
successfully in such a capital gains opportunity.
A trillion here, a trillion there---pretty
soon you are talking about a lot of "pop."
It can only happen if we can look into
the face of our addiction and start having a conversation about
how we move out of our current financial incentives that keep
the Solari Index down to a more positive, sustainable and wealthy
future for our children and grandchildren. For example, think
about what would happen if every government worker in America
had their annual salary fluctuate based on the performance of
the Solari Index in their jurisdiction? I bet it would take about
three years to get the Solari Index back to 100%.
That is why all the yah-yah in Washington
about new stricter money laundering laws to deal with terrorism
won't work. If government officials and bankers can keep making
money when the Solari Index is at 0%, it will not rise no matter
how many people - innocent or guilty - we put in jail. The day
we decide that government officials only make money for performance
and all the companies that get money from government - whether
contractors or banks that use taxpayers credit - only get money
if we are better off and the Solari Index is rising, is when
we will start to face and solve the real problems in a money
It's time to face our addiction to narco
dollars and to grapple with how to reverse our incentive systems.
It is time to figure out how publicly traded companies and our
banks and insurance companies can make more money from our kids
succeeding then from them failing. Indeed, it can be done.
So here is my last message on how the
money works on narco dollars. Now that we have run the Solari
Index down to near 0% while fueling the rise of the Dow Jones
about 20X since I was a kid, the new opportunity is going to
be the fortunes to be made on businesses and investment vehicles
that fuel the Solari Index rising.
Wouldn't you pay for streets to be sweet
for your child once again? Especially if it made you a whole
bunch of money on an IPO of your neighborhood mutual or venture
fund in the stock market?
I want to make money on kids succeeding.
I want to teach Dave a way to make more money by getting out
of narco dollars and backing Sam starting a solari and "trading
My money is on Solari rising.
For more on starting a
solari for your neighborhood, see www.solari.com, or contact Catherine at email@example.com
After three years of plowing
through hundreds of books, videos and articles, here are the
sources that I found most useful to helping me understand "how
the money works" in the drug trade.
Assuming that you are
a busy person who knows nothing about narco dollars and does
not want to become an expert----you just want to have a good
map of "how the money works" in your world----I have
put an (*) next to my top four book and one video recommendations.
These are the ones that will be the most useful to help you understand
the drug trade and what it means to you, your family, your business
and the Solari Index in your neighborhood.
Black Money, Michael Thomas
Blowback: America's Recruitment
of Nazis and Its Effects on the Cold
War, Christopher Simpson
The Boys on the Tracks,
Mara Leveritt. St. Martin's Press, 1999.
Cocaine Politics: Drugs,
Armies, and the CIA in Central America, Peter Dale Scott &
Jonathan Marshall. Berkeley: University of California Press,
The Collected Works of
Col. L. Fletcher Prouty, including, The Secret Team: The CIA
and Its Allies in Control of the United States and the World,
Col. L. Fletcher Prouty (Ret.), CD-Rom, available from The Center
for the Preservation of Modern History, http://www.prevailingwinds.org
CRA$HMAKER: A Federal
Affaire, a novel of love, death and the Federal Reserve, Victor
Sperandeo & Alvaro Almeida, http://www.crashmaker.com/
Dark Alliance, Gary Webb. New York: St. Martin's Press, 1998.
Deep Politics and the
Death of JFK, Peter Dale Scott. Berkley: University of California
Dope, Inc.: Britains Opium
War Against the United States, Konstandinos Kalimtgis.
Double Cross: The Explosive
Inside Story of the Mobster Who Controlled America, Sam &
Chuck Giancana. New York: Warner Books, 1998
False Profits: The Inside
Story of BCCI, the World's Most Corrupt Financial Empire, Peter
Truell & Larry Gurwin. Boston: Houghton Mifflin Company,
Hot Money and the Politics
of Debt, R. T. Naylor. Montreal: Black Rose Books, 1994. (*)
The Money and the Power:
The Making of Las Vegas and Its Hold on America, Sally Denton
and Roger Morris
The Mafia, CIA and George
Bush, Pete Brewton. New York: S.P.I., 1992.
Opium, Empire and the
Global Political Economy, Carl A Trocki. Routledge: Taylor &
Francis Group, 1999. (*)
The Politics of Heroin:
CIA Complicity in the Global Drug Trade, Alfred W. McCoy Lawrence
Hill Books, 1991.
Powderburns : Cocaine,
Contras & the Drug War, Celerino Castillo, Dave Harmon
Red Mafiya : How the Russian
Mob Has Invaded America, Robert I. Friedman, Little Brown &
Rulers of Evil: Useful
Knowledge about Governing Bodies, F. Tupper Saussy HarperCollins,
WhiteOut: The CIA, Drugs, and the Press, Alexander Cockburn and
Jeffrey St. Clair. Verso, London:1998.
"Albert Vincent Carone:
The Missing Link Between Iran-Contra Cocaine Operations and Organized
Crime", Mike Ruppert. From the Wilderness Publications,
Mena, Arkansas: Various
The Boys on the Track,
various articles by Mara Leveritt,
The Mystery of the "Lost"
Mena Report; Gray Money: the Continued
Cover-Up, by Mark Swaney
Sam Smith's Progressive
Review, The Clinton Scandals (see Mena sections):
Narco News, www.narconews.com, Al Giordano, Publisher
The Spooky-Minded Professor:
CIA Cover Up Meister Gets Princeton Job, by Uri Dowbenko,
Catherine Austin Fitts:
Air America, Mel Gibson
Bullworth, Warren Beatty
CIA Director John Deutch
in Watts Video: Special Town Hall Meeting with John Deutch &
Juanita McDonald, October 15, 1996 http://www.copvcia.com (*)
Enemy of the State, Will
Smith & Gene Hackman
Mike Ruppert on CIA & Drugs: The Confession & The Impeachment,
From The Wilderness. Video, 1999. http://www.copvcia.com
The Salon At Fraser Court,
Mike Ruppert, From the Wilderness Video, 1999. http://www.copvcia.com
Telefon, Charles Bronson
and Lee Remick
Wag the Dog, Dustin Hoffman
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