DON BELL REPORTS

A WEEKLY COMMENTARY

Year Twenty-Nine ... Number Eighteen ... May 7, 1982

Table of Contents

WHO REALLY RUNS AMERICA?

For the ninth time in nine years, U.S. News has conducted its annual survey to find out "Who Runs America." The newsmagazine called on "1,548 opinion molders in 30 fields" and the majority of them agreed that Ronald Reagan exercises "the most influence in national life." This would be an obvious assumption of opinion molders, since Reagan is the Nation's chief administrator and announces most new policies or changes in policy, signs all bills before they can become laws, or vetoes them in the hope they won't become laws, is responsible or must bear the responsibility for everything that is published in the Federal Register, is commander-in-chief of U.S. armed forces, etc. As President Harry Truman observed, the buck stops at the oval office in the White House. Hence, the President of the United States, whoever is in that office, would appear to "exercise the most influence in national life." But, actually, these 1,548 opinion molders came closer to the truth when they said that Paul Volcker, Federal Reserve Chairman, was the second most influential man in American life, since President Reagan admits that he has no control over the Federal Reserve's actions and decisions. Ranked third in this opinion molders survey was State Secretary Alexander Haig. After the usual ranking members of Cabinet and Congress, Supreme Court Justice Warren Burger came in tenth while influence-maker David Rockefeller was relegated to eleventh place.

Most Americans would accept the list without question. But if the whole truth were told, number eleven on the list should be number one, with Paul Volcker ranked second, Alexander Haig third, and then possibly Ronald Reagan. This can be said because there really is an unelected government that really runs America; an unelected government that includes Rockefeller, Volcker, Haig, Regan, Weinberger, and about eighty other unelected leaders all of whom are members of the Rockefeller-led Council on Foreign Relations, the Trilateral Commission, or both, some few of them having resigned upon becoming a part of the visible federal government, like George Bush and Donald Regan.

Readers of Don Bell Reports are familiar with the position of influence occupied by David Rockefeller in America as well as the world. But, perhaps the whole story has never been told about the influence exerted by Paul Volcker. Donald McAlvany, Intelligence Adviser, has recently published a review of the activities of this man who represents the special interests of a handful of private investors, many of whose names have never been made public. We quote the following from the May issue of The McAlvany Intelligence Adviser.

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An excellent subject for a doctoral dissertation would be a study of who owns the U.S. Federal Reserve System. It is not owned by the government, nor the banking system, nor the people of America. The U.S. central bank, like its sister central banks in Western Europe is privately owned by a small handful of private investors -- the list is a more closely guarded secret than the 'actual' amount of gold in Fort Knox. Certainly a strong clue as to the ownership group is that a majority of appointees of the Federal Reserve Board and the powerful Open Market Committee come from the liberal Eastern Establishment group headed by David Rockefeller. Today, since Fed Chairman Paul Volcker and the twelve man 'Open Market Committee' (the unelected officials who control the U.S. money supply and interest rates), wield more financial power than President Reagan, the entire U.S. Conress and the U.S. judiciary combined, it might be well to ask -- 'who are these men and where do they come from??' Five of the eight permanent members of the Federal Open Market Committee are Carter appointees. Four of the seven Governors of the Federal Reserve Board are Carter appointees. (This Board must approve the Presidents and Vice Presidents of the twelve Regional Fed Banks).

When Paul Volcker was appointed by Carter as Chairman of the Federal Reserve Board, the New York Times commented that David Rockefeller had a 'strong influence' in the Carter selection ... Paul Volcker (a liberal Democrat and graduate of Princeton, Harvard and the London School of Economics) rose to prominence first at the New York Fed Bank and then as an assistant in the Kennedy Treasury Department. He later served in the Johnson and Nixon Treasury Departments and has held several management positions (e.g., Director of Planning) at David Rockefeller's Chase Manhattan Bank. In addition, he is a trustee of the Rockefeller Foundation, a board member on the Council on Foreign Relations and a member of Rockefeller's Trilateral Commission. As Under Secretary of the Treasury for Monetary Affairs under Nixon, Volcker was the man who in 1969 engineered the inflationary boondoggle whereby the IMF created billions of dollars of SDRs (called 'paper gold') out of thin air. In 1971, Volcker engineered the final severance of the dollar from gold, and the move away from fixed currency exchange rates to floating exchange rates ... These three Volcker achievements set the stage for the massive global inflation of the 1970s and prompted a number of the leading European bankers to comment, upon Volcker being named by Carter to head the Fed that 'it closely approximated placing Dracula in charge of the blood bank.' ...

Conclusion: The Federal Reserve, a small group of unelected bank officials, has too much power. The power to manipulate the economy of the United States and indirectly much of the world, in conflict with the wishes of the elected U.S. executives and legislative branches, was never intended by our founding fathers to be vested with a small handful of private bankers. Such incredible power could obviously be used (and abused) to manipulate economies and governments, and for the concentration of vast political and economic power.

(End of quotes from the McAlvany Intelligence Advisor. Monthly, $75
per year. Subscription office: P.O. Box 39810, Phoenix, AZ 85069

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It should be conceded that all of the blame for our country's financial and economic distress cannot be laid at the feet of unelected officials in the Fed. The majority of elected officials in our Congress seem to have a positive lust for giving away American wealth in the form of foreign aid, loans and guarantees to private banks to protect their loans to governments that have no hope and no desire to repay the loans. Howard Ruff recently wrote: "One bit of irony that seems to have escaped most commentators on the subject of Soviet military superiority is that they wouldn't even have been in the arms race had it not been for the incredible volume of loans made directly to the Soviet Union by U.S. banks and other Western banks. Even the hard money credits granted to other Iron Curtain countries have benefited the Soviet Union because that is foreign aid they [the Soviets] didn't have to come up with. The dimension of the communist loan problem is awesome. The Soviet Union is in hock to the West for at least $19 billion. The total outstanding debt to the United States, Western Europe and Japan is $82.5 billion. A decade ago it was $37.8 billion. Interestingly enough, that last decade was the period in which the huge military buildup occurred.

"Loans to the communist countries give us two problems: the aforementioned military buildup that would not have occurred without it, and the fact that it is virtually inevitable that sooner or later all those loans will default and, as a result, our banks will be in deepest trouble. As I have consistently said, the government will bail out the banks because most of these loans are federally guaranteed, and even if they weren't, the government can't afford to let the banking system fail. But, this is an immensely inflationary event. There is an old adage that says, 'If I owe you $10 and can't pay you, you've got me. If I owe you $10,000 and can't pay you, I've got you.' The Soviet Union has pulled off the incredible feat of getting us to finance their military buildup, which forces us to engage in a higher military buildup, resulting in a huge increase in domestic debt and more inflation. They have left us in a position where we have to continue to finance them because the consequences of default are so great. So we continue to throw good money after bad, and that money some day could come flying across the North Pole with a tail of fire. The Soviet Union's economy and its military effort would collapse in no time if it became the policy of the West to refuse to loan or do business with the Soviet Union ... Lenin was right when he said that we capitalists would braid the rope by which we would be hanged."

Congressman Ron Paul was one of the few legislators who have tried to stop the giving of loans to sustain communist regimes. In introducing a bill, H.J. Res. 414, which would prevent such "rope braiding," he said: "A staggering $57 billion in various loan guarantees and credits has been provided by the U.S. government for the benefit of foreign governments. This is just the start of government activity which has kept interest rates high in the midst of a terrible recession. If it weren't for these government credit programs those 57 billions would be available to American consumers and businessmen, to buy homes or cars, or to improve outmoded plants and equipment .... Our foreign policy is being wagged by the tail of global debt. It is the U.S. government, not the regimes in Poland or Russia, which is being held hostage by the big banks and their overextension of credit abroad.

Ron Paul's H.J. Res. 414 will undoubtedly go unheeded by the majority of Representatives and Senators. For months Congress has wrestled with problems concerning spending and taxing, and attempts to present an acceptable budget for the coming fiscal year. But, it seems the consensus of Congress that we who are broke must keep trying to keep other countries from going broke. An example is that incredible act that permits the Fed to "monetize" the debts of foreign countries so that we, the taxpayers, must pay the bills. Then there is the case of the $1.9 billion paid to Poland to save that country from default. It did nothing for the Polish people, hurt us, and helped the Soviets. Another example surfaced about two weeks ago. A Commodity Credit Corporation official, Lester LeCompte, said the CCC will soon begin to reimburse American banks for some $138 million they loaned to the Communist Government of Poland. Since Poland can't pay her bills, we'll pay them for her, through CCC. Payments will be made to the First National Bank of Chicago, Bank of America, Marine Midland Bank of New York, and the Girard Bank of Philadelphia. This will be a kind of first payment, because Poland will still owe American banks some $679 million, and our government will reimburse the banks. Even worse, Poland owes free world governments and banks some $28 billion, and if the "handful that rules the world" decides Poland has to kept afloat, they have the permission of our government to "monetize" those debts -- which will also help to keep Soviet Russia afloat.

And now comes Argentina's bill. Before the shooting started, Argentina had a foreign debt of $38 billion, a debt on which the government couldn't even pay the interest. And eaten up by inflation (13,500 inflated Argentine pesos equal one inflated U.S. dollar at this writing), going deeper and deeper in debt and the government about to be juntaed out of existence, something had to be done. Now, by a strange kind of magic seemingly known only to "that handful," war has become a good way to turn bad debts into good profits, usually at the expense of the United States. Therefore, it was clever strategy to drag Alexander Haig into the mess as mediator. When the smoke has cleared the United States Government will undoubtedly assume responsibility for the debts, and we, the people, will indirectly reimburse the banks, at the very least in the amount of $8 billion, which is owed to American-based banks.

And Red China must not be overloooked. At this writing Vice President George Bush is in Peking making deals. For the past many months, through arrangements of the government, American businessmen have been going to Red China to arrange for trade and commerce with a Nation that has little, if any, hard money and little except opium products to trade. So, whatever deals that can be made will be guaranteed by our government. In this connection, an article appearing in the British Intelligence Digest of April 28, 1982 is important. We quote:

"Know Your Enemy: China ... Some little time ago, Huang Hua, the Foreign Minister of Communist China, delivered a secret report in Peking. It makes interesting reading as Americans prepare to 'do business' with Communist China. [Huang Huo said]:

"Now we quote from an American businessman who was with a party of top American business and oil men on a trip to Communist China ...

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