The mystery of the Missing Currency

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Published : August 24th, 2010
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The Mystery of the Missing Currency

US money supply stopped growing in 1980

Fed admits dollars disappearing

Fed admits dollars disappearing.
Star-News - Google News Archive - Feb 11, 1986

A lot of U.S. greenbacks can’t be accounted for.

A study has concluded that
$136 billion in U.S. currency88 percent of the total circulation is missing.

In a comprehensive look at personal money-handling habits, Federal Reserve Board economists concluded that individuals over age 18 are holding $18 billion in U.S. coins and cash. That is about $100 per person.

That is, however, only 12 percent of the $153.9 billion of cash supposedly in circulation. Where is the rest?

“I wish we knew where it was.” said Paul A. Spindt, a Fed economist and one of the authors of the study.

Fed economists know that part of it is in the cash drawers of legitimate businesses and some is held by people under age 18. Neither group was included in the Fed survey.

Spindt said he doubted, however, whether the amount held by youngsters and businesses would total more than 15 percent.
That leaves nearly three-fourths of U.S. currency missing in action.

One explanation is that part of the missing money is being u8ed in the “underground” economy, populated by those intent on evading income taxes by dealing on a cash- only basis.

This explanation, however, would account for only part of the funds, because even ill-gotten gains flow back into general circulation at some point.

Other studies have speculated that as much
as one-third to two-thirds of U.S. currency winds up in foreign hands. The Fed economists made no estimate of how much has gone overseas, but speculated that a big part of the money is, indeed, being used by foreigners who would rather deal in the stable U.S. currency than in their own currencies.

“We do know that there are some very large shipments of U.S. currency going offshore to various destinations around the world,” Spindt said.

This money often ends up in areas with high inflation rates. In some Latin American nations, for instance, the citizens exchange local currency on the black market for dollars as a hedge against their own currency’s being devalued.

What This Means

NCPA reports that Foreign Dollar Holdings and the U.S. Money Supply.

Foreign Dollar Holdings and the U.S. Money Supply

One of the most important of all economic indicators is the money supply. Most economists believe that it plays a major role in the level of interest rates, inflation and real growth in the economy. The Federal Reserve controls the money supply through various policy instruments.

The Mystery of the Missing Currency

Since currency is such an important component of the money supply, it obviously is very important to have an accurate measure of it. In practice, the Fed assumes that all the money ever printed is still in circulation, less only that which has been officially withdrawn from circulation or is known to have been destroyed. However,
when the Fed has attempted to survey banks, businesses and households to find out how much currency was actually circulating, some 80 percent of the currency thought to be in circulation had simply disappeared.

Efforts to locate this missing money have focused particularly on “exports” of U.S. dollars:
money that has left our shores and now circulates in foreign countries.

What This Means

At a minimum, this suggests that
the money supply is much lower than published data indicate. Economist Case Sprenkle of the University of Illinois argues: “Since foreign-held currency is not a medium of exchange for the issuing country, increases in currency in the hands of the public in developed countries then should not be considered as money supply increases for monetary policy decisions. The Federal Reserve and other central banks should IGNORE SUCH INCREASES AS BEING BASICALLY IRRELEVANT TO DOMESTIC MONETARY CONDITIONS."

This could have important implications for Federal Reserve policy and monetary analysis. It might mean that


Foreign holdings of U.S. dollars are a significant and growing phenomenon. They are now so large as to affect our basic understanding of the relationship between the money supp]y, inflation, interest rates and other economic variables. The phenomenon may be causing the Federal Reserve to run a tighter monetary policy than it intends, with important implications for economic growth, unemployment and the standard of living of all Americans.

Answer to the Mystery of the Missing Currency
A Torrent of Dirty Dollars - TIME

A Torrent of Dirty Dollars
TIME - Sunday, June 24, 2001

Much is at stake as
the powerful flow of narcodollars is recycled through the world's financial system. Drug lords and other lawbreakers are believed to be buying valuable chunks of the American economy, but clever Dutch sandwiches and other subterfuges make it almost impossible for U.S. authorities to track foreign investors. A case in point: blind corporations based in the Netherlands Antilles control more than one-third of all foreign-owned U.S. farmland, many of the newest office towers in downtown Los Angeles and a substantial number of independent movie companies producing films like Sylvester Stallone's Rambo pictures.

While businesses and individuals may conceal their assets for purposes that are completely legal, or dubious at worst,
the systems set up for their convenience can be perversely efficient at helping drug barons launder as much as $100 billion a year in U.S. proceeds.

The money-laundering process, especially in the drug trade, begins with greenbacks. MUCH OF THE CASH SIMPLY LEAVES THE U.S. IN LUGGAGE, since departing travelers are rarely searched. Larger shipments are flown out on private planes or packed in seagoing freight containers, which are almost never inspected. THAT EXPLAINS, in part, WHY U.S. OFFICIALS ARE UNABLE TO LOCATE FULLY 80% OF ALL THE BILLS PRINTED BY THE TREASURY. Once overseas, the cash is easy to funnel into black markets, especially in unstable economies where the dollar is the favored underground currency.

Three main components of the U.S. dollarization strategy:

1) Forcing drug money out of the U.S.
2) Facilitating drug trafficking
3) Destroying foreign currencies


1) Forcing drug money out of the U.S.

Seizure of Assets Presses Drug Suspects

April 29, 1988
Seizure of Assets Presses Drug Suspects

In seizing the apartment leases of two suspected drug dealers in New York City Wednesday,
Federal authorities broke new legal ground in their fight against illicit drug trafficking by tenants of public housing projects.

But they also underscored
the growing power and scope of Federal statutes that now permit the seizure of virtually any kind of property even remotely involved or ''intended'' for use in drug transactions.

Those laws, first enacted in 1970 and amended several times, have been sharply attacked by civil liberties groups as a violation of the requirements of due process of law.

In 1987, according to official figures, the Federal Government seized more than $180 million in assets related to illegal drug dealing, a sharp increase from 1986. Property seized included cars, planes, boats, houses and a wide range of personal possessions.

More potent in law-enforcement terms are
the civil provisions of the law, which allow the Government to seize property unilaterally pending a civil hearing.

This kind of proceeding is made possible
by a Federal statute that gives the Government title to any asset or property used in a drug transaction, effective from the moment the transaction takes place or is ''intended'' by the criminal.

Taking Possession

''When you commit the violation, the right and title to that property reverts to the United States at that moment,'' said Mary Lee Warren, the chief of the narcotics unit in the office of the United States Attorney for the Southern District.

Having thus received title to the property involved, the Government may then act under civil statutes that permit it to recover assets in the same way that a bank may repossess a car for an unpaid loan.

Depending on the size, value and location of the property to be seized,
authorities may simply take it, or may seek a seizure warrant to allow them to enter a home, bank safe, or other protected space to take possession of the property.

As in a criminal proceeding, the owner of something that is seized under civil statutes has a right to a hearing in Federal Court to challenge the Government's action. But
in contrast to criminal cases, in which the Government must prove its case ''beyond a reasonable doubt,'' civil cases can be won by law-enforcement authorities with a simple preponderance of evidence - a far less stringent legal standard. 'Operating Capital'

Law-enforcement authorities at many levels of government have hailed the forfeiture laws as a breakthrough in the fight against illegal drugs.

''It used to be that a defendant was willing to do jail time, because when he came out, his money would be waiting for him,'' Mr. Zimmerman said. ''But we've found out that if we take away substantial amounts of money from the traffickers, what we're doing in effect is taking away their operating capital.''

Civil liberties advocates, however, have sharply opposed the statutes as a violation of the due process clause of the United States Constitution, which prohibits the Government from depriving anyone of property without a proper hearing.

''We believe
the seizing of someone's property or property interest because they've been merely accused of being a drug dealer is a serious violation of civil liberties,'' said Norman Siegel, the executive director of the New York Civil Liberties Union.

Originally intended to cover the drugs and vehicles used by drug dealers, the statutes were amended in 1978 to allow seizure of the proceeds of drug transactions. In 1984, they were further amended to allow seizure of real estate, and in 1986 to allow authorities to seek seizure warrants for assets that were not kept in public areas.

''It's a very innovative thing,'' said Pamela Dempsey, an assistant United States Attorney who specializes in forfeiture matters in Mr. Giuliani's office. ''The law generally is expanding and evolving in such a way as to provide a new solution to a very difficult law-enforcement problem.''

Officials take aim at drug money

Officials take aim at drug money
Sarasota Herald-Tribune - Google News Archive - Mar 11, 1997
Faced with controls on electronic transfers, officials say, cartels returned to smuggling money in bulk.


NEW YORK — For years, drug cartel money-launderers in New York have been sending up to $1.3 billion a year back to Colombia through storefront shops, many of them in Queens, that immigrants use to wire cash home.

The major restraint on this electronic smuggling has been a federal requirement that transactions of more than $10,000 be reported to the government.

But since last summer, drug busters will tell Congress today,
a Treasury Department order imposing a $750-per-transaction limit on 1,600 remittance shops suspected of wiring most of the illicit money has won a small victory in the war on drugs, sharply cutting the electronic transfers to Colombia and forcing the cartels to return to crude old methods of smuggling money in bulk.

Faced with the alternative of wiring fortunes in penny-ante increments or submitting picture-identity cards with their transactions,
cartel operatives have gone back to stashing cash in coffins, bowling balls and other hiding places, investigators said Monday.

Banks Intensify Crackdown On Money Laundering

Banks intensify crackdown on money Laundering
Daily Gazette - Google News Archive - Sep 23, 1990
By JAMES M. ODATO Gaz’tte Rport.’r

The cash comes from criminals, or those dodging taxes. Frequently, it comes from drug deals. And there is lots of it.

To hide its sources, drug dealers and other illegal enterprisesuse money launderers — people whose Job it is to get the currency into such legitimate places as banks — to make it more difficult to trace.

For a while, those launderers could walk into banks with cardboard boxes bulging with cash, and no one would bunk an eye.

That’s all changed.

Banks have gotten tougher, as federal authorities have put more pressure on them to report transactions that appear suspicious.

In fact,
following the declaration of a “war on drugs” and the threat of whopping fines, banks began filing reports by the millions — seven million were filed last year alone.

Some of those helped federal investigators convict drug dealers and uncover other illegal enterprises.

But federal officials estimate
$110 billion is still being laundered, undetected, each year across the country.

For instance,
Key Bank of Eastern New York has two officials working full time to ensure that the bank complies with the rules. Last year, the Albany-based bank filed 20,000 reports, said spokesman Peter D. La- Fleche.

“It takes 37 minutes to properly fill out the forms, according to the Federal Reserve,” says James Smith, Key Corp’s compliance chief. “If one files 10,000 currency transaction reports times 37 minutes times 5 per hour ... We’re doing a lot.”

The Bank Secrecy Act of 1970 requires banks to file a Currency Transaction Report on cash transactions of more than $10,000. Banks also must file a report if it appears a customer is trying to avoid having a CTR’filed by staying below the $10,002 thresh- old or for suspicious behavior. such as trading $2000 in twenty-dollar bills for 20 one-hundred dollar bills.

as of last month, banks must also report to federal authorities any transactions involving purchases of at least $3000 of money orders, checks, traveler’s checks or bank drafts in aggregate by a customer.

The CTR gives investigators another tool to use against drug dealers.

“Banks are very necessary to the chain of laundering. The majority of the money is going to financial institutions and then wired out of the country,” says Charles 0. Slmonsen, chief of currency investigations of the US. Customs Service.

He said
legislation has been proposed to require reports when money is wired.

From bank to bank

Once the laundered money gets to a bank, be said, it can be “layered,” or moved from bank to bank, so that it gets farther away from the source.

He said the CTRs may have cut down on some of the laundering.
OTHER ALTERNATIVES FOR LAUNDERERS, he said, INCLUDE SMUGGLING MONEY OUT OF THE COUNTRY. A report is required by customs, and failure to file it can result in prosecution.

He said that
since 1986, the IRS has initiated more than 4,200 criminal eases on money launderers, with more than a quarter of them started this year alone.

Preferred Target

Banks are the preferred target of money launderers, Hanson, and other say, because of the low risk involved in investing cash with them.

“We report so much it’s a risky proposition” says John Byrne, a legIMauve counsel with the American Bankers Association. “Also (some) banks now have software to show you’ve had multiple transactions in a day and we’ll file a report on you.”

Byrne admits that banks were part of the money laundering problem because they failed to submit forms. In 1977, just 34,000 CTRs were filed by banks.

Last year, banks spent an estimated $160 million complying with The Bank Secrecy Act.

Part of the reason for the vigilance is the fear of liability. Federal regulators began fining banks heavily in the mid-’80s. Bank of Boston paid 1500,000 in 1985 while Bank of New England paid a $1.24 million f inc in 1986. As a result, “everybody and his brother learned what money laundering was,” says Byrne.

The Double-Edged Sword undercover researcher observed
agencies abandon investigations of suspects they knew were trafficking large amounts of contraband simply because the case was not profitable. Agents routinely targeted low level dealers rather than big traffickers, who are better able to insulate themselves and their assets from reverse sting operations. The report states: "Efficiency is measured by the amount of money seized rather than impact on drug trafficking."

A reverse sting operation, where the officer becomes the seller who encourages the suspect to commit a crime, "was the preferred strategy of every agency and department with which the researcher was associated because it allowed agents to gauge potential profit prior to investing a great deal of time and effort." More importantly,
the narcotics units studied preferred seizing cash intended for purchase of drugs supplied by the police, RATHER THAN CONFISCATING DRUGS ALREADY ON THE STREET. When asked why a search warrant would not be served on a suspect known to have resale quantities of contraband, one officer responded:

"Because that would just give us a bunch of dope and the hassle of having to book him (the suspect). WE'VE GOT ALL THE DOPE WE NEED IN THE PROPERTY ROOM, just stick to rounding up cases with big money and stay away from warrants."

In one case an agency instructed the researcher to observe the suspect's daily transactions reselling a large shipment of cocaine so that


2) Facilitating drug trafficking

Dollarization and the United Narcostates of America

Dollarization and the United Narcostates of America
Jaguar Press
Saturday, October 31, 2009 at 9:33pm

In America the number of people who use cocaine regularly is higher than 3.6 million, including crack users, while
heroin abusers are untallied, though invariably over a million in this country. There are also millions more heavy-narcotic consumers worldwide, concentrated in Europe, Central Asia, and Latin America. The millions of domestic users form the base from which profits are taken, in the form of drug money, US dollars, in order to fund pro-US governments abroad and expand the influence of the dollar.


From the first economic contact between the British East India company and poppy producing regions in Asia, opium has become a major narcotic in the Western and world markets, both legally and illegally. Wars have been fought over the importation of opium in Asia, and at every step of the way,
Western powers have been vitally involved in its production and distribution. These cartel-like military incursions have developed into extremely lucrative and subversive markets that introduce the US dollar into foreign economies.

Most recently,
Afghanistan has risen to international prominence in the opium trade, responsible for over 80% of the global opium stock, of which “authorities” only intercept a small percentage. …

Addiction is undoubtedly wide spread in the countries importing, whether legally or illegally, but the negative side effects of heroin don’t end there. And
while 100,000 people a year are dying of heroin-related causes worldwide, even more people are beginning their experience with it. These users are actually investors, funding the US’s neo-imperialist infiltration of the Afghani financial system by flooding it with US dollars and demand for an unsustainable cash crop.

That’s right,
the people of Afghanistan have traded their food crops and peace for an era of opium and war,

In Afghanistan right now, the Afghani and the dollar are pretty much interchangeable. It is astounding to American personnel stationed in Afghanistan that their US dollars are just as good as at a 7-11 back home. This isn’t an accident—the illicit trade in opium has single-handedly introduced the dollar as a stable medium of transaction in the region. It is so prominent that Karzai’s government had to pass a law requiring vendors to list their prices in the native Afghani in addition to its pricing in dollars. The use of the dollar abroad means not only increased security for the US Treasury, but also a guaranteed trade partner in the dollarized nation.


The American coca trade has risen in recent years to far outreach the opiate trade in general. The sale of cocaine within the US alone has generated over $70 billion, almost entirely underground.
Since the coca boom of the 1980’s usage has risen drastically, no longer confined to certain social classes—most citadins can obtain cocaine or crack quite easily and for competitive pricing. This vast trade, encompasses much of the American hemisphere, from South America, through Central American and the Caribbean to the United States and Europe, has led to mass addiction and the vicious dollarization of Latin America.

US neo-colonialist policies and practice, whether carried out by government funded groups or private corporations, developed into an efficient machine for the consumption and global exportation of cocaine starting in the 1970’s, while introducing the dollar to coca producing regions as a replacement for their sometimes unstable national currencies.

In 1986, it came to light that the US government had been tacitly supporting, if not directly developing massive cartel infrastructure in Central America by funding the anti-communist Contra group in Nicaragua. Thousands of tons of cocaine were brought into the American West Coast and South and the money was used not only to attempt the violent overthrow of the Sandinista government—the revolutionary group that liberated Nicaragua from American occupation in the 1930’s—but to introduce the dollar to the entire region.

And while the scandal has dissipated and American influence is no longer visible,
the US dollar is now the standard currency for El Salvador and Panama. The dollar is also used in some countries who maintain a currency at a rate fixed to the dollar while it is simply the unofficial, de facto tender in the rest of the region and the cocaine trade has only grown since then.

That’s right,
nearly every country in the Americas involved in producing, transporting and using cocaine is using the US dollar as a medium for exchange. Michael Melvin and Jerry Ladman have researched the economic structure of coca producing regions in Vol. 23 of the Journal of Money, tracing the rise of the dollarized narcostate, “Since illicit activities like smuggling are financed with currency rather than bank deposits, many people believe that much of the U.S. dollar currency circulating in Bolivia, Colombia, and Peru is earned from illegal drug sales. For instance, in the coca-producing regions of Bolivia, farmers cultivate coca plants to provide leaves from which coca paste is extracted locally and then used as the base for manufacturing cocaine in Bolivia or elsewhere.” This is not a unique case for Bolivia as the region is faced with harsh coca and basuco addiction in the wake of the dollar.

And while the use of adulterated narcotics rises in South America,
the abuse rate of cocaine and crack in the United States rises every year. General coca addiction in the US is actually encouraged by the government who has transformed this massive consumer base into an investment pool for the economic subversion of the narcostates of America.

With almost 4 million users, the incentive for foreign producers and manufacturers to supply the US is immense, leading to an entire cultural shift for the hemisphere.
Violence from Los Angeles to La Paz is endemic of the coca trade and each of the regions with the most cocaine manufacture and traffic—El Salvador, Panama, Ecuador, Bolivia, Peru, Colombia, numerous Caribbean states, northern Mexican border, to name a few—endure crippling US political influence and overt dollarization.

Latin American cartels, with US support during and after the “War on Drugs,” have establishment well fortified shipping lanes, utilizing planes, submarines, and old fashioned mules to move well concealed cocaine at varying degrees of purity north. The unquantifiably large Pacific Rim coca trade has turned the northern Mexican border into one of the most lawless, violent regions in the world. Here more than ten murders a day are attributed to the intense cartel activity. These well organized, well paid groups are spurred by the availability of arms across the border and the relative economic corruption of the area.

If you’re in Southern California you can test it, the US dollar is valid in the cities of Mexico just south of the border. As in all other opium and coca producing states from Central Asia to Latin America we see the same symptoms of US narcocolonialism—addiction, exploitation, the dollar. There are no efforts to effectively curb hard drug abuse or to curtail the trade, quite the opposite, the US government has supported the drug trade at many levels.

Addiction growing at home, economic desperation abroad, and
international confidence in the US dollar continues to grow as it becomes the global currency of so-called illicit business.

Brought to You by CIA : America's Drug Crisis

First Published 2009-10-30
Brought to You by CIA : America's Drug Crisis

The real story here is that
where the US goes, the drug trade soon follows, and the leading role in developing and nurturing that trade appears to be played by the Central Intelligence Agency, notes Dave Lindorff.

How the CIA stoked the region’s heroin trade

AN INTEGRAL part of CIA intervention in Afghanistan in the 1980s was a huge in-crease in the production of opium and heroin. David Musto, a member of the Strategic Council of Drug Abuse, warned therethe administration that the mujahideen inwere heavily involved in drug production. The “I told the Council that we were going into Afghanistan to support the opium growers in their rebellion against the Soviets.”1 But Musto’s warnings were deliberately ignored. According to Alexander Cockburn and Jeffrey St. Clair: trade

The DEA [Drug Enforcement Agency] was well aware that the mujahideen rebels were deeply involved in the opium trade. The drug agency’s reports in the 1980s showed that Afghan rebel incursions from their Pakistan bases into Soviet-held posi- tions were “determined in part by opium planting and harvest seasons.” The numbers were stark and forbidding.
Afghan opium production tripled between 1979 and 1982. There was evidence that by 1981 the Afghan heroin producers had captured 60 percent of the heroin market in Western Europe and the United States (these are UN and DEA figures).2

Trucks and mules supplied by the CIA to transport arms into Afghanistan were used on the way out to bring opium to heroin laboratories along the Afghan-Pakistan border.3 U.S. officials turned a blind eye toward what was going on:

The DEA had evidence of over forty heroin syndicates operating in Pakistan in the mid-1980s during the Afghan war, and there was evidence of more than 200 heroin labs operating in northwest Pakistan. Even though Islamabad houses one of the largest DEA offices in Asia, no action was ever taken by the DEA agents against any of these operations. An Interpol officer told the journalist Lawrence Lif- schultz
, “It is very strange that the Americans, with the size of their resources, and political power they possess in Pakistan, have failed to break a single case. The explanation cannot be found in a lack of adequate police work. They had some excellent men working in Pakistan.” But working in the same offices as those DEA agents were five CIA officers who, so one of the DEA agents later told the Washington Post, ordered them to pull back their operations in Afghanistan and Pakistan for the duration of the war. 4

In 1993, a DEA official quoted in the Los Angeles Times, described Afghanistan as the new Colombia of the drug world,5 and
by 1994, Afghanistan had surpassed Burma as the world’s number one supplier of raw opium.6 According to some estimates, it now accounts for 75 percent of world production.7

Contras Thwarted By Disputes, Reports Say

Contras Thwarted By Disputes, Reports Say
Ocala Star-Banner - Google News Archive - May 19, 1986

FORT LAUDERDALE (AP) — The Contras struggling against the leftist government of Nicaragua are hobbled by Inner disputes that could ruin their political base, a newspaper reported after interviewing past and present freedom fighters and U.S. citizens who have been close to them.

Since the Contras began receiving U.S. aid in 1982, stories about the rebel movement have abounded, with rumors of
CIA agents lugging around stacks of cash in suitcases and cardboard boxes; alleged plots to assassinate foreign leaders, rival rebel leaders and even a U.S. ambassador. The Fort Lauderdale News and Sun- Sentinel reported in its Sunday editions.

Such rumors could derail President Reagan’s stalled $100 million Contra aid proposal pending before Congress. Both houses are sufficiently alarmed by these and other allegations that they have begun separate investigations.

“Over the past few months, my office has engaged in an investigation of alleged drug smuggling, gun running, Neutrality Act violations and other equally, if not more serious, offenses,” said Sen. John Kerry, D-Mass., a Contra aid opponent who is prodding the Senate Foreign Relations Committee to hold hear- mgi next month.

“To date we have received substantial corroboration of these activities, some of which shock the conscience.”

Drug Enforcers Losing Nation's Cocaine War Massive Government

Drug Enforcers Losing Nation's Cocaine War
Massive Government Eradication Efforts Are `Overwhelmed by the Bad Guys,'
Los Angeles Times - ProQuest Archiver - Sep 21, 1986
By Bill Farr; Carol McGraw

The economics of cocaine have changed so radically that it is no longer restricted to the well-to-do. The processing of crystallized cocaine as "rock" or "crack" has so lowered the price—and increased the availability—that junior high school students are pooling their lunch money, "share cropping," as one sheriff's deputy called it, to buy cocaine from schoolyard dealers. In some areas of Los Angeles, the scene resembles a public market, with competing dealers loudly hawking their wares on the sidewalk, telling passers—by that their cocaine is better than the next dealer's. In some areas, armed dealers make house calls in pickup trucks equipped with telephones to take orders.


3) Destroying foreign currencies

Living with Dollarization and the Route to Dedollarization

2. Dollarization Trends in Latin America: Some Stylized Facts

Dollarization of private and public sector assets and liabilities is widespread throughout Latin America. As part of a comprehensive set of structural reforms—some which came in the aftermath of financial crisis and hyperinflationmany Latin American countries liberalized and reformed their financial markets. In the process, strong linkages to the US dollar were developed, frequently through the adoption of strong pegs or quasi-fixed exchange rate arrangements, in a context of increased capital mobility. In many countries, restrictions on holding financial assets abroad, moving assets freely across the border, or issuing liabilities in foreign currency both locally or across the border, were lifted and competition between domestic and foreign currencies increased. In many cases this led to the dollarization of deposits and loans in the domestic financial system, to significant holdings of financial assets abroad, and in general to the issuance of foreign-denominated liabilities of the private and public sectors.


Philadelphia Inquirer - NewsBank - Feb 29, 1988

After the Soviet Union invaded Afghanistan,
the CIA responded by making money. Counterfeit Afghan currency. The intelligence agency also made weapons. Counterfeit Soviet weapons. The bogus money and copied weapons became part of a vast cache filled by the CIA's global gun-running operation for the Afghan resistance. Over the last eight years, the CIA's efforts for the Afghan rebels grew to become the biggest covert operation in the agency's history ...

Fake-Money Flood Is Aimed At Crippling Iraq's Economy

May 27, 1992
Fake-Money Flood Is Aimed At Crippling Iraq's Economy

AMMAN, Jordan, May 24— Iraq's economy is the target of an American-led destabilization campaign to pour vast amounts of counterfeit currency into the country, Arab and Western officials here say.

The fake dinar notes are being smuggled across the Jordanian, Saudi, Turkish and Iranian borders in an effort to undermine the Iraqi economy, said the officials here who closely monitor the situation inside Iraq. Those officials said counterfeit dollars are being smuggled into Iraq in smaller quantities to further confound the banking system. The officials, who insisted on not being identified, said the countries behind the separate counterfeiting operations included Western nations, Saudi Arabia, Iran and Israel.

The fake currency is openly discussed in the press and by the people in Iraq. The counterfeiting problem has become serious enough to be loudly denounced by the Government, which is taking measures to curb it, including instituting life sentences for cooperating in circulating counterfeit dollars or dinars and death sentences for those who smuggle them into the country.

Efforts in High Gear

The fake currency has contributed to Iraq's severe inflation problem, which is aggravated by the fact that the Iraqi Government is printing money at uncontrolled speed to pay inflated salaries and cover the costs of reconstruction.

Over the last few months,
the destabilization efforts seem to have shifted into high gear, officials here say, particularly after the United States was reported in February to have authorized full-fledged covert operations against Iraq.

Counterfeit money was dropped by United States helicopters in the southern marshland areas, in Mandali and in al-Tib in the Maysan governorate, said the letter from the Iraqi Foreign Minister, Ahmad Hussein.

The letter, reported by the Iraqi press agency and reprinted in Iraqi newspapers, said
counterfeit money was entering the country through the Turkish and Jordanian borders as well.

Stiff Punishment Imposed

A Saudi official, who insisted on not being identified, concurred with the reports, saying that
"all borders are being used."

Similarly, a senior Jordanian official agreed with the report, saying
Jordan "does not approve of it, but we can do little to stop it".

Contra War Fuels `Crazy' Nicaraguan Inflation

Contra War Fuels `Crazy' Nicaraguan Inflation
Los Angeles Times - Sep 20, 1987

In a July speech, [Daniel Ortega] said
U.S. "aggression" has cost Nicaragua $2.8 billion since 1980. His calculation included direct damages and production losses caused by the war as well as favorable trade opportunities and dollar credits cut off by the 2-year-old U.S. embargo.

Once every few months, they get $100 or so from one of [Patricia Chavez]'s brothers in the United States. And every payday, Chavez takes black-market jeans, cosmetics, shoes and purses to the office to sell to co-workers in her typing pool. This earns her an extra 200,000 cordobas a month,
an income that rises faster than her wages.

Briefing on Brazil's Economic Crisis
by Satya Gabriel
January 14, 1999, 4 p.m. (e.s.t.)

The widespread devaluations of currencies against the U.S. dollar has acted as a virus in the global economy since the Mexican peso devaluation at the end of 1994 (and, perhaps, since the Chinese devaluation earlier in that same year). Particularly in many less industrialized nations, wealth has vanished overnight. Holders of U.S. dollars have found themselves in increasingly privileged positions, able to gobble up cheap assets from Mexico to Thailand. The virus has now clearly taken hold of Brazil.

The World: Was the U.S. Involved? - TIME

The World: Was the U.S. Involved?
TIME - Monday, October 01, 1973

The U.S. has a long and mostly inglorious history of meddling in the internal affairs of Latin American nations. Thus it came as no surprise to Washington that the Chilean junta's overthrow of President Salvador Allende sparked a flurry of angry charges that either the CIA or the White House had somehow engineered the coup. At a special meeting of the United Nations Security Council called by Cuba to protest attacks by Chilean troops on its embassy in Santiago during the coup, Cuban Ambassador Ricardo Alarcón y Quesada charged: "The trail of blood spilled in Chile leads directly to the dark dens of the Central Intelligence Agency and the Pentagon."

In Mexico,
former Chilean Ambassador Hugo Vigorena Ramírez, a career diplomat who resigned his post in Mexico City after the coup, claimed to have seen documents outlining what he called the "CIA's war against Allende." The alleged plan, code-named Centaur, was said to involve economic and psychological subversion of the Allende government, including such dirty tricks as INTRODUCING COUNTERFEIT MONEY and upsetting the rhythm of crops. "The CIA plan prepared for the coup," insisted Vigorena. "It was a systematic campaign of torpedoing the government."

Vigorena's charges seemed to be bolstered by
Washington's lack of concern at Allende's fall. President Nixon sent no message of condolence to Allende's widow—a customary gesture on the death of an elected head of state. Nor did the Administration lament the demise of the democratically elected government in Chile. "We will have to work with the generals," said a State Department spokesman, "and it makes no sense to issue some moral statement about democracy." On top of all that, world suspicions were aroused by the department's admissions that it had known beforehand about rumors of a possible coup—not that this would have been much of a surprise to anyone, presumably including Allende.

Charges have been made, however, that Washington played a large and possibly crucial role in Chile's economic difficulties. Pressure from Washington on such institutions as the World Bank seriously aggravated Chile's fiscal crises. As Latin American Experts James F. Petras and Robert LaPorte Jr. noted in Foreign Policy magazine, "Dominican style 'gunboat diplomacy' has been replaced by 'credit diplomacy.' "

Eric de Carbonnel

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Eric, good article about our Fascist Government; but you like they are missing what is really happening. We no longer trust our own Government, as it operates above the law by changing the laws in the middle of the night ( a la Paulson), turns off "free market" computers to stave off crashes (a la flash crash), and simply ignores disclosure, environmental and safety laws as desired (a la BP). It is obvious to me that many have simply taken their savings out of the system and put it in a vault or safety deposit box. What are they missing? One tenth of a per cent interest. So watch out, velocity is the key to inflation, not volume. When they scare us with monetary inflation we will spend it very quickly and asset inflation will zoom. The time to spend will be when the insiders quit buying the bonds and the bond market crashed. Then we can call it the Weimar II.
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Eric, good article about our Fascist Government; but you like they are missing what is really happening. We no longer trust our own Government, as it operates above the law by changing the laws in the middle of the night ( a la Paulson), turns off "free  Read more
John R. - 8/24/2010 at 3:45 PM GMT
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