the Exchange Stabilization Fund
by Catherine Austin Fitts  /   May 3, 2010

“…One of my favorite money laundering stories is told by Christopher Simpson, in his marvelous book Blowback, regarding one of the first Exchange Stabilization Fund slush fund operations after WWII. The ESF is a fund run by the Federal Reserve Bank of New York for the Secretary of the Treasury.  According to Simpson, this first operation, run from offices of Allen and John Foster Dulles at Sullivan & Cromwell in New York, used monies seized by the Nazis from Jewish victims and then seized from the Nazis by the Allies (and not returned to the victims), to rig the Italian elections for the conservatives at the request of the Vatican…”

Sullivan – Cromwell, the Dulles brothers, Nazi loot; a Secret Slush Fund and The Roll of The New York Federal Reserve Bank.

Joseph P. Farrell on Funding Black-Budget Exotic Technology and Breakaway Civilization
by amunaor  /   April 24, 2014

“Following WWII, having laundered some of the Nazi money seized from the Jews, that’s come back from Switzerland, was placed into The ‘Exchange Stabilization Fund’, which in the United States is the mother of all slush funds. The Exchange Stabilization Fund is run by the New York Fed, as agent for the Secretary of Treasury, it doesn’t go through any governmental bureaucracy, it goes directly to the Secretary of the Treasury. Financial power, Sullivan – Cromwell had/has a very big hand in this. The newly formed CIA, having received a request from the Vatican to rig the Italian elections, dove into this secret slush fund to fulfill the Vatican’s request.

The history of America is the story of how it continues to replenish this secret slush fund of WWII Nazi loot. The last round of bailouts, they got it all. While deals were being struck between Allen Dulles and General Reinhardt Gehlen, there was something else going on towards the tail end of WWII within American intelligence and that is what was to become the institutionalization of covert operations after the war, which was a nexus of American covert ops and this hold over Nazi organization, resulting in the rise of the current Fascist atmosphere we now find ourselves in. Towards the end of the war the Nazi’s were driving the division of the spoils, with the topflight, cream of the crop were ferreted into US institutional hierarchies, commandeering key segments the Military Industrial Complex, setting up a balance of tension between east and west….a tension utilized by the Nazi’s to exploit an arms buildup in the west.”

“This is a very interesting video series by Eric deCarbonnel of Market Skeptics about the Exchange Stabilization Fund. It is a look into the secret slush fund that operates trillions of dollars of with no oversight.

by Tyler Durden / 01/01/2012

“When it comes to the fabled President’s Working Group on Capital Markets, also known as the Plunge Protection Team, the myths about the subject are certainly far greater than any underlying reality. To be sure, vast amounts of popular folkflore has been expounded into the public arena, with most of it being shot down simply due to it assuming conspiracy theories of such vast scale that the human mind is unable to grasp the complexity, and ultimately the inverse Gordian Knot makes an appearance with the claim that vast conspiracies are largely untenable simply because it is impossible to keep a secret from so many people for so long. Yet what if the secret is not a secret at all but is fully out in the open, and is only a matter of interpretation, and contextualizing? Why just 3 years ago it would appear preposterous to allege the capital markets are a ponzi and that the Fed does everything in its power to keep stocks higher. Well, what a difference three years make: now the Chairman himself in a Washington Post OpEd has admitted that the sole gauge of Fed success is the loftiness of the Russell 2000, neither unemployment nor inflation really matter now that the Fed’s third mandate has been fully whipped out. Furthermore, Keynesian economics, and the entire top echelon of the educational system have also been accurately represented as a paradigm which merely perpetuates the status quo as the alternative is the realization that the whole system is a house of cards.

As for the global capital markets being nothing short of a ponzi, we merely point you to the general direction of Europe, the ECB and the continent’s banks, where the monetary interplay is nothing short of the world’s biggest pyramid scheme. Yet the PPT, or whatever it is informally called, does not exist? Consider further that only recently did it become known that the former SecTres Hank Paulson himself was exposed as presenting material non-public information to a bevy of Goldman arb desk diaspora hedge funds, headed by with none other than the head of the President’s Working Group on Capital Markets Asset Managers committee David Mindich. So, if contrary to all the evidence that there is some vast underlying pattern, if not a conspiracy per se, one were to take the leap of faith and take the next step, where would one end up? Well, most likely looking at the Exchange Stabilization Fund, or ESF, which Eric deCarbonnel has spent so much time trying to unmask. Is it possible that the ESF, located conveniently at the nexus between US monetary policy, foreign policy and last but not least, a promoter of the interests of the US military-industrial complex, is precisely the  organization that so many have been trying to expose for years? Watch and decide for yourself.

As a reminder deCarbonnel is not some tinfoil hat clad sub-basement dweller – it was his input that led us to the realization that in attempting to control the Treasury curve, the Fed will, and already has, experiment with selling puts on various Treasury maturities in an attempt to generate reflexivity whereby the synthetic determines the value of the underlying (something ETFs are now doing so very well), the value naturally always being higher, higher, higher irrelevant of what underlying demand there is (and as we showed last week, with a record amount of international outflows in the past month, the demand, at least from abroad, is just not there). So what does Eric assert?

Quite a bit as it turns out. “It is impossible to understand the world today without knowing what the ESF is and what it has been doing. Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA’s black budget, and is the architect of the world’s monetary system (IMF, World Bank, etc). ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness). It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, and worse…

So while nursing that New Year’s Day hangover, take some time and watch this series of videos. If nothing else, even if they are merely the extended ramblings of some person that one can quickly dismiss as just the latest fringe lunatic, they do present an alternative reality to what so many may be accustomed to. After all at the end of the day imagination, the ability to think outside the box, and to see patterns where previously there were none, is the greatest threat to the falling and declining status quo by far.”

Husband of Mary (Polly) Knowles, a dedicated arts philanthropist and legendary Washington hostess.

The Exchange Stabilization Fund Role In Financing CIA Covert Operations
by Eric deCarbonnel  /  September 4, 2010

The Presidential Slush Fund: The inside story of how the fund established to help stabilize the dollar, supplemented by enemy assets during World War II, financed the first U.S. covert operations after the Cold War.

Over the centuries, as every graduate student of history knows, presidents and potentates have had their slush funds to carry out discreet activities of statecraft that they would prefer not to explain in public. In the United States, the practice started with George Washington himself, and for his purposes he seemed to manage quite well with disbursements in the hundreds of dollars. By the middle of the twentieth century, with the United States emerging as a global power and heading into a cold war with international communism, the covert doings of ages past were growing into an art form of intelligence — and a major arm of foreign policy. On June 18, 1948, the National Security Council of the Truman administration secretly approved its Directive 10/2, a clandestine program for infiltration, sabotage, and subversion of the newly imposed communist regimes of Eastern Europe.

Since both the new Central Intelligence Agency, established barely a year before, and the Joint Chiefs of Staff were skittish about entering into the uncharted waters of covert action on such a scale, Truman’s NSC created a new government agency to do the job that the top policymakers felt had to be done if the world was to be saved from communism. The new creation was called the Office of Policy Coordination (OPC), an opaque label for the command headquarters running operations for which, the NSC mandated, the United States government could “plausibly disclaim any responsibility.” (This was the origin of the doctrine, later infamous as its cynicism became all too evident, of “plausible deniability.”) Recruitment of agents to parachute behind the Iron Curtain, their training, and logistical support became the secret mission assigned to a creative and energetic New York lawyer and World War II intelligence veteran named Frank G. Wisner.

Wisner’s obvious first task, before any of the skullduggery could be mounted, was to scrounge up the cash to pay for it all. For this, the NSC blithely had made no provision. And it had to be cash on trust; the purposes for which it would be disbursed could not be openly described. “The heart and soul of covert operations” Wisner learned from his savvy legal counsel, Lawrence Houston, is “provision of unvouchered funds, and the inviolability of such funds from outside inspection.” Thus was the notion of a slush fund expressed in bureaucratic parlance. Traditionally, appropriations for secret operations are buried on innocuous lines of other agencies’ budgets as submitted to Congress. The semblance of legal accountability is preserved, without wide disclosure of exactly how these funds are to be used. In 1948, with Truman and his NSC pressing him for immediate action, Wisner could not wait for a congressional appropriation procedure, however circumspect.

The State and Defense departments, for all their endorsement of Wisner’s mission, were not about to part with any of their own appropriated funds for some nefarious new venture. Wisner cobbled together what his officers called “tenuous understandings” with key members of Congress, the General Accounting Office, and other government departments to locate obscure accounts that his agency could draw upon without having to answer for it in public.

He found his first tempting target in an extraordinary and (at the time) little-noted account accumulating out of sight in the Department of the Treasury known as the Exchange Stabilization Fund (ESF). Established in 1934, this ESF had provided the then extravagant fund of $2 billion in working capital before World War II, for short-term currency trading to stabilize the value of the dollar in world trade. Then, in 1941, War Powers legislation designated this convenient accounting device as the holding pool for captured enemy [Nazi stolen] assets and other monies being smuggled out of Europe.

After the war, the bulk of the ESF was transferred to the new International Monetary Fund as America’s capital contribution. But a relatively small portion, $200 million, was retained in the Treasury. As Congress was much later told, this would serve to help in the “reconstruction and rehabilitation of war-torn countries.” Exactly how it would so help was not specified, nor indeed, under the founding mandate, did it have to be. One special feature about the ESF was particularly enticing to Wisner and his financial officers, and their counterparts in Truman’s White House, as they scoped out possibilities for seed money to get the OPC’s clandestine operations up and running. From its origin, the ESF had been endowed with a provision which made financial sense at the time, but was also well suited to the funding of secret operations, never contemplated when the measure was enacted.

Currency trading and hedging tactics required “a high degree of flexibility and discretion,” Congress noted in setting up the fund. “Operations for the account of the ESF are likely to be highly sensitive, requiring a substantial degree of confidentiality.” Thus, Congress placed the fund “under the exclusive control of the Secretary of the Treasury, with the approval of the President, whose decisions shall be final and not be subject to review by any other official.” For Wisner and his OPC, this extravagant freedom from scrutiny, enshrined in law, was nothing short of ideal. A reported $10 million was quickly signed over to the OPC; no outside accounting was required or made. Lest this old device ever be challenged, Wisner sought the specific concurrence of the NSC after his first year of operations that financial measures could “jolt” the communist bloc, with repercussions “bound to be felt in the political, military and cultural spheres.” Use of the ESF was thus brought within the OPC purview. Since Congress had already stated that ESF disbursals were not proper subjects for scrutiny, neither the Senate nor the House of Representatives bothered to hold any hearings in the formative years of the Cold War on the confidential accounts of the Exchange Stabilization Fund. It was the slush fund established to help stabilize the dollar in world trade, then supplemented by enemy assets during World War II, that started the United States off on the first covert operations of the cold war.

My reaction: When you realize that the Exchange Stabilization Fund runs the CIA’ s black budget, a lot of things start to make sense. Some of the big implications of this:
1) Without covert financing provided through the ESF, there is no covert wing of the CIA.
2) The CIA’ s worst secrets are buried in the ESF, and the fate of covert wing of CIA and ESF are therefore linked
3) By arranging covert funding and keeping its secrets, the ESF exerts enormous influence on the CIA.
4) The resources of the CIA, such as the propaganda networks set up during the cold war, are therefore at the disposal of the ESF.
Conclusion: The Exchange Stabilization Fund, operating through New York Fed with the CIA at its command, is the most powerful institution in the world.

“As Evan Thomas reported in The Very Best Men, the OPC’s charter gave it responsibility for “propaganda, economic warfare; preventative direct action, including sabotage, antisabotage, demolition and evacuation measures; subversion against hostile states, including assistance to underground resistance groups, and support of indigenous anti-Communist elements in threatened countries of the free world.” The U.S. government would “disclaim any responsibility” of the OPC’s missions.”

Retrobituaries: Frank Wisner, Father of American Covert Operations
by David W Brown  /   February 27, 2013

When the Central Intelligence Agency was established in 1947, its founding officers had to figure out how to build a global network of spies, run secret missions, overthrow governments, and recruit agents. It’s not like other countries were lining up to teach the United States the finer points of espionage, so those first CIA men had to be really smart or slightly crazy. Frank Wisner, the father of American covert operations, was both. Wisner was a genteel lawyer from Mississippi who grew bored with office life and joined the Navy. After Pearl Harbor, he found himself in the Office of Strategic Services, where he spied behind enemy lines, eventually becoming head of OSS operations in southeastern Europe. When the war ended, the OSS was shut down and Wisner returned to the soul-draining doldrums of office life.

It wasn’t long before the United States recognized the obvious mistake it had made in shutting down its intelligence capabilities. Worse yet, the few offices still around with any sort of proficiency in covert action were just too accountable. The State Department didn’t want anything to do with these precursors to the CIA, fearing that some blown secret mission might cripple diplomacy. The Defense Department preferred to save its dirty tricks for times of war. The FBI hated them because they didn’t want competition. When Truman signed the CIA into existence, the new agency found a similar reception. Would the National Security Council really want to explain to the press why some official had to be bribed or some foreign election had to be subverted? Frank Wisner, who was part of the small network of OSS hands eager to get back in the spy game, had a solution to the problem. He wanted to start yet another secret agency—this one accountable to virtually no one.

There’s a general rule in secret operations: If it has a bland name, it’s important. That’s why when you read about something called the Mission Support Activity, your eyes glaze over before you realize that you’re reading about the Joint Special Operations Command’s special mission unit for intelligence commandos. The Defense Mobilization Support Planning Activity? They plan for apocalyptic scenarios and continuity of government. The Combat Applications Group does not write database software for infantry supply clerks; it is better known as Delta Force. Frank Wisner’s new agency was called the Office of Policy Coordination, which should tell you an awful lot about its business. As Evan Thomas reported in The Very Best Men, the OPC’s charter gave it responsibility for “propaganda, economic warfare; preventative direct action, including sabotage, antisabotage, demolition and evacuation measures; subversion against hostile states, including assistance to underground resistance groups, and support of indigenous anti-Communist elements in threatened countries of the free world.” The U.S. government would “disclaim any responsibility” of the OPC’s missions.

Wisner’s office would be attached to the CIA only on paper, and strictly for funding and quarters. It would nominally report to a senior State Department official. The OPC’s mission was to take on the Soviet Union, and right from the start, the Pentagon—gearing up for World War III—wanted everything from insurgencies in Western Europe to sabotaging the entire Soviet air force, and it wanted them now. The OPC had a staff of 10, so this wasn’t likely to happen. Wisner focused his efforts on psychological warfare, most notably through Operation Mockingbird, wherein the OPC sought to influence foreign media—and who better to plant propaganda than the press itself? According to Deborah Davis in Katharine the Great, “By the early 1950s, Wisner ‘owned’ respected members of the New York Times, Newsweek, CBS and other communications vehicles.” The program successfully inserted countless pro-American news stories into coverage while suppressing reporting that might be embarrassing to the country. The program lasted through 1971. (Mockingbird wasn’t the OPC’s only psychological operation, and Wisner’s office had a great sense of humor. As previously described at Mental Floss, one of their more brilliant, but alas, never executed, operations involved airdropping enormous condoms labeled “medium” behind the Iron Curtain, as a way of demonstrating the anatomical superiority of the American fighting man.)

To confront Soviet aggression, Wisner eventually organized a secret army in Europe. Five thousand refugees volunteered to be part of a “post-nuclear guerrilla force,” which was just what it sounds like—Fallout: New Stalingrad. He orchestrated a massive spy ring, many of whose members were tasked with parachuting into Soviet territory and gathering intelligence. For months, waves of airborne spies in mission after mission landed, and each was killed straightaway. “The only thing they’re proving is the law of gravity,” said one CIA officer. It was an exhausting, stressful, and almost impossible job. To give some idea of how aggressively Wisner worked to build his spy network and subvert the Soviet Union, when the OPC was finally and officially absorbed into the CIA as the Directorate of Plans, it dwarfed the rest of the Agency, and consumed 75 percent of the CIA budget. Wisner was placed in charge of this new branch, and was beginning to find some real successes. On his watch, the CIA overthrew the governments of Iran and Guatemala—the only two such successes in the Agency’s history.

It’s worth noting that Wisner was the Christopher Hitchens of his day—a relentless charmer and bon vivant who threw all the best parties with the most interesting, powerful, and influential guests. This had the effect of keeping the money flowing while allowing Wisner to influence and backchannel policy decisions. Recalled one CIA officer, “I would be at a meeting where it was obvious that the decision had been made the night before at a dinner party.” Still, the job’s toll on Wisner was becoming apparent. He worked tirelessly during the Hungarian Uprising in 1956 to roll back Soviet expansion, but was largely ignored for fear of triggering a nuclear war. The results were horrifying—2500 Hungarians were killed, 200,000 were forced to flee their country, and tens of thousands were arrested and imprisoned. “All these people are getting killed,” Wisner later said, “and we weren’t doing anything, we were ignoring it.”

He didn’t take it well. While it’s reductive to say the aftermath drove Wisner mad, it’s fair to say that it didn’t help matters. He eventually had a breakdown, was hospitalized, and received an aggressive course of electroshock therapy. Afterward, he obviously wasn’t equipped to go back to the Directorate of Plans, so he was made the station chief in London. He retired in 1963, and committed suicide with a shotgun in 1965. Desmond FitzGerald, a deputy director of the CIA, remembered him as a “watchmaker in Detroit” on whose shoulders it fell “far more than any other man, to build our defenses from the ground up and with all speed.”

TUNNELS between the VAULTS
by Tyler Durden on 03/02/2013

“…as a result of our cursory examination, we have learned that the world’s largest private, and commercial, gold vault, that belonging once upon a time to Chase Manhattan, and now to JPMorgan Chase, is located, right across the street, and at the same level underground, resting just on top of the Manhattan bedrock, as the vault belonging to the New York Federal Reserve. At this point we would hate to be self-referential, and point out what one of our own commentators noted on the topic of the Fed’s vault a year ago, namely that: “Chase Plaza (now the Property of JPM) is linked to the facility via tunnel… I have seen it. The elevators on the Chase side are incredible. They could lift a tank. … but we won’t, and instead we will let readers make up their own mind why the thousands of tons of sovereign gold in the possession of the New York Fed, have to be literally inches across, if not directly connected, to the largest private gold vault in the world.