Feb. 8, 2007 - Freedomain Radio - Stefan Molyneux
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| Good afternoon, everybody. | |
| Hope you're doing well, Seth. It is February the 8th, 2006, and we are going to have a little stroll and a chat at lunchtime here. | |
| This article was pointed out by... | |
| I've heard of this before, but it's well worth having a little bit more of a chat about it. | |
| This is an article that a long-time listener has pointed out. | |
| This is from the Guardian in the United Kingdom. | |
| This is an article about... | |
| Well, I'll just read bits of it, and we'll talk about it in a little bit. | |
| The U.S. flew nearly $12 billion in shrink-wrapped $100 bills into Iraq, then distributed the cash with no proper control over who was receiving it and how it was being spent. | |
| The staggering scale of the biggest transfer of cash in the history of the Federal Reserve has been graphically laid bare by a U.S. congressional committee. | |
| In the year after the invasion of Iraq in 2003, nearly 281 million notes weighing 363 tons were sent from New York to Baghdad for disbursement to Iraqi ministries and U.S. contractors. | |
| Using C-130 planes, the deliveries took place once or twice a month with the biggest of $2 billion, 401,600,000 on June 22, 2004, six days before the handover. | |
| Details of the shipments have emerged It's a rhetorical question which he should know the answer to. | |
| The memorandum deals with the casual manner in which the U.S.-led coalition professional authority dispersed the money, which came from Iraqi oil sales surplus funds from the U.N. oil food program and seized Iraqi assets, which I would doubt highly. | |
| How do you convert all of that into U.S. dollars? | |
| Well, you don't. | |
| Quote, One CPA official described an environment awash in $100 bills, the memorandum says. | |
| One contractor received a $2 million payment in a duffel bag stuffed with shrink-wrapped bundles of currency. | |
| Auditors discovered that the key to a vault was kept in an unsecured backpack. | |
| They also found that $774,300 in cash had been stolen from one division's vault. | |
| Cash payments were made from the back of a pickup truck. | |
| Cash was stored in unguarded trucks in Iraqi ministry offices. | |
| One official was given $6.75 million in cash and was ordered to spend it in one week before the interim Iraqi government took control of Iraqi funds. | |
| The minutes from a May 2004 CPA meeting reveal, quote, a single disbursement of 500 million in security funding labeled merely TBD, meaning to be determined. | |
| The memorandum concludes, many of the funds appear to have been lost to corruption and waste. | |
| Thousands of, quote, ghost employees were receiving paychecks from Iraqi ministries under the CPA's control. | |
| Some of the funds could have enriched both criminals and insurgents fighting the United States. | |
| Gee, do you think? That would be unprecedented. | |
| According to Stuart Bowen, the Special Inspector General for Iraq Reconstruction, the $8.8 billion funds to Iraqi ministries were dispersed, quote, without assurance the monies were being properly used and accounted for. | |
| But according to the memorandum, quote, he now believes that the lack of accountability and transparency extended to the entire $20 billion expended by the CPA. To oversee the expenditure, the CPA was supposed to appoint an independent certified public accounting firm. | |
| Quote, instead, the CPA hired an obscure consulting firm called North Star Consultancy. | |
| The firm was so small that it reportedly operates out of a private home in San Diego. | |
| That's great. Someone's friend. | |
| Mr. Bowen found that the company, quote, did not perform a review of internal controls as required by the contract. | |
| Gee, I can't imagine that would be the case. | |
| However, evidence before the committee suggests that senior American officials were unconcerned about the situation because the billions were not U.S. taxpayers' money. | |
| Paul Bremer, the head of the CPA, reminded the committee that, quote, The subject of today's hearing is the CPA's use and accounting for funds belonging to the Iraqi people held in the so-called Development Fund for Iraq. | |
| These are not appropriated American funds. | |
| They are Iraqi funds. I believe the CPA discharged his responsibility to manage these Iraqi funds on behalf of the Iraqi people. | |
| Of course, if he says it, it must be true. | |
| Bremmer's financial advisor, retired Admiral David Oliver, is even more direct. | |
| The memorandum quotes an interview with the BBC World Service. | |
| Asked what had happened to the 8.8 billion, he replied, I have no idea. | |
| I can't tell you whether or not the money went to the right things or didn't. | |
| Nor do I actually think it's important. | |
| Question. But the fact is, billions of dollars have disappeared without a trace. | |
| Oliver. Of their money. | |
| Billions of dollars of their money. | |
| Yeah, I understand. I'm saying, what difference does it make? | |
| Mr. Bremer, whose disbanding of the Iraqi armed forces and debathification program has been blamed as contributing to the present chaos, told the committee, quote, I acknowledge that I made mistakes, and that with the benefit of hindsight, I would have made some decisions differently. | |
| Our top priority was to get the economy moving again. | |
| The first step was to get money into the hands of the Iraqi people as quickly as possible. | |
| Millions of civil service families had not received salaries or pensions for months, and there was no effective banking system. | |
| Quote, it was not a perfect solution, he said. | |
| Delay might well have exacerbated the nascent insurgency and thereby increased the danger to Americans. | |
| Absolutely wonderful stuff. | |
| Just wonderful, delicious, fabulous stuff. | |
| So, this is all very disingenuous stuff, right? | |
| And it's exactly what you would expect. | |
| People working for the state who are, you know, being asked annoying questions by reporters and who have to come up with some sort of insane justification just to get people to shut up, right? | |
| I mean, the purpose of the state is not to answer any questions, but just to get people to go on to some other topic by providing enough nonsense answers that people get bored and it becomes a non-story and moves on. | |
| And this kind of dance is very common, of course, in Can you imagine being a project manager, being asked by somebody to give an accounting of your project, and then telling them that you just have no idea, that you're just hurling buckets and bags and sacks and vaults of cash around in the hopes that something positive is going to occur, and that you would not get any further, and so on. | |
| Or if you were managing the dissolution of a company, And you just spent everything you could get your hands on or handed it around or whatever, that this would be an acceptable answer to your boss. | |
| I don't recommend giving it a try in the private sector. | |
| Unless, of course, you're dealing with the government, which is only the quasi-private sector. | |
| But there's such an extraordinary amount, naturally, of economic ignorance in these kinds of non-answers that it really is something to behold. | |
| It's not economic ignorance, I think, or at least I believe, on the part of the people who are sort of telling the lies, but it is economic ignorance that they're relying on the part of the general population, which We'll swallow such nonsense as, oh, oh, oh, it wasn't my money? | |
| Oh, it wasn't my money. | |
| Well, isn't that great? Well, this is all the purest nonsense, of course. | |
| If you're an American, it is your money. | |
| And I'll tell you why. | |
| The hundreds of tens of billions of dollars that were shipped All of this money that was shipped off to Iraq was shipped off to Iraq in US currency. | |
| It wasn't the Iraq currency or whatever the hell they would use over there after the fall of Saddam Hussein. | |
| It's the US currency. | |
| So what is the magic alchemy We're transforming Iraqi assets into US currency. | |
| What is the magic by which this can be achieved? | |
| Well, there is no magic by which it can be achieved. | |
| When Iraqi assets are seized, or some sort of revenue is seized, and what comes out of that is US dollars, then The taxpayer is being ripped off, really basically in the form of two major ways. | |
| The first is that the taxpayer is being ripped off because the resources and the goods and the services and the people and all this kind of stuff that would otherwise have accrued in some manner to the US economy is instead devoted over to Iraq, | |
| right? If you have a large amount of labor and materials going over to Iraq, and we can count the soldiers, but we're just talking in this case all of these other resources, then said resources are not available to the United States economy. | |
| A couple of hundred thousand people over in Iraq, a couple of million people in the armed services as a whole, these are all not available to the productive economy, the private economy. | |
| Which drives up the price of goods and services and labor and materials and all this kind of stuff. | |
| If you take half of the car production in the world and blow it up, I'm guessing that the price of the remaining cars would go up by approximately double. | |
| Would go up by approximately 100%. | |
| So... | |
| That redirection of resources to Iraq as part of this war is something that occurs before even the money goes out. | |
| And after the money goes out, what happens? | |
| Well, as you well know, as we've talked about before in the boomerang of currency trading, You print off enormous numbers of US dollars and you then ship them overseas. | |
| What happens? Well, you create a massive gravity vortex that hoovers out US resources from the country, from the US, and goes somewhere overseas, by and large. | |
| Because when you take a hundred dollar bill and give it to a Frenchman, he is going to have to use it at some point, in some manner, To exchange something, this $100 bill, for something that is produced by a US company, | |
| because the US dollar is legal currency, sorry, only in the US. So, no matter where you give this money around the world, at some point it's going to have to come back and hoover up a large amount of, or an equivalent amount of the dollar value of the currency you're handing out of US goods and services. | |
| You can't spend, except at the black market, you can't spend a U.S. dollar in France or Botswana or Iraq. | |
| At some point it has to be handed over to a U.S. company so that it can pay its workers in U.S. dollars and all this kind of stuff. | |
| So, what happens? | |
| Well, you hand out 8 or 10 or 20 billion dollars in Iraq, what happens? | |
| What you're doing is creating a massive vacuum that is going to pull US goods and services in exchange for nothing. | |
| Actually, in exchange for inflation, which we'll get to in a second. | |
| You're just creating this massive vortex, this massive gravity well that hoovers out like a black hole pulling matter off a star that just pulls out goods and services from the United States. | |
| Which, I mean, you might as well just ship Goods over there is exactly the same. | |
| In fact, it would be about the same. | |
| You might as well take American workers and send them over for a quick period of time. | |
| You might as well take American goods and send them straight over to Iraq and just dump them in Iraq. | |
| So, when the U.S. dollars land in Iraq, they eventually have to find purchase in U.S. goods and services. | |
| No real question about that. | |
| And what that does, of course, is it raises the demand, but largely overseas, to U.S. goods and services, which means that it drives the price up in domestic terms. | |
| And, of course, what happens is, this is just another way of printing money, right? | |
| This is inflationary in the extreme. | |
| Just print up all this money, And say, well, you know, we've got some assets, we've got some oil revenue and so on. | |
| But the interesting thing is that this is what people say, but of course this is not what's actually happening. | |
| What's happening is the money is printed and shipped to Iraq. | |
| So saying it's the result of oil revenue and so on doesn't really make any sense. | |
| If you print the money at home on a color printer and then hand it out and somebody from the police force comes along and says, where the hell did you get this money? | |
| And you say, oh, don't worry. | |
| I'm fine. | |
| I'm good. I got the money from my job. | |
| They'd say, well, if you got the money from your job, why is it printed yourself? | |
| Why did you print it yourself if you got the money from your job? | |
| If you were paid by somebody, then shouldn't the notes be a little bit soiled and not necessarily freshly minted and printed and put into shrink-wrapped boxes of near-infinite cashola? | |
| So, of course, the money does not come from sales of Iraqi oil. | |
| It is just a story. | |
| Oh, don't worry, it's not our money. | |
| But why is it US dollars then? | |
| If the provisional authority Let's put a fantasy scenario out and imagine that somehow this money has been generated through or some wealth has been generated through the sales of Iraqi oil to Saudi Arabia. | |
| Let's just say you're bringing ice cubes to the Arctic and you're able to sell oil to Saudi Arabia. | |
| Well, they're going to pay you in Saudi Arabian currency, which you're then going to have to go back and spend in Saudi Arabia at some point or in some manner or trade it with somebody who wants to buy something from Saudi Arabia. | |
| There's just no way that the sale of, unless you make the United States dollar, the official currency of Iraq, and don't allow it to be traded to the Iraq dollar or whatever, don't allow, say, put a special color on them and don't allow them to be traded in the United States, then naturally all that's going to happen is that you're going to sell, sorry, the money's just going to come back to the United States where it can actually buy some Some decent goods and services. | |
| So, if you produce all this oil and sell it to Saudi Arabia, then you're going to be paid in dinar or whatever they use in Saudi Arabia, and that's how the money's going to show up. | |
| If you sell it to the United States, somebody in the United States, then of course, yes, you will be paid in US dollars, but you won't be paid in freshly minted US dollars from the mint. | |
| That definitely won't occur. | |
| So, this is just another example of the economic ignorance and the toll it takes on any sort of reasonable comprehension of how the world actually works. | |
| Sorry, I'm dying for a coffee, so I'm strolling over to coffee time and that's why it's so loud. | |
| I'm not looking around in the back quarters near my office. | |
| So, That's just sort of another example of how ridiculous it is that we anticipate or expect that the freshly minted US dollars are not somehow being spent to the detriment of US taxpayers. | |
| Of course, as these dollars are printed and shipped overseas, they will inevitably, in order to have any value, in order to be tradable at all, they will have to went their way back to the US Ben Hoover up goods and services, which again is inflationary. | |
| More dollars, same amount of services, or, you know, 20% more dollars, 10% more services, 10% inflation. | |
| So, naturally, there's all these inflationary pressures which are occurring, which is going to strike the U.S. economy at some point fairly parachute. | |
| We'll just take a pause here and get the Mac up here. | |
| Alright, I have my caffeine delivery mechanism. | |
| We can continue. Now, let's have a look at the outrage of this gentleman who is claiming to be so appalled by the lack of oversight in the United States prosecution of the war. | |
| Of course, as he puts it, why the sane individual would send crates full of money to a war zone? | |
| Well, a very sane individual, frankly. | |
| A very rational, very sane, very self-interested, and morally corrupt individual. | |
| One can be very rational and still corrupt. | |
| I mean, the corruption is in the axioms, not in the execution. | |
| The supply chain to the Blitzkrieg in the Eastern Front in 1939, when Hitler's forces attacked Poland, that supply chain worked beautifully, and that was really the essence of Blitzkrieg. | |
| Lightning war, as it means in German. | |
| So, you can have some wonderfully rational supply chain allocations and processes that go on, all of which, you know, based on sort of morally corrupt principles, but that's neither here nor there. | |
| You can absolutely and completely have rational behavior within a particular context. | |
| If you want to shoot someone, it's rational to get a gun. | |
| It doesn't mean that it's right, it's just rational. | |
| It's just the premises that alter. | |
| He says, what? | |
| A sane human being would supply, would send all of his stuff to a war zone? | |
| Well, people who want stuff, people who are greedy, those people will be overjoyed to send boxes and crates of money to a war zone. | |
| People who can have free money. | |
| If you have no consequences for your actions, and other people always pay the bills, and massive amounts of financial and material rewards follow particular actions, asking why people would commit those actions is ridiculous. | |
| It's kind of like a joke, right? | |
| I mean, it's a... | |
| It's a moral pantomime that government officials go through, and government will regularly hive off opposing sophists to its core corruption, and have those sophists regularly take over and communicate the outrage of the people, and then everything will coalesce back to its own natural self, right? | |
| It bothers the government about as much as having a mild cold bothers you. | |
| It is not at all surprising that when this news comes out, right, somebody in the government has to take on the role of shocked, appalled, and outraged watchdog, right? | |
| I mean, that's the role that needs to be played. | |
| So that people think that somebody's looking after the till, right? | |
| It's the good cop, bad cop kind of thing, right? | |
| If two of your employees are stealing money from you, and one of them realizes that He's about to be caught. | |
| Then if they want to continue making as much as possible, the other one will pretend to catch him. | |
| Right? I mean, that's sort of the way it goes. | |
| And I'm not going to overstretch the metaphor here because it doesn't work too, too far. | |
| But I think you get the general idea that this thievery, of course, massive thievery is going on. | |
| And it's as soon as the public finds out about it or as soon as the news comes out, Then somebody has to be appointed as the conscience of the people and the man asking the tough questions. | |
| You see all these congressional committees and so on. | |
| Well, to me it's all fairly simple. | |
| Does anybody go to jail? | |
| I mean, words, words, words, right? | |
| Anybody can say anything. Oh, I'm shocked and appalled. | |
| Oh, it's egregious behavior. It's terrible. | |
| It's bad. Blah, blah, blah. Well, does anybody have to repay anything? | |
| Or does anybody go to jail? | |
| That's a... It's really all it comes down to. | |
| I mean, the rest of it is just bloody bloody woody woody, which I know a little bit about. | |
| So, I don't think that it's reasonable or rational to imagine that there's any kind of particular or authentic outrage on the part of this, right? | |
| I mean, for sort of quote crimes that even if we accept they weren't provoked through state regulation, quote Carmen Enron for crimes which don't include war, And which are of much smaller magnitude than the crimes of $20 billion here, those people are indicted, go to jail. | |
| That's how the government deals with corrupt organizations when it's not protecting itself, right? | |
| So, the government certainly has within itself and within its mandate the power to prosecute those who Have done bad things with other people's money, let's say. | |
| Even if that money was more voluntarily handed over, then it's the case when you just print up a bunch of money. | |
| So, the fact that this guy is expressing all this outrage and how terrible it is and this oversight, I mean, this is a morality play. | |
| It's nonsense. It's like when the mayor comes in in the cop movies, right? | |
| The mayor comes in. The mayor's all over me. | |
| The mayor comes in and chews someone out, and then that guy chews out his subordinate, but as he turns around and chews out his subordinate, he just gives a wink, right? | |
| Which is, sorry, I have to go through this silly ritual, but the mayor is here, and I have to go through this rigmarole of pretending to chastise you, though I'm totally behind what you're doing, but this is kind of the public role. | |
| Wink, wink, wink, that I have to take on. | |
| And, uh... It's all the purest fantasy. | |
| It is a species of sickened and sickening theater. | |
| So, that I think is particularly funny, that the problem that is perceived in this area is this 8 billion or 20 billion or the CPA budget or all of this money. | |
| The idea that this is the problem is quite funny, right? | |
| After you cut off somebody's head, you think that the problem is that the blood spurts, right? | |
| Well, when you cut off somebody's head, assuming they're alive, the blood is going to spurt. | |
| And saying, well, the blood spurted in a better direction than it would have otherwise is sort of missing the basic point. | |
| And, of course, Brenner, a complete moral lunatic, he talks about how, well, you know, this money went to the Iraqi people and they got to live and it could have made the insurgency worse and this and that and the other. | |
| Well, sure. Hey, why not? | |
| It could be. I mean, I'm not sure how you attest or verify any of these suppositions. | |
| But it's just a story. | |
| And government is all about telling bedtime stories to calm people's panic and rational panic at the growing corruption and insidiousness and invidiousness of government. | |
| You just tell bedtime stories. | |
| Oh, you know, well... If we hadn't handed out this money, then, gosh, don't you know, I think that American Lions, I'm sure that American Lions would be more in jeopardy. | |
| Well, yeah. | |
| Who can tell? Who can tell? | |
| It's like if I have a problem with a project and I say, well, I created an internal wiki website and I spent a million dollars on that. | |
| And they say, well, what the hell was the point of that? | |
| How did that help? I said, well, We've facilitated communications, and yes, the project is 300% behind schedule and 500% over budget. | |
| But without me spending a million bucks on that wiki thing, it would be even worse. | |
| Well, yeah, maybe. Maybe yes, maybe no, maybe sideways, maybe up and down. | |
| And maybe a spoonful of sugar does help the medicine go down, but nobody can tell. | |
| These are just assertions. And they're really just assertions designed to get people to shut up. | |
| It's a funny kind of role that these people in the government play. | |
| And it's a sort of weird kind of job, like Tony Snow's. | |
| Perfect name, eh? | |
| It's just this nonsense that people speak. | |
| Just to sort of go through this ritual, and the people who are in the media, they just play along with it. | |
| They ask these tough questions, and then they get these nonsense answers. | |
| And then they write them up. | |
| And then they move on to something else. | |
| They're part of the whole nonsensical charade that goes on in terms of communication about anything that's important. | |
| Nobody asks who's going to be prosecuted. | |
| Right? Nobody asks who's going to have to pay anything back. | |
| Nobody asks, well, you guys went after Enron and WorldCom and all these kind of Organizations, you went after them pretty heavily. | |
| So, I assume that you're going to take the same approach here. | |
| You've just imposed Sarbanes-Oxley, at least relatively recently, Sarbanes-Oxley, on this, that, and the other organizations. | |
| So, we can assume that you're going to take the same approach. | |
| The CEOs of these organizations went to jail, so when it's a trial, will Donald Rumsfeld going to commence? | |
| Oh, and by the way, the invasion of Iraq was Fell under the rubric of the crime of aggression, which is a war crime punishable by International Tribunal at The Hague. | |
| So when is George Bush going to... | |
| Like all of these basic things, right? | |
| When is it that the media ever puts forward the argument in a sensible way that says, well, this is what you guys established as a moral principle the last time that this occurred in the private sector. | |
| Now that this has occurred to a much more egregious degree, What is your plan? | |
| How are you going to do it? | |
| And not take no for an answer. | |
| Well, of course, that's just not part of the equation. | |
| That's not how people in power, whether in the media or in the government, that's not how they talk to each other. | |
| It's just a game. It's like trash talking before a boxing match. | |
| It's got nothing to do with good and evil. | |
| It's just, you know, playing to the crowd, which is, of course, the Definition, really, of party politics, right? | |
| It's just trash talking before a game. | |
| It's got nothing to do with good and evil. | |
| Or right or wrong. So, that kind of stuff is just kind of funny. | |
| Now, the last thing that I'll say about all this is that it really is, to me at least, quite funny. | |
| How there's just a mention made that it seems to be vaguely possible that all of this money sloshing back and forth might have made its way into the hands of insurgents and so on. | |
| Well, that's complete nonsense. | |
| Of course it made its way into the hands of insurgents. | |
| Of course it made its way into the hands of insurgents. | |
| Billions upon billions of dollars. | |
| The international currency, at least the last time I checked, though it could be different now, for Arms sales is the US dollar. | |
| So, when you pump an enormous amount of currency into a war zone, you arm your enemies. | |
| You arm your enemies. | |
| We talked about this in terms of the arms trade as a whole. | |
| But I think it's just important to understand that, as we mentioned, if the DRO was pursuing this course of action, claiming to protect you or wanting to protect you while simultaneously arming those who would do you harm, you would see it very clearly for what it was. | |
| Which was an egregious violation of trust and decency and honor and an instigation of violence with the hopes of profiting from it. | |
| Well, that's kind of, sort of, totally what occurs in these kinds of situations. | |
| So, all of this money being pumped into all of these Iraqi places, these Iraqi ministries which had enormously strong ties to the military and enormously strong ties to the dictatorial regime that was supposedly replaced, You hand over all of this money in the international currency of arms dealing, and then, shock upon shock, the insurgents seem to be well armed. | |
| And who pays the price for that? | |
| Well, obviously the soldiers and the Iraqi people. | |
| What happens when, was it, Walker, Lind, Paul Walker, I can't remember his name, some US guy was found over there fighting with the Taliban in Afghanistan. | |
| And, well, he turned against his own people, I guess, this is the story, vilified, a horrendous villain, tortured by the people who caught him, sent to jail, blah, blah, blah, blah, blah. | |
| Well, what happens, instead of picking up a gun, On the theme of the quote enemy, you instead fund their arms purchases to the tunes of billions of dollars. | |
| Should your punishment be greater, equal to or less than some poor uneducated schmo who ends up picking up a gun and facing vastly better armed and better funded and technologically superior US forces. | |
| What do you think the punishment should be for those who aid and abet the enemy in terms of billions of dollars of arms sales As opposed to just pick up some old rusty rifle and stand on a hill and get captured. | |
| In terms of material damage to U.S. interests or to the citizens that you're supposed to be protecting, I gotta think, just in general, I gotta think that the guy I picked up in Afghanistan fighting on behalf of the Taliban was doing just a little bit less harm than those who shipped crates full Of hundreds of thousands of dollars, | |
| of hundred-dollar bills, hundreds of thousands of hundred-dollar bills, thus providing an enormously powerful mechanism by which those who fight against the U.S. can buy weapons and live and train and flourish at the expense of the U.S. soldiers and the very citizens of the country they're trying to protect. | |
| I hope that this helps in your perspective. | |
| If you do and didn't end up with any of this contraband money, you can denote it to me through PayPal. |
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