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French Socialist to Head IMF

Monday, November 19, 2007

By William F. Jasper

The executive board of the International Monetary Fund announced on September 28 that it had confirmed French socialist Dominique Strauss-Kahn as new head of the IMF — with the approval of the Bush administration. That announcement and the IMF's current plans for reform should have served as a signal to reopen the case for abolishing the Fund, not to support yet another round of empty promises about "reform."

For decades, free market economists have advised that the United States should withdraw its membership in, and funding for, the United Nations’ financial institutions — the IMF and World Bank. Instead, Democrats and Republicans in the Congress and White House have continued U.S. support for these sinkholes of corruption that have robbed billions of dollars from U.S. taxpayers to give to foreign governments and politically connected banks and corporations. These misbegotten sister institutions, created at the secretive 1944 Bretton Woods conference (just months before the creation of the UN itself) have toppled governments, lavished funds on some of the worst regimes, and caused political and economic chaos across our entire planet.

"The world cannot get back to economic sanity," warned eminent economist Henry Hazlitt in 1984, "until the IMF is abolished.... We will not stop the growth of world inflation and world socialism until the institutions and policies adopted to promote them have been abolished."

"Yet the supreme irony," Mr. Hazlitt went on to note in his 1984 book From Bretton Woods to World Inflation: A Study of the Causes and Consequences, "is that the Bretton Woods institutions that have failed so completely in their announced purpose, and led to only monetary chaos instead, are still there, still operating, still draining the countries with lower inflations to subsidize the higher inflation of others."

Unfortunately (but not surprisingly), the Bush administration, like every administration going back to that of Harry Truman (when the IMF & World Bank were created), solidly backs these UN-related engines of destruction.

In his September 19 statement backing the former French finance minister Dominique Strauss-Kahn for the IMF's top job, U.S. Treasury Secretary Henry Paulson said "Mr. Strauss-Kahn's experience and drive have prepared him well to vigorously pursue reform of the IMF…."

What "experience" of Monsieur Strauss-Khan inspires such confidence in his "reform" capabilities and intentions? Perhaps his lifelong commitment to socialism and his leadership in France’s Socialist Party? What reforms, exactly, did he accomplish in his last public office as Finance Minister in the Socialist government of Lionel Jospin? Strauss-Kahn may indeed have "drive," something he obviously shares with many of his socialist and communist colleagues, one of which is Denis Kessler, a Maoist of the Revolutionary Communist League, who coauthored a book on economics with Strauss-Kahn.

IMF: Danger Alarms from the Start
Perhaps it is this pedigree that Strauss-Kahn’s supporters find most attractive about the appointee. After all, the principal architects of the Bretton Woods system were John Maynard Keynes, one of the most famous members of the Fabian Socialist Society, and Harry Dexter White, one of Stalin’s top-most agents in the U.S. government.

As in the case of the more famous Soviet spy Alger Hiss, there also have been plenty of influential defenders of Harry Dexter White. In spite of overwhelming evidence that White was a Soviet spy, they stubbornly insisted on his innocence, arguing that he was a victim of a "witch hunt." The declassification and release of the "Venona" intercepts in 1995 finally settled that matter. The Venona documents are transcripts of communications between Soviet intelligence agencies and their American agents intercepted by the National Security Agency. White’s codenames were "jurist," "lawyer," "Richard," and "reed." The Venona intercepts prove beyond doubt what numerous earlier investigations showed: that White was indeed a Soviet agent who had done incalculable harm to this country and many other countries as well. "Venona disclosures now make apparent that White was a very important Soviet spy — perhaps even more important than Alger Hiss," write coauthors Herbert Romerstein and Eric Breindel in their authoritative book, The Venona Secrets, Exposing Soviet Espionage and America's Traitors.

White, a Harvard economist, joined FDR’s New Deal Treasury Department in 1934. He rose to assistant secretary, the number two man at Treasury, and became the close friend, confidante, and adviser to Treasury Secretary Henry Morgenthau, Jr. He was also an agent of the Soviet GRU, Stalin’s military intelligence, and later of the Soviet NKVD (which subsequently became the KGB). White hired other communist agents, placed them into critical positions in the government, and protected them from exposure when they came under suspicion from security investigators. He also influenced U.S. policy in ways that had historic impact.

White was the key agent in Operation Snow, the Soviet plan to manipulate strategic U.S. policy. In 1941 his main duty was to sabotage State Department diplomatic efforts that were aimed at averting war between the United States and Japan. The Soviet Union desperately wanted a Japanese-U.S. war, to, among other objectives, free it from worries of Japanese forces on its eastern flank. White faithfully wrote memoranda dictated by his Soviet handlers to Morgenthau pushing harsh, unreasonable demands and using insulting language calculated to enflame the Japanese, undercut Japan’s moderates, and strengthen the hand of Japan’s war party. The Soviet plan worked. The White-Morgenthau "diplomacy" was adopted by Roosevelt and his Secretary of State Cordell Hull, guaranteeing Japan’s decision for war. It can be argued that the war would have come anyway, without White’s treasonous help. But what cannot be denied is that White and his ring of spies were exerting enormous influence in our government for a hostile power.

Another example: White and his fellow communist agents at Treasury — Frank Coe, Victor Perlo, Irving Kaplan, Harold Glasser — succeeded in holding up for two years a shipment of $200 million in gold, which was part of a loan authorized by Congress for our ally Chiang Kai-shek in China. Chiang’s anti-communist government was in desperate need of the funds, but helping him would have upset Moscow’s plans to install Mao Zedong as communist viceroy of China.

Another example: Toward the end of World War II, White provided the Soviets with U.S. plates for printing the occupational currency of Germany. The Allies had planned to print 15 billion Allied Marks (AM), as the currency was called. Thanks to White, the Soviets were able to print 78 billion AM, to be redeemed by U.S. taxpayers.

Those are but a few of White's many acts of treachery. One of his most enduring legacies was designing and founding the IMF and World Bank, both of which have been more effective than a hundred divisions of the Red Army have been at promoting global socialism.

Incredibly, with all that is now known about the enormity of Harry Dexter White’s treason, the IMF still praises him and presents him as a tragic, unjustly "vilified" victim of "the McCarthy era." According to the IMF’s official historian, James M. Boughton:

Without question, Harry Dexter White was one of the two great intellectual founders of the IMF and the World Bank. As the chief international economist at the U.S. Treasury in 1942–44, he drafted the U.S. blueprint for the IMF that competed with the plan drafted for the British Treasury by Keynes.

"Whatever mistakes White may have made," says IMF’s Boughton, "… seem trivial today when set next to the excesses of his enemies." Thus are White’s horrendous crimes whitewashed into "mistakes" — and "trivial" ones at that! Meanwhile, those who heroically tried to do the right thing, who braved scorn, ridicule, career threats and personal danger to expose one of the most celebrated and powerfully connected men in Washington and his ring of cohorts, are categorized as "enemies" who went to "excess."

The IMF’s Indefensible Record
One of the IMF’s most persistent public critics has been Rep. Ron Paul (R-Texas), who has served for many years on the House Banking Committee and the Joint Economic Committee. In a September 28, 2004 column entitled "The IMF Con," Dr. Paul wrote:

The IMF provides a perfect illustration of both the folly of foreign aid and the real motivations behind it. The IMF touts itself as a bank of sorts, although it makes “loans” that no rational bank would consider – mostly to shaky governments with weak economies and unstable currencies. The IMF has little incentive to operate profitably like a private bank, since its funding comes mostly from a credulous US Congress that demands little accountability. As a result, it is free to make high-risk loans at below-market interest rates.

The real purpose of the IMF is to channel tax dollars to politically-connected companies. The huge multinational banks and corporations in particular love the IMF, as both used IMF funds – taxpayer funds – to bail themselves out from billions in losses after the Asian financial crisis. Big corporations obtain lucrative contracts for a wide variety of construction projects funded with IMF loans. It's a familiar game in Washington, where corporate welfare is disguised as compassion for the poor.

In fact, IMF loans often do far more harm than good. At best IMF borrowers are governments of countries with little economic productivity; at worst the money ends up in the hands of corrupt dictators. Either way, most recipient nations face huge debts they cannot service, which only adds to their poverty and instability. IMF money ultimately corrupts those countries it purports to help, by keeping afloat reckless political institutions that destroy their own economies.

Government-to-government transfers through a middleman like the IMF cannot produce real growth. When capital remains in private hands, it is allocated to its most productive uses as determined by the choices of consumers in the market. Placing capital in the hands of politicians and bureaucrats inevitably results in inefficiencies, shortages, and economic crises, as even the best-intentioned politicians cannot know the most efficient use of resources.

A decade ago the IMF and World Bank rightfully came under attack from a broad array of forces for their roles in debacles such as the Mexican peso crisis of 1994-1995 and the subsequent "Asian financial crisis" (1997-1998) that brought economic collapses in Indonesia, South Korea, and Thailand, followed by the economic implosions of Russia and Brazil. Many significant voices called for the IMF to be drastically shrunk, or even abolished. Here are a few of those noteworthy appeals that are even more relevant today:

Now more than ever we should be calling on Congress to abolish (or terminate, or kill — choose your predicate) the IMF, before the economic hit men of the IMF/World Bank and their colleagues at the Federal Reserve and the private megabanks subject the U.S. economy to the same devastation that they visited upon Mexico, Indonesia, and Thailand.


William F. Jasper joined the staff of The John Birch Society in 1976 as a researcher and soon became a contributing editor to the Society's magazines, American Opinion and The Review of the News. When those publications merged in 1985 to become THE NEW AMERICAN, Mr. Jasper continued to serve as a writer and contributing editor until 1990, when he was promoted to the position of Senior Editor.

Over the past three decades, William Jasper has researched and written extensively on foreign and domestic politics, national security, education, immigration, constitutional issues, the culture war, and most notably, the United Nations. His renown as an investigative journalist and insightful analyst on a wide array of topics has made William Jasper a frequent and highly sought guest on many radio and television programs.

He is the author of the 2001 book, The United Nations Exposed and the 1992 book, Global Tyranny-Step by Step: The United Nations and the Emerging New World Order. Both books were praised by many as the most authoritative and detailed expose' of the UN ever written. Mr. Jasper's coverage of UN events has included attendance at the Earth Summit in Rio de Janeiro, the UN 50th Anniversary Founding celebration in San Francisco, the July 1998 UN Summit on the International Criminal Court in Rome, and the UN Millennium Summit in New York City during September 2000.

Born in Madison, Wisconsin, William Jasper grew up in the Pacific Northwest and is a graduate of the University of Idaho. Mr. Jasper receives critical support from his wife Carmen and their two sons.


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