12. "Conspiracy theories in the history of world economics". (ebb Unit XV a)

There existed a system. It did not have an organizational chart, but it consisted of Randolph Aldrich and maybe 2 dozen other people in the USA. They were sure that they were running the world since 1945, and running it reasonably well. Everybody knows stories about the Rockefeller's, the Rothschilds, First Boston, Lehman brothers and a few other places like that being really in control of America, and thus the world, through their control of the world’s only really big capital market, and their control of the puppet strings which such money provides - especially those extending a few hundred miles south from NY to Washington. We can not believe for one minute in any real conspiracy, but perhaps there is something that exists - a very closely knit old-boy net. There had simply been too many smooth transitions between the key spots in Washington and those on Wall street.

It really started in the 1930’s, when Bernard Baruch acted as NY’s liaison man with Roosevelt. John S. McCloy took over that function when Truman came in. First he ran the newly created World Bank. Then he took over the job of running West Germany from Lucius Clay. He was “their” man, not Truman’s, and he was slotted into these position because both were key to keeping world safe for American capitalism in the postwar era. Clay, by the way, moved up to the board of Lehman brothers. McCloy eventually returned to NY, where he became chairman of the Chase Manhattan Bank, and a director of at least a dozen of American’s largest multinationals. Eisenhower had his Charlie Wilson, whose main idea was “what is good for General Motors being good for the US. McNamara - moved from running Ford Motor Company to running the Vietnam War from the Pentagon to running the World Bank. We may say that Nixon was helped both into and out of the white house by the biggest lawyer in Wall street annals, John Mitchell. And Jerry Ford was given little choice but to delegate half of his Presidency to the leading alumnus of the Rockefeller training camp, Herr Doctor Kissinger. Finally the Coach himself, Nelson Kissinger, took a leave of absence from the Big Apple (N.Y.) to make sure Jerry did not screw up the other half.

By the end of the 1970’s without the blessing of the NY financial community, the Federal Government could have became inoperative within a very short time. As NY City had been chronically spending billions more than it had been taking in taxes, the Wall Street were going to either run the place their way or to let the city go bankrupt. Thereafter Gracie Mansion was openly controlled not by Democrats or Republicans, but by the Wall Street gang. At the end of 1978 the Federal Government was in exactly the same position, except that the scale of its indebtedness, and thus exposure to the New York banking community, was immeasurably greater. Uncle Sam was in hock to the New York gang to the tune of well over one-half trillion dollars, and every week he had to borrow at least an additional billion to stay in business. For the “Great Recession” of 1974-75, and the massive unemployment it had created had not just gone away, like all other post-World War Two recessions. Unemployment dropped back to 7.5 percent in 1976, and then started soaring again.

Thus the “temporary measures” that had been initiated in mid-decade — tax rebates, extended unemployment benefits and welfare payments, food stamps, clothing stamps, federal support for state and local governments to assist them in their support of an increasingly idle population — all became permanent. So the “temporary” federal budget deficits of $60 billion per annum had not only continued, but by 1978 had risen to more than $100 billion

To increase taxes would have been the classical way to bring government financing back into equilibrium—in fact, the only way. But higher taxes would no doubt have brought slump and still higher unemployment. That was politically and socially impossible. So instead, like New York City a few years back, the men in Washington had merely borrowed and borrowed and borrowed to make up the difference between the country’s income and its expenditures. And, at least until the end of 1978, the New York banks and their satellites around the nation had just lent and lent and lent. The alternative would have been the collapse of government, and the end of the system which made Wall Street possible.

The problem was that the banks were starting to run out of money! And there were only two ways. The easiest would have been simply to print money, through the mechanisms of the Federal Reserve System and the US Treasury. But that would have led to runaway inflation and to the demise of the system. The other way was to find a new source of savings — massively and quickly. And such a source existed in the Middle East, where the oil nations had accumulated a hoard of savings that was absolutely unique in the history of mankind — over half a trillion dollars, an amount almost equal to the value of all the shares of all the corporations listed on the New York Stock Exchange. Salvation for Wall Street could be found in Riyadh — and perhaps only in Riyadh.