An Interview with Catherine Austin Fitts by Jorge Nascimento Rodrigues, editor of Janelanaweb.com.

QUESTION: Which are the roots of the ongoing financial crisis? A group of Wall Street’ criminals, or a couple of legislation pieces and policies since Clinton’s repeal of the Act of 1933 and Greenspan’s so called financial revolution?

ANSWER: It is much deeper than this. Recommend for your readers to listen to the audio seminar that I recorded in 2005 to explain the deeper history. At the heart of the problem is the “red button” test. See the last chapter of my book. When surveyed out of 100 people, 99 said they would not push the red button. Our financial dependency on unsustainable economics is broad, ingrained and deep. There’s also a Wall Street old saying – the expression ‘never fight the tape’. It means never try to oppose the market – always go with the market’s trend and direction.

Q: Without all that financial “creativity”, the last 20 years would be of economic and consumption growth, financial and stock bubbles in the US and deeper globalization of financial capital?

A: The bubbles were developed to accommodate a number of goals. First, was to facilitate the shift of capital out of the US to reinvest in Asia and the emerging markets and to ensure global dominance for the corporations and investments facilitating the shift. While the US was bubbled, moving money out at a high dollar price, economies in Asia, Latin America and Eastern Europe experienced the withdrawal of credit, devastating their currency and market values, so that major assets could be picked up on a very economic basis. Second, was to help reengineer global governance out of households, communities and sovereign governments and centralize it into private corporations and banks. So the bubbles were at the heart of what I call “a financial coup d’état.” The coup d’état, however, is not just in America. It is world wide. The commitment of the American people to democratic process and individual property rights and freedom is a major obstacle to the coup. Hence, the financial confrontation underway is a dramatic one and important to the whole world.


Lesson 1: Consolidation using these “pump and dump” cycles is an inherent part of the economic warfare we are experiencing.

Q: With a default in American bank reserves of more than $150b and a growing run-out of international capital from the US, what can you expect for the rebuilding of US financial leadership?

A: My expectation is that the folks who pulled the capital out during the last decade will be able to buy back in cheap. This is the same process we saw at the end of the last housing bubble bust in the US in 1989-1993. Those who sold at the top of the “pump” were in position to buy in cheap on the “dump.” Consolidation using these “pump and dump” cycles is an inherent part of the economic warfare we are experiencing. Numerous factions appear to be competing for control. It is impossible to say who will emerge in command. Whatever happens, my hope is that the process creates a sufficient spiritual and cultural shift to support the creation of serious alternatives to the central banking-warfare model that has dominated our planet for 500 + years. Whoever is running things here or in Europe, these events could never have occurred without widespread greed within the general population.


Lesson 2: The bailout will address a short-term symptom at the cost of promoting a greater unraveling.

Q: Can the $700b package (plus the $110b for trickle down perks) restore confidence in the banking market, or the money will be “lost” in the corridors of consulting and managing companies, financial targeted “friends” in route to mega acquisitions and a new «bubble» in Wall Street?

A: The package should be sufficient to handle credit default swap settlements during October as well as liquidity squeeze in the major US institutions through the election. I doubt it will carry us must past the election or inauguration. Part of the challenge, is the process to achieve the bailout broadcast to depositors and investors that the system is fundamentally unsound. Hence, the bailout will address a short-term symptom at the cost of promoting a greater unraveling.


Lesson 3: The dollar’s value is determined politically, which is supported by military capacity and power projection.

Q: Is it possible for the US to combat the ongoing financial crisis as a lonely financial superpower?

A: Yes, if the US and UK in combination are prepared to use sufficient military and covert force.

Q: What you mean? Hard power or covert power projection, certainly will accelerate other strategic moves from China, Russia and even a few others, including provocateurs, and I am not sure that Europe (even UK) will follow…

A: The dollar’s value is determined politically, which is supported by military capacity. The new president will not have a mandate to support the dollar. The people who finance the government will decide and the question is what they want. If continuing a global taxation system through the dollar managed system is what they desire for political reasons, it can and will continue. See my post.

Q: So you mean that the countries and institutions all around the world that finance American crazy debt and deficit system are paying a kind of global tax to the superpower?

A: Global Treasuries and Sovereign Wealth Funds, central banks and a variety of large institutions buy Treasury securities or hold dollars not because there is true economic value behind them or because these financial assets are sound fiscally or in terms of credit. The US debt and deficit financing is no longer a debt system. It is a global taxation system.

Q: Even with all this recent financial carnage?

A: Hence, demand for US dollars and government and agency bonds continue even as value falls dramatically. The losses on these holdings represent a tax paid to the “Empire”.

Q: Don’t we need a multilateral approach, particularly with the Chinese and the European Union?

A: A multi-lateral approach is preferred, the question is it possible or are there too many direct conflicts over resource and resource pricing issues between the US and China and direct power conflicts between the US and Russia.


Lesson 4: In the long run, financial systems require reliable standards.

Q: How you evaluate the recent European financial decisions?

A: On one hand it makes sense to have a coordinated European response. On the other hand, national governments are required to intervene in support of the individual banks. Hence, what can a European wide response really do? Actually, over time it can lead to more information sharing and ensuring that the leaders support each other and feel not alone. The bigger issue is that the credit freeze results from an absence of trust. And that absence of trust is well deserved.

Q: Why?

A: We have had a steady deterioration in the integrity of law, accounting and banking practices. On one hand part of what we are watching is the full cost of corruption within the system. In the short run, government can guarantee everything. However, in the long run, financial systems require reliable standards. This is a little bit like sending up a space shuttle in which all the engineering decisions were made by political decisions and convenience. The thing will not fly. So we need consolidate and a cultural revolution. In part, we need the consumers and citizens to create market demand for it.

Read this interview on Janelanaweb.com:
An Interview with Catherine Austin Fitts by Jorge Nascimento Rodrigues, editor of The Silent Financial Coup d’état.

21 Comments

  1. Rescue, Bail-Out, Bust-Out? or Bleed Out?

    Our forefathers entrusted us with the affirmative duty to protect the country’s future –to be present and to serve when our nation is in need of our contribution. Now is one of those times.
    Patriotically albeit reluctantly; we move forward. Forward without clarity; all gathered together to make a significant contribution. We need and deserve to know whether we are reluctant investors or unknowingly part of a bail-out, bust-out, or bleed-out. (See government definitions: http://www.usdoj.gov/ust/eo/ust_org/ustp_manual/volume5/vol5ch10.htm)

    Our contribution will not only involve tax dollars, but call upon us to contribute an individual gift of our human capital through patience and trust. Our investment is indeed necessary to rescue our financial markets.

    We are poised to make a significant contribution. As taxpayers and future investors we are asked to assist each other in resolving the “unforeseen” and presently “unknown” financial chaos. We are told that the genesis of the current financial chaos lies with questionable mortgage backed securities (MBS). The “private” sales of the MBS (actually of mortgage – “related” – securities) originally were issued as an investment with a direct security interest in “real estate”. In fact, the troubled securities were originally labeled subprime “mortgages”.

    These securities have now been redefined “toxic assets”.

    Many of these “toxic assets” are in default (albeit not near as many mortgages as are current). As these “toxic” mortgages have not amortized and matured, we find the largest private financial institutions calling upon taxpayer assistance as during the period after 1986 tax reform.

    To address that previous significant financial crisis, Congress adopted in 1989 the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), and created the Resolution Trust Corporation (RTC). On Sunday September 21, 2008, Tom Brokaw interviewed Secretary of the Treasury Paulson on Meet the Press. Secretary Paulson related the current crisis with the Resolution Trust Corporation. The Secretary stated,

    “…First of all, a lot of people talk about the RTC…in those days, there were whole loans, and the government owned the real estate…Here, the financial institutions are clogged with illiquid loans…[that] won’t be giving us control of real estate, … and that, that is what we have in front of us today.”

    Notably, Secretary Paulson acknowledges the material distinction between whole loans, and mortgage “backed” securities. To be sure legislation is necessary to prevent a most certain global panic and chaos regarding these mortgage-related securities. Title to property is a material issue.

    Exactly, what are the taxpayers being asked to support – a mortgage with security and “control of real estate”? As new investors, we need “control of real estate”. Without “control of real estate” what will we have? Transparency is necessary because of the potential for “misstatements of assets”.

    In that regard, Katherine M. Porter, wrote in her University of Iowa Legal Studies Research Paper Misbehavior and Mistake in Bankruptcy Mortgage Claims, “If a security interest in property of the debtor is claimed, the proof of claim shall be accompanied by evidence that the security interest has been perfected.” (Fed. R. Bankr. P. 3001(d)). (website: ssrn.com/abstract=1027961) Otherwise, as investors we will come to discover we lack the very evidence necessary to confirm our contribution is not just a back-door open to address at best a bail-out, or worse enable a bust-out or bleed-out.

    As assets are worked out in the future, some of our human capital must be devoted to insist that transparency evidences we own a security interests properly perfected, and secured by a debtor’s home. It is that interest, I understood Secretary Paulson addressed and the interest we should be acquiring.

    Simultaneously, we need to protect that proposed changes in accounting practices are well reasoned, and not abused just to support an aggregate amount of real estate securing the investment is just insufficient to support the shares or interests previously securitized and sold.
    Last year Judge Christopher Boyko of the United States District Court for the Northern District of Ohio in In re Foreclosure Cases, 2007 WL 3232420 (N.D. Ohio Oct. 31, 2007), dismissed cases in which lenders sought to foreclose on securitized residential mortgages in default because they failed to evidence a perfected mortgage with the security and “control of real estate”. Judge Boyko reinforced to lender’s counsel that the jurisdictional integrity of United States District Court is “Priceless.” (Additional information is the subject of an article in The New York Times on November 15, 2007.)

    The current fear in financial markets will only be resolved through the trustworthy administration by our leaders and our patient resolve to require transparency and accountability.

    Mort(imer) Gage

    PS – If it is not obvious, I believe Ms. Austin Fitts knows her stuff.

  3. Given the importance and gravity of such a subject, it is quite curious (and sad) that someone would focus their attention on linguistics and syntax instead of the real problems Catherine raises and tries to explore in her text.

  4. Thank you for this article and the original links. Just read the portuguese version. I imagine you have ‘nuf resources, but I can help with translation if ever needed, for portuguese to english work. Not really needed here as the article is more than intelligible and rightly damning just on exposition of the messed up system under which we operate.

  6. Two suggestions:

    1. Spell check your work.

    2. Have grownup read your stuff afterward and advise you which word strings are sentences and which are not. If you can afford it and if anyone is willing to take on the job, try to convert the ones that are not into something sensible.

    I think you mean well but you inchoate ramblings make a bad impression.

  7. For the past 39 years The Tree of Life Bookstore & Wellness Center of Harlem has DEMONSSTRATED effective techniques for re-generating America’s inner cities:

    Tree of Life Bookstore & Educational Center of Harlem, a rare gem burning brightly in the heart of New York City

    Dear Friends,

    I was delighted to find mention of The Tree of Life Bookstore of Harlem mentioned in the much longer treatise on “What America Truly Needs” written by Richard Sauder, PhD. http://www.sott.net/articles/show/164892-Who-Wants-To-Be-CEO-of-a-Red-White-and-Blue-Kakistocracy-

    “I must say that I am intrigued and encouraged by the work done by Kanya Vashon McGhee at his bookstore and learning centers in Harlem, New York and Atlanta, Georgia. His Tree of Life Bookstore & Educational Center of Harlem was a rare gem burning brightly in the heart of New York City, like a beacon of hope, drawing in people like a magnet with Kanya’s unique educational approach based on practical application of the universal laws of the ancient Egyptian sage Hermes Trismegistus.

    “Large numbers of people whom society had relegated to cast-off status, junkies, drop-outs, convicts, were pulled into the orbit of the Tree of Life Bookstore & Educational Center in Harlem and began to read, to learn and to flourish, many of them for the first time in their life. Now that’s an impressive accomplishment, both on Kanya’s part and theirs. I would certainly want to have Kanya Vashon McGhee in my administration.

    He is a national asset of the first caliber, like a sparkling Hope Diamond, and I would turn him loose to establish a national network of Tree of Life Bookstores and Educational Centers from border to border and coast to coast, to replicate what he accomplished in Harlem in cities and towns all over the country.

    His emphasis has been primarily on the upliftment of downtrodden African-American people, but I am sure that his approach would benefit many other people, too. My administration would encourage new approaches like this, based on ancient wisdom retooled for changed, contemporary circumstances. Kanya has a demonstrated track record of success in Harlem, and in a saner world the so-called Department of Education would latch onto a program like his and take it national – for the betterment of society at large.

    Sadly, the Department of Education is currently presided over by an elite educational, technocratic clique who care more for institutional clout and bureaucratic power plays than they do about the life prospects and career formation of the nation’s young people. The end product of our educational system is in sharp decline, with the result that tens of millions of people are ill prepared to meet the challenges of the dynamic, rapidly changing global society we are plunging and morphing into.

    Richard Sauder, PhD
    email: Dr_Samizdat@hotmail.com
    210-877-0585

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