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Dollars and Nonsense

By James L. Hirsen, J.D., Ph.D.

Remember all of the anxiety over the deficit? What about the five and one half trillion dollars worth of debt unscrupulously accrued by our representatives in Washington? Remember the calls for fiscal austerity? If you thought that electing an economically responsible Congress would help, forget it. The Executive Branch can apparently spend our money without public or congressional authorization by misusing a fund established by a 1934 law called the Gold Reserve Act. Intended to be used when the stability of the exchange value of the dollar was directly threatened, the Exchange Stabilization Fund was unfortunately placed under the discretion of the Treasury Secretary with sole approval of disbursement in the hands of the President.

Two years ago, Congress was not involved in the decision to send over twenty billion dollars out of this same fund to Mexico, ostensibly because of that country's significance to the U.S. as a trading partner. Overlooked by the mainstream media as the real reason for this unprecedented avoidance of constitutional mandates were the potential financial losses the former investment banking clients of Secretary Robert Rubin would suffer without such a governmental bailout.

Under the guise of the Treasury Department, the current administration has declared itself an economic autocracy. Exertion of exclusive control over a discretionary slush fund allows the Treasury Department to fund the International Monetary Fund's global insurance program for foreign governments in financial straights and, coincidentally, their creditors on Wall Street.

Our illustrious Treasury Department has recently provided an instant twenty billion (yes, that is billion with a "b") dollars to support the International Monetary Fund (IMF) and World Bank bailouts of Indonesia, Thailand, the Philippines and South Korea.

After the IMF sent fifteen billion dollars to Indonesia primed by a three billion dollar guarantee of the Treasury Department, the Suharto Government failed to meet its obligations thus sending the currency plunging and jeopardizing all of the other financial rescue efforts underway throughout East Asia.

President Suharto and his immediate family who, by the way, have a net worth of approximately thirty billion dollars have an illicit stranglehold on the Indonesian economy. Is it the responsibility of the American taxpayers to save Suharto's corrupt regime? John and Jane Q. Public would undoubtedly answer that question with a resounding "no." We must collectively wonder, then, why our money is being surreptitiously spent in this wasteful and unnecessary manner. Perhaps it has something to do with a certain Mr. John Huang and his employer, mega-billionaire and Indonesian mogul, Mochtar Riady.

The principles of the free market should apply to foreign governments as well as their investors and creditors. Billions of U.S. tax dollars should not be the vehicle by which a government elite provides international welfare to overseas campaign financiers.

High on the Congress's agenda for the coming year should be an overhaul of the Gold Reserve Act. Our representatives must act to limit the use of the Exchange Stabilization Fund. In this way, perhaps, some sensible conformance with constitutional norms can be reestablished. If not, we must consider abolishing the law altogether.

Copyright © 1999 -
James L. Hirsen, J.D., Ph.D.

All Rights Reserved