The Exchange Stabilization Fund with Rob Kirby

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The Solari Report 2017-03-09

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The Solari Report 2017-03-09

March 16 – Precious Metals Market Report with Franklin Sanders

March 23 – Unpacking Your Financial Ecosystem

March 30 – Cardiac Arrest with Howard Root

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Catherine’s Recording Chonology – Notes

“The important thing to know about an assassination or an attempted assassination is not who fired the shot, but who paid for the bullet” ~ Eric Ambler

By Catherine Austin Fitts

The Exchange Stabilization Fund (ESF) is a fund managed by the New York Federal Reserve and its member banks acting as agents for the US Secretary of the Treasury. The fund is free of Congressional oversight, with broad authority to intervene in currency, securities, and commodities markets.

The fund was created by the Gold Reserve Act of 1934. The act required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the US Treasury. A 1970 amendment to the act allows the Secretary of the Treasury, with authorization of the President, to use ESF funds to “deal in gold, foreign exchange, and other instruments of credit and securities.”

Long-time Solari Report subscribers are used to hearing me describe the ESF as the “mother of all slush funds.” My favorite reference is at hand, from Christopher Simpson’s excellent book Blowback: America’s Recruitment of Nazis and Its Effects on the Cold War:

“The trail of this tainted money dates back to 1941, when the War Powers Act authorized the U.S.Treasury’s Exchange Stabilization Fund to serve as a holding pool for captured Nazi valuables— currency, gold, precious metals, and even stocks and bonds— seized as the Germans or other Axis governments attempted to smuggle them out of Europe. The captured wealth, which eventually totaled tens of millions of dollars, included substantial amounts of blood money that the Nazis had pillaged from their victims. Indeed, it was precisely this type of criminal booty that overeager Nazis had most frequently attempted to export from Europe.”

“The Exchange Stabilization Fund was authorized to safeguard the portion of the Nazi hoard that had been uncovered and confiscated by the United States in the Safehaven program, which sought to interdict the German smuggling efforts. The official purpose of the fund was to serve as a hedge against inflation and as a bankers’ tool to dampen the effects of currency speculation in the fragile economies of postwar Europe and Latin America.”

“In reality, this pool of money became a secret source of financing for U.S. clandestine operations in the early days of the CIA. The first known payments from the Exchange Stabilization accounts for covert work were made during the hotly contested Italian election. The CIA withdrew about $10 million from the fund in late 1947, laundered it through a myriad of bank accounts, then used that money to finance sensitive Italian operations. This was the “black currency” that Cardinal Spellman asserted was given to the Vatican for anti-Communist agitation.”

This coming week, I will be in Toronto to attend the convention of the Prospectors and Developers Assocation of Canada (PDAC) and visit with Rob Kirby of Kirby Analytics. Rob will join me to discuss the Exchange Stabilization Fund and its role at the intersection of the hidden system of finance, the black budget, and the financial markets. Rob had a successful career in the fixed income and derivatives markets working for global and Canadian financial institutions before starting Kirby Analytics. He is one of the most popular on line commentators today on the financial markets. Rob is particularly knowledgeable about Exchange ESF role in the precious metals markets. As we will discuss, following the gold price suppression and other manipulations in the gold market invariably leads investors to want to learn more about the ESF.

For Let’s Go to the Movies, Rob and I will discuss Eric deCarbonnel’s video briefing, “The ESF and its History.” You can access it on line, starting with Part I here:

Part 2
Part 3
Part 4
Part 5

As always, there is a lot to discuss on the latest developments in the financial markets and geopolitics to in Money & Markets. Please make sure to post or e-mail your questions for Ask Catherine.

Talk to you Thursday!

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  1. Catherine, thanks for an amazingly informative discussion.

    1) At time 12:15 Rob Kirby suggests that the ESF gathered all of the war booty that the Vatican didn’t have in their possession. I thought that the churches were robbed of their treasures during the war, so what war booty did the Vatican have and where did it come from?

    2) Then at time 12:20 you add something about the booty that didn’t go to Antarctica and you quickly move on. That really piqued my curiosity. Anything to do with Antarctica is a fascinating question mark.

    3) Later on in the discussion, at time 1:35:40, you say that was about “Goldman was instrumental in laundering the money back in from Russia”. What is that about?

    These comments have left me wanting to know more. Can you please direct me to information about these 3 topics?

    Also, time 28:45 Rob says that the US gold reserves belong to the Treasury or possibly the ESF. I can’t remember where, but I recall reading something to the effect that the gold is, in fact, owned by the Fed. It has something to do with the gold having been leased by the Treasury to the Fed or with the gold having been used as collateral for Treasury bonds sold to the Fed. Do you know anything about this?

    Please keep enlightening us!

    • Vatican laundered funds for the Nazis. Strongly recommend you read everything that Farrell has written about the continuation of the Nazis and their funds after WWII. He and I have done several discussions about this on the Solari Report. The speculation was that Antarctica was one of the Nazi strongholds after the war.

      I strongly recommend you listen to the interviews with Ann Williamson in the Solari Report archives about the Rape of Russia and look at the related links.

      I will send your last question on the gold reserves to Rob.


      • Dear Catherine,

        I spent the past week-ends following up on the links you suggested.

        Your interview with Rob Kirby was full of fascinating information. The connections of various knowledge management events surrounding 9/11 was brilliant.

        With your permission, I would like to distribute the transcript to my class and make it compulsory reading for my macro-economics course, especially with respect to the discussion on Bank of Italy and LTCM. The Italy story has got far less exposure than the Greece one, both of which are essential to understanding the euro.

        I am lecturing at university level. We were recently covering the topic of leadership. I was surprised to discover that none of the students had ever heard of Napoleon, Alexander the Great or Mahatma Gandhi. I asked them to name a leader, either past or present. They couldn’t. In desperation, I told them to pick a leader from a movie they had recently seen. They told me that they do not watch movies. This surprised me because I thought that everyone watched movies, of at least some sort. They said that movies are too long. They can’t watch the same story for over an hour as they get bored after 15 minutes.

        This made me think of the recent article in Time Magazine “You Now Have a Shorter Attention Span Than a Goldfish” according to which, “The average attention span for the notoriously ill-focused goldfish is nine seconds, but according to a new study from Microsoft Corp., people now generally lose concentration after eight seconds, highlighting the affects of an increasingly digitalized lifestyle on the brain.” Scary stuff.

        I was also surprised when they told me that they had never seen a black and white film and that would never watch one because black and white films are boring. It saddens me to know that there are so many wonderful films they will never see.

        One of my students boasted to me that he had never read an entire book in his whole life.

        This is not to say that the kids are stupid. They all know the intricacies of various smart-phones and can accurately identify hundreds of logos. Their knowledge of footballers is extensive and the details they can recall about various matches is impressive. Nevertheless, I find it all most disheartening.

        The future of our planet is in the hands of these young people. How can we reach a generation that is so dumbed down that they cannot think and do not read?

        Thanks for listening.


  2. Great, great interview! I will have to listen again to the first half. I saw today there is a protest planned in Washington conceding

  3. 5 star interview

    Thinking out loud.
    The Dulles brothers made a financial agreement with Hitler in January 1933, just months before FDR moved against owning gold. Any connection?
    I always wondered why Germany allowed the British to escape at Dunkirk, the Germans could have ended the war very quickly. Maybe the war was designed to expand and after Germany had confiscated a great deal of wealth that wealth (like Japan) would be used to seed a European Union.
    The other item that got my attention about WW2 is where the most destruction in Germany took place. North Germany was hard hit while South Germany was not, plus East Germany fell into the Soviet hands. Most Lutherans lived in North Germany and what became East Germany, while Catholics lived in South Germany. Protestant genocide?
    Just sharing, not looking for answers

  4. Oops. I was replying to one of Robert Lord’s ideas. I did not realize where this would show up. I did have another thought, though, regarding the timing of the creation of the ESF. Let’s not forget about the ‘business plot ‘ that tried to recruit Smedley Butler in the summer of 33.I wonder if the ESF was not some sort of Plan B

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