Narco-Dollars for Beginners: "How the Money Works" in the Illicit Drug Trade: Part I in a Series
By Catherine Austin Fitts
Summary: Catherine Austin Fitts, a former Assistant Secretary of Housing-Federal Housing Commissioner in the first Bush Administration, makes the argument that so much money made from the sale of illicit drugs ends up invested in legitimate enterprises that if the US ended prohibition in one fell swoop the resulting fallout would leave major corporations so starved for investment capital that it would wreck the US and world ecconomies.
One day, Forest, my dog, and I were up in Georgie's apartment to enjoy a fresh plate of scrapple that Georgie had fried up that morning. The conversation turned to narco dollars. Georgie said that looking at the big picture was simply too overwhelming. Couldn't I explain this without using the words millions or billions - just dollars and cents in terms of our neighborhood in West Philadelphia?
I always have this problem explaining international money flows to moms and grandmoms. Most really great women want to know about the real world. The world of real people - her world full of her kids and grandkids and other kids she loves.
So we got out a blank piece of paper and started to estimate.
Every day there are two or three teenagers on the corner dealing drugs across from our home in Philadelphia. We figured that if they had a 50% deal with a supplier, did $300 a day of sales each, and worked 250 days a year that their supplier could run his net profits of approximately $100,000 through a local fast food restaurant that was owned by a publicly traded company.
Assuming that company has a stock market value that is a multiple of 20-30 times its profits, a handful of illiterate teenagers could generate approximately $2-3 million in stock market value for a major corporation, not to mention a nice flow of deposits and business for the Philadelphia banks and insurance companies.
Part I didn't really lend itself to excerpting. The quoted passage comes from Part II.
Questions for discussion:
Cross posted to: libertarianism and drugwar