This is the first of a four-part series on the International Monetary Fund, World Bank and the international financial system.

The world's financial elite, now milling about at the IMF and World Bank Annual Meetings in Washington, are unhappy players in a drama whose theme is lost empire. Not empire in the sense of ancient Rome, but rather the collapsing American empire of finance capitalism, whose front-line soldiers were equipped not with helmets and rifles, but with Brooks Brothers suits and U.S. fiat dollars.

Though the expansion of NATO will insure a future abundance of over-priced toilet seats, the costs of maintaining the U.S. military are today rivaled by the sums needed for the publicly financed multibillion-dollar bailouts of entire countries on the hook to U.S. global banks and high-flying investors. But don't blame the banks or the investors, they're just team players. The bailouts are intended to preserve the bloated power and hubris of the U.S. federal government, particularly the executive branch.

When libertarians say that government produces nothing, they make a grave error. Government produces one thing in abundance -- our money. Unsurprisingly, U.S. paper fiat dollars have no intrinsic value and circulate only by faith and by edict. Consequently, the dollar in a baby boomer's pocket is worth but the penny that was in his grandfather's purse less than a century ago. But granddad's penny was one hundredth of a twentieth of an ounce of gold, while today's dollar is the product of a government-operated pyramid scheme. Once the state slipped the "golden handcuffs" of budgetary discipline through the Federal Reserve System, it gained the ability to create unlimited debt, thereby claiming for itself what before had been the purview of tyrants -- the ability to debase the currency. It is the slow leeching of value from the U.S. dollar, not the far lesser sums raised by direct taxation, which has enabled the political class to purchase votes for its re-election and to further degrade the citizenry with socialist schemes that penetrate every nook and cranny of American life.

Any pyramid scheme remains viable only so long as its base continues to expand and it is that fact which has driven U.S. foreign policy for much of the past century. Since politicians and investment bankers both have an interest in promoting deficits and in forcing taxpayers to redeem government debt, they were quick to come to terms on the advantages of underwriting foreign debt along with new markets and natural resources from abroad. The collusion between bankers and politicians has enabled the financial and political elite to use America's wealth to subsidize and force-feed export markets and investment outlets as well as to guarantee foreign government bonds. Taxpayer-subsidized globalism then is not a new phenomenon, but has only reached its most recent apogee under the guiding hand of the over-reaching Clinton Administration.

Once the easy money common to presidential election cycles began pumping into the economy in the spring of 1995, it wasn't long before asset inflation hit U.S. corporate share valuations. Throughout 1995 and 1996, the money supply kept rising, and along with it mutual fund holders' paper wealth and Bill Clinton's public approval ratings. Attracted by the double-digit yields found in risky, unregulated environments abroad, the banks -- given the election year liquidity the Fed wished to export -- lent unwisely and to excess. The moral hazard the 1995 $40 billion bailout of Mexico unleashed (the debt was refinanced, not repaid, with additional IMF lending and proceeds from eurobond sales in 1996) led to a tripling of international capital flows. Investors took greater and greater risks in the belief that the "new paradigm" promised taxpayer-provided redemptions if necessary. The consequence of all those dollars frolicking in exotic locales is a $141 billion bailout for Asia, more than $20 billion for Russia in 1998 alone, a possible $30 billion for Brazil and thereafter, most likely, Mexico again.

The Clinton administration's attempt to socialize the risk of private investment with public funds now threatens a global meltdown. Whatever cure is devised, it is sure to further indirectly the degradation of individual citizens' independence and prosperity. It is one more irony of the post-cold war environment that ambitious American policymakers, who were so busy "reforming" Russia in the most appallingly cavalier and self-serving fashion, failed to honor the lesson Russia has to teach, i.e. liberty and empire do not cohabit.

The 1930s was the last era in which the international political and financial elite sought advantage through control of the global economy. What economists call "hot money" raced from one nation to the next throughout that era, leaving a trail of competitive currency devaluations in its wake. Six decades ago, as nation after nation was humbled by and strangled with the manipulations of the financial world's insiders, history saw fit to serve up Adolph Hitler.

A world war and a score of years later, the allies established the IMF as a prophylactic money bag to prevent destabilizing trade imbalances and therefore, they thought, a repetition of the preceding decade's nightmare. Yet over half a century later, the IMF, the World Bank and their similarly U.S.-controlled spawn -- the IFC, the six regional development banks and the EBRD -- have become 800-pound gorillas of economic distortion and, over time, of pillage which unchecked will guarantee extensive international conflict and a broadly-based anti-Americanism.

"The new paradigm" economy concocted by the Harvard-connected Clinton administration appointees in the U.S. Treasury, was designed to extend the federal government's meddling hand worldwide through its control of the multilateral and bilateral public lenders, enabling government a free ride on the back of a re-structured U.S. economy grown vigorous and ever more innovative on account of the benefits of the Reagan era's low taxation, expanding world trade, moderate inflation and reduced regulation had delivered. The overall scheme worked as follows:

Sell assistance programs on an alleged "free market" and "humanitarian" basis by awarding government grants to those academics who could be relied upon to supply the intellectual camouflage politicians and journalists then repeat ad nauseam to a distracted public, move the IMF and the World Bank to target, induce target to raise taxes, fine tune target's central banking operations, encourage borrowing and debt creation through the target's government and its national banks, allowing IMF lending to pay yields if necessary; induce target to privatize national property while building a flimsy, artificial "infrastructure" for an equities market good enough to attract high risk foreign investors. Once the target nation's government flounders, step back and watch speculators assert discipline through a run on the target's currency. The subsequent devaluation delivers, in turn, a flood of cheap imports to American consumers.

The finishing touch on the swindle is to confiscate more money from G-7 citizens (the lion's share from Americans) to pay for what is said to be an "essential" IMF bailout; thereby allowing Uncle Sam's IMF minions to entrench themselves more deeply in the target's government. Taxes are raised, the population struggles beneath indebtedness, draconian taxation and the inevitable domestic inflation a devaluation delivers; Western neo-colonialists then bully the target over its rapidly compounding debt in order to extract yet more property. Once successful, the world's insiders then turn around and deliver cheap shares from privatizations and initial public offerings into the maw of U.S. mutual funds and portfolio investors. U.S. taxpayers get hit coming (foreign aid) and going (bailouts) and innocent foreigners' property is finagled away either from, or on account of, inattentive and corrupt leaderships. The big winners are the world's increasingly corrupt and cozy governing class, international bureaucracies and global banks.

Yet what America has wrought across much of the post-Cold War landscape is a moral, political and financial abomination based on fraud, theft and deceit. In Russia the results of the Clinton administration's policies are the perpetuation of the longest depression of the 20th century in what is increasingly an unpoliced deadly weapons dump, the biggest swindle of national property since Vladimir Lenin muscled the country early in the century and the discrediting of the ideas of free markets and democracy. In Asia, hundreds of millions too have been ruined, riots enliven Jakarta's street life while Japan continues to stew in its own inscrutable juices. Just offstage, Eastern Europe and Latin America wait to ascend the devaluation gallows.

But as the old saying has it, what goes around comes around. All those dollars the Fed printed to get Bill Clinton re-elected in return for Alan Greenspan's third appointment as central bank chief, are now returning to the United States in the form of manufactured goods and commodities with which our own producers can not compete on price. Corporate profits will decline as a consequence, share prices following suit. Alas, those Americans up to their necks in credit card debt will be the next class of debtors to be rolled, an event for which Congress has prepared by tightening bankruptcy procedures. Credit will dry up, government receipts will dwindle, the national debt will skyrocket and unemployment will increase. Eventually the government will inflate its way out of its accumulated debt.

And if the year 2000 alarms regarding a potential worldwide computer meltdown are accurate, then the international public and private financiers' decades-long experiment with paper fiat currencies may well come a cropper, leaving the world to ride a rollercoaster of misery. No wonder the bankers and the policy makers in Washington this week are so glum.