|This article appears in the November 6, 2009 issue of Executive Intelligence Review.
LaRouche Tells Russian Weekly: Four-Powers Initiative `Our Last Chance'
Lyndon LaRouche gave the following interview to Alexander Nagorny, deputy editor of the Russian weekly Zavtra, on Oct. 10, 2009. They were attending the 7th annual World Public ForumDialogue of Civilizations, on the Greek island of Rhodes. Zavtra published Nagorny's report on his discussion with LaRouche in its Oct. 21 issue. This transcript of the original exchange will be published, after editing, by permission of both participants.
Zavtra: This is Professor LaRouche, one of the most famous, sage persons, the one who actually predicted so many mega-trends, which have taken place in the world economy and world politics. Mr. LaRouche, I have several questions to you, related to your statement.
First of all, what would you characterize as the immediate sources of the current economic crisis, and how do you interconnect them with the current situation of the political scene of the United States?
LaRouche: We have two historic problems. One, is that, we've had monetarist systems before, but the present world systems have stemmed, hereditarily, from the failure of the Persian Empire to succeed in conquering the Mediterranean, which meant that the Greek form, which is a maritime form of monetary system, was the foundation or the beginning point of all European economy, which was based on a maritime model. And that has always been, in a sense, a failure, because maritime models are trading models, they are not production models, and the real model is the production model.
The second thing is, Vernadsky is key in dealing with something, more than ever before: Vernadsky's conception of the Biosphere, the distinction, is extremely important, because it makes a distinction: First of all, we are living on a planetmost of our resources come from dead bodies of plants and animals. So we are now drawing down those dead bodies, because we take the richest resources first, the most easily accessed ones, which become the more costly, apparently.
Therefore, we have to have technological progress, to increase the productivity of man to compensate for depletion of resources. Not depletion of the amount of resources, but depletion in terms of accessibility, convenience. Which means we have to constantly go to what we call "higher energy-flux density." It's not the quantity of measure of energy, per se, it's the intensity, that is, the per square kilometer, per square centimeter, concentration of power.
We have gone from burning wood, up to coal, oil, and so forth; we now are nuclear. Where, if you don't have a nuclear economy, you can't really have a modern economy. We're also going to have to have a fusion economy very soon, in order to keep up with these demands on us. So therefore, we have to look at the attrition of old methods of economy, because we're drawing down old resources. We compensate by going to new technologies, which have higher energy-flux densities, or the equivalent.
Zavtra: I think Mr. Obama would share most of your statement.
LaRouche: Nonot at all. Not at all. He's not really an intellect, he's a mouth.
The Physical Economy of the U.S. Constitution
Zavtra: But yesterday, in your remarks, actually, you mentioned a very interesting detail, which was quite unexpected, at least to me. You said that during the 1944 [Bretton Woods] conference, actually the concept of Mr. [Franklin] Roosevelt was much different from the concept which was introduced by Mr. [Harry] Truman.
LaRouche: Truman, yes.
Zavtra: What was the difference between those two approaches?
LaRouche: It's in the U.S. Constitution. The U.S. Constitution is unique. It is actually a physical economy: It was designed by Alexander Hamilton.
Zavtra: Hamilton, mm-hmm.
LaRouche: Before the Constitution.
First of all, the states were bankrupt from fighting the war against the British, and the banks of each of these former colonies, which were now states, were bankrupt. So Hamilton set up a national banking system, as a concept. In order to make the national banking system work, that is, to keep the various parts of the nation working together, you had to have a Federal government in place of a federation of
LaRouche: Right. So, this resulted in the U.S. Federal Constitution. In the Federal Constitution, at the beginning, the foundation is a credit system. First of all, the principle of the Preamble of the Constitution, which is a principle of nature, that is, a principle of mankind, a fundamental law. In that, you can not create a monetary system, you have to have a credit system. And now, we've had changes in the behavior of government, but the Constitution remains the same. The conception of the United States is not a European monetary system, but a credit system. We have adapted to a world monetary system.
What Roosevelt did, Roosevelt then saidwe had China, Russia, and so forththe Soviet Union, then. All right. Roosevelt's conception was to use the powers which were coming out of the war, to create a new world system, which would be a feeder for the United Nations. The United Nations would be a federation of sovereign nation-states, and the purpose of Roosevelt was to eliminate the British Empire, and every other empire.
When Roosevelt died, on the 12th of April, on the 13th, Truman, the new President, made a deal with Churchill, and they went back to empire. And they went back to a monetary system, under the fixed-exchange-rate system, rather than a credit system. Roosevelt's intention was to establish a credit system based on the debtthat is, only a nation can recognize money. It is their money, it's their credit, they control it. But then, you have to have a fixed-exchange-rate system among nations, so you do not have rising interest rates
Zavtra: Even no fluctuation in some corridor?
LaRouche: The idea was fluctuation could occur only by negotiation.
LaRouche: But the point was to avoid this escalation of interest rates, through inequities in terms of fluctuations in interest rates. In other words, if a currency goes down, then the compensating interest rate goes up. Therefore, you have to have a fixed-exchange-rate system to prevent inflation in borrowing. Because an internal economy can generally tolerate only 1.5-2% interest rate, which we need to keep in order to develop the economy fully. And you have to accomplish this by cheapening the power, all kinds of power.
A Keynesian System, or Glass-Steagall
Zavtra: But you mentioned that, actually, Truman introduced a Keynesian system
LaRouche: Yes, Keynes
Zavtra: Which, for me, sounded a little bit different, because liberal values are going against Keynesian regulatory methods.
LaRouche: Well, no. It's the same thing. The Keynesian system is a monetarist system. We're still operating under a Keynesian system, internationally. What they did is, they introduced several things: First of all, they introduced fake money, called "financial derivatives." That was essentially done, officially, in 1988, '87-'88; it was done under [Federal Reserve chairman Alan] Greenspan. That was the change. And then, with the expansion of this gambling moneyit's really a form of gamblingthis thing has polluted the whole system.
For example, just look at the United States' economy. The U.S. economy is, right now, bankrupt. Well, how do you deal with a bankrupt economy? You put it through bankruptcy reorganization. In the U.S., we had a statute formerly, which was based on the Constitutionit's called the Glass-Steagall Act. Which meant that you kept commercial banks separate from investment banks. The commercial banks are protected; the regular banks, savings and deposits, you protect them. And if they have to go into bankruptcy, you control it, to protect the public interest. And the standard is, the Glass-Steagall standard. That was the standard that Roosevelt introduced. But that's actually a Constitutional standard, but that was the legislation to deal with a very specific problem at that time.
What we have, in the last period of the administration of my dear friend President Clintonhe was in trouble, because of this impeachment effort. So, Larry Summers, who is a real swine, worked to sabotage that, to get Glass-Steagall cancelled. Glass-Steagall is now cancelled.
Zavtra: Actually, Larry Summers is the author of the Russian debacle with the state bonds, you know.
LaRouche: Yes! I know. He's a thief!
Zavtra: Because, they were working together with Chubais on this thing.
LaRouche: That's right, they're thieves!
Zavtra: Yes, exactly, exactly. It's a very interesting thing. But, theoretically speaking, of course, the introduction in 1944, the system was anchored to the gold standard, as part of that...
LaRouche: Not really. No, that's a mistake. I heard that [said] yesterday. It's a mistake.
The gold standard is not the basisit's not a monetary standard. The British had a gold standard, in the 19th Century, which was cancelled, of course, in the 1930s, the beginning of the '30s. The gold standard is not the basis of the currency. The standard for the currency is the credit system standard. Now, what we did, was we used the gold as a reference point, not as a gold standard
Zavtra: Just a reference.
LaRouche: A point of reference, of a common agreement among different currencies, which would enable them to coordinate as an international currency system. But based on each nation being a sovereign nation, in agreement with other nations. So therefore, you do not want fluctuations in interest rates between different countries, because that will destroy the economic cooperation. Therefore, you want to fix the interest rate. You want to fix the currency. So that is a protection measure, it is not a standard of value.
The Second Phase of the Crisis
Zavtra: Yes, but if we take the situation as of now, after Obama was awarded with this funny prize of Nobel [laughs]which was absolutely a crazy thing! But still, you are mentioning that actually the dollar world system has maybe one or two months ahead before the second phase of the crisis.
LaRouche: Look at the debt. Look what happened. I was going to mention, in a statement of remarks herebut, on the 25th of July, in 2007, I gave one of my regular international webcasts, and I announced, on that date, that we were on the edge of a breakdown crisis of the entire international system, the dollar system, in particular, but it would be international. That's what's happened. We're now in the last weeks, before something happens, when the whole system will go into a chain-reaction collapse of the entire world economy.
Zavtra: You mean, through the hyperinflation cycle? Or, how?
LaRouche: What happened is that, what I proposed in that time, back in 2007, in the Summer, I proposed that we put the entire banking system under protection, with a single act, which I drafted. And I put it through the states first, the Federal statesget votes from the Federal states, and then from the governors of states. There was agreement to do that; we had enough power to do it, but there was intervention from the Federal side to stop it. What my provision would be: We would freeze all these mortgages, all these home mortgages. You don't foreclose.
Zavtra: All? All of them?
LaRouche: All, exactly. Until we straighten the mess out. And we protect the banks, the commercial banks; and we protect the mortgages, because that was the vulnerable point then. If we had done that, as I proposed with my legislation, if that had been carried through, we would be out of the mess. We'd have had a reorganization
Zavtra: Of the banking system, and of the Federal Reserve System, probably?
LaRouche: Well, the Federal Reserve System has to be cancelled. It's actuallysquat. You can not save it.
Zavtra: You're a very dangerous person [laughs]for some people in the Federal Reserve!
LaRouche: No, it has to be done! Because there's no solution if you don't do it.
Zavtra: Yes, I understand this.
LaRouche: It's like wartime: You have to win the war once you start one. Or, you have to make a peace, quick.
Zavtra: But then, emission mechanism should be transferred to the Federal Reserve System to
LaRouche: The Treasury.
Zavtra: The Treasury.
Establishing the National Bank
LaRouche: Well, what we would actually do, is go back to the system that we had under Hamilton, of national banks. The National Bank is a quasi-private bank. The Treasury is responsible for the currency and for the law. A National Bank, a regulated, commercial National Bank, is what is needed in order to coordinate credit, the mixture of foreign, public, and private credit, because that's what you have in reality.
So you have a National Bank, which is the institution of reference, which is controlled, to organize the relationships among private banks and similar kinds of interests. This institution operates under law, under protection, under Federal protection. And my view is, you need a system of national banks which are quasi-private, because they represent private interests as well as public ones, but under protection of law, under Federal governments or national governments.
So, this was the proposal, this was what we were going for.
What they did, is, they went immediately into utterance of vast amounts of financial derivatives, in the form of debt: The so-called bailout operation. We now havewe don't know how much there is, in terms of paper debt out there, in terms of monetarist debt. We have, for example, $26 trillion officially on the books of the United States, which suddenly were slapped on there for bailing out bankrupt institutionsworthless! We have a similar thing in Europe.
Zavtra: But smaller scale, I think.
LaRouche: No! No!
Zavtra: No? Don't you think?
LaRouche: It's bigger. In Europe, the whole euro market is contaminated with it! The euro is totally bankrupt; every nation in western Europe and central Europe is bankrupt, hopelessly bankrupt! The only way you get them out of bankruptcy is by putting them through bankruptcy reorganization.
Zavtra: But if such a vast, I would say, huge reform is taking place in the United States, then Europe should go through the same procedure.
LaRouche: Europe won't. Because Europe, it will have to revolt to do it.
Zavtra: Otherwise, you know, the European Union will go into pieces.
LaRouche: They will, the European Union will go to pieces, and that will be good: It'll be better to go back to sovereign nation-states. The way to do that, you have to have power to do this: And the power to do it exists within the United States, with Russia, China, and India. And other nations that cooperate with them in the initial action, to create a fixed-exchange-rate system, based on a credit system, not a monetary system. In other words, the national currencies, if each of these countries agree, would go into essentially a fixed-exchange-rate system among themselves.
Zavtra: Between U.S., China, Russia, India, and probably Brazil, yes?
LaRouche: No, not just that. You have also Japan would go in.
Zavtra: Japan, of course.
LaRouche: Japan would go in; you would probably have some other countries in South Asia would go into this. So you would have a majority
Zavtra: But then, it would be some generalwell, another Bretton Woods conference.
LaRouche: It would have the effect of being a new Bretton Woods conference. It would have the effect, which would establish a system of regulated states, with fixed-exchange-rate credit systems. In other words, you would have no international monetary system. You would have credit systems of sovereign nations, which is what Roosevelt intended by the Bretton Woods
Zavtra: With separate currencies?
LaRouche: With separate currencies, but they would have a fixed exchange rate.
The Role of China
Zavtra: But don't you think that, right now, the world financial system hosts the arena of clashes between differentiated political centers? What I mean, what I have in mind, that I see that China actually is trying to camouflage the situation, and they are preparing for some drastic steps.
LaRouche: They are doing
Zavtra: They are right now under intense negotiations with Japan.
LaRouche: I knowwith everyone.
Zavtra: Trying to make common ground
LaRouche: Well, China's preference would be, to have an agreement with the United States directly, of the type they want. Under the present Obama Administration, that's not possible. What there is, is a compromise, and China does not trust the Obama Administration.
Zavtra: No. They don't trust anyone.
LaRouche: Well, I have a good relationship with some of the people in China on this question. Because I've been talking about this for a long time, and they know what I've been saying. They realize I'm right. But the question is, we have to have an efficient agreement.
Now, the problem is this: China's great growth had a big mistake built into it.
Zavtra: Mm-hmm, which one?
LaRouche: The one where you have Communist Party billionaires? Right?
Zavtra: But sometimes, they are shooting them, you know.
LaRouche: I know, I know.
Zavtra: Like the case with the president of the national oil company.
LaRouche: Oh sure. Sure. This is Chinese decision-making. The Chinese have a very special way of thinking about things. I like them, but they have their problems.
But the point is, they don't trust the United States, and rightly so. Because here's what the primary China problem is: The development of China's economy was limited to a small portion of the total population.
Zavtra: Absolutely. Maybe 25%.
LaRouche: Right. And the majority of the population is still pretty much in as bad, or worse conditions than before. Now, this can be fixed. Because China's destinyfirst of all, China's problem was, it gained this problem, gained this interest, because they were able to produce more cheaply than
Zavtra: Absolutely, yes.
LaRouche: All right. So therefore, by producing more cheaply, they went below the cost of reproduction, physical reproduction. That is, their income was not sufficient to reproduce the entire population of China and its development, so therefore, you had a cheap-labor policy for a so-called dependent country, which is a very bad policy. What is needed is a long-term development policy, which means you need a system of credit for about 50 years.
Zavtra: Now, besides that, they have a plan for huge projects, as hydro-dams, and construction, and things
LaRouche: Oh, this is fine. That's fine, this is what they need. Largely what they need is heavy, basic economic infrastructure development, which is not marketable by them immediately.
Zavtra: No. And that's why it creates a longer cycle of
LaRouche: That's right. You get away from short-term cycles to long-term agreements. And you have many parts of the world with that characteristic: Where they need a long-term credit system, for development of the basic economic infrastructure, to bring them into parity of ability to function within an international market. Therefore, you need an agreement among states, where the states are sharing credit to other states, under long-term agreements.
Zavtra: So you don't think that for China, it could be a much more plausible way to create some mega-regional currency, and mega-regional economic cooperationif they strike certain agreements with Japan, for example?
LaRouche: That won't work. It has to be global. Because you have to have a stable, global system.
LaRouche Proposals Are on the Table
Zavtra: Then another question: What would be your general scenario for the coming several months, maybe one or two years? Do you think that the American administrationnot Obamabut maybe a new one, an administration would come to such conclusions as you put on the table?
LaRouche: It's on the table. I'm part of it. I'm part of it, on the table in the United States.
Zavtra: But you actually characterized Obama as a British spy, and
LaRouche: No, not a British spy, he's a puppet. Not a spy.
Zavtra: He's a puppet, of course. I understand. It was figuratively speaking.
LaRouche: He's totally owned, he's totally owned by British intereststotally.
Zavtra: But he's from the Harvard group, as I can understand. He's from the Harvard group.
LaRouche: Not really, no. He's actually the Chicago group, it's the Chicago mob. That's what it is.
Zavtra: [laughs] The Chicago mob is interesting!
LaRouche: That's what it is, really! But anyway, he's a puppet. He's a total puppet.
Zavtra: But who is actually?
LaRouche: Oh, Tony Blair's his controller.
Zavtra: Larry Summers?
LaRouche: No, Tony Blair.
Zavtra: Tony Blair?
LaRouche: The former prime minister of Britain, is his controller.
Zavtra: Don't you think that [Gordon] Brown is also kind of a person, qualified for understanding all the complexity of the financial system?
Zavtra: The current Prime Minister of Great Britain.
LaRouche: Brown? No. He is a financial specialisthe's a thief, an expert thief, and a murderer. [laughter] I mean, he's British.
No, the British have an ideology. People talk about the British Empire. The British Empire is not the United Kingdom. The British Empire is an international monetary system, which the British have managed to get control of. In other words, it's a Venetian type of system, like Venice operated in the Dark Age in the 14th Century: The Venetians controlled the Italian bankers. The Italian bankers were the instruments of the Dark Age.
Zavtra: Controlled a wider circle?
LaRouche: But the Venetians controlled the Italian bankers. And what they did, is they switched between a gold and a silver system, and by that switch, they trapped all of Europe into a Dark Age. And what you have, is a new version of this Venetian-style banking, which created the British Empire.
The Gold Standard Is a Danger
Zavtra: But, how about, then, the gold standard? Don't you think that the movement and actually the purchases of gold, which is now
LaRouche: I know.
Zavtra: Everywhere shows that gold is returning back as a kind of
LaRouche: That could be a danger. A gold standard is a danger.
Zavtra: It's very narrow, I think. It can not be a basis for the complex global economy.
LaRouche: What you need is a production standard. See, because we're using up natural resources, in their present form. Therefore, we have to have an economy, which is not based on a fixed standard, but based on a constant rate of technological growth, an increase in productivity, to overcome the depletion factors. So therefore, you have to have a movable standard. And the movable standard is actually a production standard: What's your standard of productivity?
So you have to have a science-driver orientation these days, in agriculture, industry, and infrastructure. And if you're not meeting that standard of improvement of technology, you're not going to be able to maintain your position with respect to economy.
LaRouche: So therefore, you have to have long-term views, which are like 50-year, or century views, which is one thing the Chinese will understand.
Zavtra: I think they are much closer than any other part of the global system to that standard.
LaRouche: They do understand that. What they understand is, they have to think in century terms, but they are operating in a world which operates on less than one-generation terms.
Zavtra: Yes, but, actually, the predominant political thinking, on the part of the United States establishment, or the European/British establishment, of course, they won't change. They will drag their own line as long as possible, until it falls down into the abyss.
LaRouche: Yes, well, that's going to change. We're in a point where you have a new administration, and what I'm working with in the United States: We had a group, a team of people, who were selected originally, to be the advisors to Obama. Now, the administration was actually worked out, where Mrs. [Secretary of State Hillary] Clinton conceded to become of the Obama Administration, that's before the actual completion of the election process. As a result of that, you have two basic elements, and some other elements in the Obama Administration. One is Mrs. Clinton, together with people like [Defense Secretary Robert] Gates, and others; [National Security Advisor Gen. James] Jones and others, who are doing a fairly good job in foreign policy, within the bounds of having an Obama Presidency. You see this with [Russian Foreign Minister Sergei] Lavrov, here. The relationship will be very good. Russia, with Lavrov and Clinton on the question of dealing with Iran, for example. It was a modest accomplishment, but it was a necessary one.
So, we have the Obama Administration, which is now faced with a mass strike, a literal mass strike, in the sense of Rosa Luxemburg's definition of mass strike. Eighty percent of the U.S. population want to get rid of Obama.
Zavtra: Yes, but it's impossible, I think.
LaRouche: No, it is not! It is not impossible.
Zavtra: So, the way of impeachment, you mean, or how?
LaRouche: Well, there are various ways. You have impeachment, that's a formality. You also have a number of powerful people go into a President and say, "Mr. President, you made a mistake. Time for you to quit."
Zavtra: Yes, but, you remember, there was a case in recent history with the Russian Tsar Nicholas II. [laughter]
LaRouche: No, well, Nicholas II was a different kind of problem. Nicholas was a victim, in terms of the British operation.
Zavtra: Yes, absolutely. It was a kind of conspiracy against [Russia], and he was stupid enough
LaRouche: When Bismarck was fired, actually by the King of England at the time or before thathe was then Prince. He was fired, because Bismarck, among other things, had made an agreement with Tsar Nicholas.
Zavtra: Yes, on cooperation.
LaRouche: That's right, on the question of the Balkan cooperation against the Habsburgs. And that's when he was fired. Once he was fired, then the British were able to orchestrate a war throughout the continent, throughout the world, called World War I. Right? And so, Nicholas was caught in the crossfire of that, because in terms of the Bolshevik Revolution, it was a very complicated phenomenon. It was not a very simple phenomenon at all. It was a frictional phenomenon, and went whwkww! [laughter] You couldn't blame people on that. You have to understand
Zavtra: But in terms of approaching events, what would you see?
LaRouche: I would see, right now, that we're in a breakdown crisis; within a matter of this month, or next month, or something like that, the whole world system is going to disintegrate. It's going to be chain-reaction, because once the U.S. dollar goes, then every part. See, you also have something else, which people don't mention here: Globalization. The globalization process has made each nation a victim of other nations, because it no longer has the protection of a margin of sufficiency, self-sufficiency within its own economy.
LaRouche: So therefore, now, nobody is independent. Everybody's dependent, because if they eat something, somebody else produces it; if they produce something, somebody else produces it. They have to pay for it. And the middleman controls them. That's the way the empire works: It's like a Tower of Babel, which is operating in the planet today.
So, when you have a margin of two or three nations go into bankruptcy, then, the trading relationships will retransmit the bankruptcy to every country in the world. No country will come out of it alive. So therefore, you have a situation, which is about to hit now, contrary to the discussion I've been hearing herethis is not real! People are having fantasies, stillit goes down.
And my concern is the timing. The timing is, the crisis is coming. We're on the verge of a complete breakdown crisis, not a gradual depressionnothing of that sort. We're in a breakdown crisis, because the amount of credit outstanding, in terms of debt, in terms of financial derivatives, which are totally worthless, is so great, and the demand is, the system now demands protection, of support, of bailout, of these financier interests which are largely derivatives. You have to cancel that.
Zavtra: It's a kind of revolutionary measure, you know.
LaRouche: But it has to be made. And the point is, it's either going to come as chaos, which can last for a generation or two, or it can come by decision of a few governments that use their heads.
Zavtra: And how would you comment on the G20?
LaRouche: It's a farce.
Zavtra: Some kind of a PR action.
LaRouche: That's all. It's a farce. Nobody agrees on anything that's any good. It's all a farce. And if the United States goes through a crisis, in which Obama is put under control, by that grouping
Zavtra: You know, Obama, of course, is a very gifted person, because when I listened to him for the first time, maybe two years ago, I could spot that his ability or his rhetoric is on a much higher level than any other participant in the political process.
LaRouche: Yes, but what's the content of his rhetoric?
Zavtra: That's, you know, he's wooing the public, the crowd.
Zavtra: Like a Christ, you know.
LaRouche: It doesn't work any more.
Zavtra: But maybe it would be the best weapon to introduce some new
LaRouche: No, it won't. It won't. I know, he's controlled. He's not an independent factor. There's no brain there.
Zavtra: Then, you think that Mr. [Vice President Joseph] Biden could be much more independent of these same forces?
LaRouche: Oh, Biden wouldn't, no. If Obama is brought under control, which I've said openlyif Obama is brought under control, with the circles that I'm working with, we know what to do.
Zavtra: Thank you very much.
LaRouche: Good to meet you.