Monetary Reform Action Must Begin During September, October
Aug. 27, 2007 (EIRNS)This statement was released today by the Lyndon LaRouche Political Action Committee (LPAC).
Lyndon LaRouche replied as follows today, to a question e-mailed earlier by Giorgio Vitangeli, economist, author, and director of the monthly Finanza Italiana, Rome:
The needed action of reform must begin immediately during the rapidly unfolding weeks of September and October. The possibility of launching the first of a series of phased reforms has been created by the rate of accelerating ferocity of the breakdown now already in progress. We are already witnessing the rapidly rising storm presently hitting the mortgage-based securities system and the banking system, that with inevitable global, early, chain-reaction effects hitting all nations, world-wide. The present world monetary-financial system is now thrashing wildly on its death-bed. Soon, without drastic reforms of policy, the movements of the sick man will become more and more violent, but, then, become less, and less, and less; then, soon, without the needed drastic reform, the sick man's movement will finally cease.
The present floating-exchange monetary ship, the ship launched by the U.S.'s George Shultz, and captained, until recently, by Paul Volcker and his successor, mad Captain Greenspan, is sinking. Passengers who are reluctant to move off that floating system now, are to be mourned.
This response by me should be read against the background defined and outlined in my just recently published, 44,000- word prolegomena for a U.S. Democratic Party's 2008 Presidential campaign platform, "The End of Our Delusion." The Preface and the first two of the three chapters of that prolegomena are devoted to the indispensable historical and physical-scientific background which is necessary for comprehension of the relatively more crucial programmatic features, which are addressed in the third chapter of that prolegomena.
As I indicated in my international LPAC webcast of July 25, 2007, where I announced the actual opening of the breakdown-phase of the worldwide monetary system, the new global crisis is already under way. That international crisis is a general breakdown-crisis of the present world monetary-financial system, but NOT NECESSARILY an economic breakdown-crisis. The physical economy can be saved, if appropriate reforms are made in time; the planet's present, "floating exchange-rate" monetary-financial system can not be saved.
The crisis will proceed in successive phases. We have entered the first phase, which is typified by the collapse of a global real-estate bubble on which the entire current monetary- financial system hangs today. The most immediate of these challenges, is being presented at this time. The U.S.A. and other governments most now react to the need for an immediate placing of home mortgages and chartered banks of the U.S. under bankruptcy protection by law. This measure is the indispensable lawful protection needed to prevent an uncontrollable, chain-reaction, hyper-inflationary collapse of the present world monetary-financial system as a whole. An uncontrolled crisis of that type would be comparable to the chain-reaction set into motion by the Fourteenth-Century collapse of the House of Bardi.
At the present moment, a set of very influential and other public and private U.S. figures, of which I am a functioning part, have formed a de facto pilot-group in support of what I have proposed as providing protection for households against foreclosures of mortgages, and also providing protection for chartered banks, but not other kinds of financial institutions operating outside the chartered banking system itself.
This emergency reform is indispensable. Without it, other reforms needed could not be implemented successfully.
We must return immediately, to a virtual reestablishment of a global, fixed-exchange-rate mode of Bretton Woods system of international and national credit. This must be understood as in the form which had been intended under U.S. President Franklin Roosevelt, and not the form matters took, immediately, under President Harry Truman.
The general reform of the world's monetary-financial system must be premised on an underlying physical-economic commitment expressed in chiefly long-term capital investments in capital-intensive modes, and in a global climate of a simple underlying interest-rate for long-term lending of 1-2%. At least half of the investment would be in long-term modern infrastructure, and the remainder in agriculture and industry. The combination of the elements of this program will represent an investment cycle of about fifty years maturity of new obligations generated.
Without U.S.A. cooperation with Russia, China, and India in creating a nucleus around which to bring in other nations, the needed organization of a revival of the physical economy would lack the indispensable "political detonator" which the launching of such a general reform requires. If relevant forces in the U.S. present that proposal, to form a sponsoring body for the assembly of a broader range of nations (as a coalition within the UNO) to Russia, China, and India, it were reasonably certain that Russia would accept a serious such proposal, and, with Russia's participation, the conditions for the formation of a sponsoring group of the four will exist.
On the matter of lapse of time, we must take into account the shocked state of mind in nations which are witnessing the daily disintegration of the system, under their eyes.