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Gold System or Credit System?

 


Dialog with LaRouche at the  LAROUCHE NUCLEAR FORUM IN IBERO-AMERICA -

June 15, 2006


Q: [Mexico, trans] 
Good afternoon, Mr. LaRouche, my name is Pablo Santos. I'm
from Mexico, I'm a representative of a sales company. I have a
question with regard to what the cost of investment would be to
implement nuclear energy. And I'm speaking about the question of
having to invest in Mexico, for such a technology, you would have
to invest it of course, in dollars. And if we're talking about a
collapse of the dollar, what possibilities might there be, or,
how could we go about this, if we were to establish a currency in
Mexico which would be based on silver? Would that function?
Thank you.


LAROUCHE: No, it wouldn't function. The idea of a monetary
unit, such as a gold or silver, does not function as a basis for
defining the credit system of a nation. This is a European idea,
not an American idea. But unfortunately, the British influence
throughout the world, is such that--or the British Empire's
influence, shall we say, is such that the idea of monetary
systems of that type prevails and the false medieval conceptions
of the role of gold and silver also prevail.


But we now should be out of medieval society, in which we
consider gold and silver as the basis for currency. We may
consider it as a reserve standard, for international currency
relations. But we would never consider, an intelligent economy
today would never consider a monetary metallic unit, as the basis
for {value} of a currency. They would use gold as a way of
regulating the relationships among different currencies, but you
would never use a monetary unit as a basis for value in an
economy. Because it is {not} the basis of value, except in a
slave economy. But in a human economy, gold and silver as
monetary units are archaic conceptions which do not belong to
modern civilization.


The basis for civilization, is the U.S. system, as
prescribed by the U.S. Constitution. The U.S. Constitution
prescribes that a monopoly on the issuance of money by the
Federal government, with the permission of the Congress: that's
our system. No currency can be issued in the United States,
except by an Act of Congress, which authorizes the Federal
government to make that issue of U.S. dollars. Any other system
is insane.


Now, under that system, when the U.S. government issues a
currency, or utters a currency, that currency can either be
distributed immediately in banks, or it can be put into reserve
accounts through the banking system, as credit. The government
may spend that currency as investment in basic economic
infrastructure--such as for example nuclear plants! Now, the
issue, when the government does that, by creating credit, either
for use as loans, government expenditures or loans through
private banking, this is capital. It is credit used as capital.
Now, let's take a nuclear plant. Today, nuclear power is so
efficient, much more efficient if properly used, than any other
source of power, you have no problem. If you need the power, use
nuclear power. It's superior to any other source of power, in
terms of requirements of humanity. The idea that it was not, was
simply an artificial arrangement to prevent it from being
proliferated. But we need it.


The investment you're making in nuclear power, you're making
an investment which is approximately 30 to 40 years' capital
investment in a nuclear plant. That means that you're going to
amortize your capital advance for this plant, over a period of 25
to 30 years; which means that you do not have to have a
pay-as-you-go approach to buying nuclear power! If Mexico has a
credit system, and is part of a credit system which is tied to
the United States which has returned to the U.S. credit system,
then Mexico has no problem. If it's in the interest of the
United States, that Mexico have nuclear plants of its own, the
United States can use its power as a credit instrument to assist
Mexico in raising, through its own banking system, enough
national credit to finance the construction of nuclear plants--or
anything else that's required: rail systems, {obviously}, in the
case of Mexico in particular.


You're going to require long-term investment in rail
systems, in power systems, in water systems. These are 30- to
50-year investments. Some longer, as in major water systems.
Therefore, they need to be made. The capital has to be raised to
construct these facilities. The government must regulate the
thing. The banking system must be regulated so this can be done.


So you don't have to pay for capital investments out of
current income. You must be able to {repay} capital investments
out of future income! That is a credit system, that is the U.S.
Constitutional system. That is the way we're going to rebuild
the world, out of the mess that the world economy is in today.


We're going to have to freeze the existing monetary systems,
which are hopelessly bankrupt. They can not be saved. We have
to put the banking systems into receivership by governments. We
have to have cooperation among governments, in creating
international credit which is used for the development of all the
participating nations. And therefore, you will have a situation
in the Americas, under which the states of the Americas will
probably reorganize their debts through cooperations among the
member governments of the Americas. This credit will then be
used to assist governments who are members, in getting the
capital financing, at low interest rates, 1-2%, in a
fixed-exchange-rate system.


Under those conditions, there is no limit to what we can
provide in investments within what we can do physically. And
since Mexico needs this, it's cheaper to help Mexico have nuclear
power, and agricultural development, and water development, and
rail development now, than to wait, and watch the population go
down the tubes through lack of development along the line.


You invest in the future! You invest in the wealth you're
going to create in the future! You invest in the power of the
human mind, to make inventions, to make improvements, which will
increase the productive powers of labor. You promote that. That
is the American System. That is the system under the U.S.
Constitution. That is the model which was used by many countries
in Central and South America at various points over the past
century or so, especially since the middle of the 19th Century.
The American System of political economy was understood by most
of the patriotic circles of places like Argentine, and then later
in Mexico, and so forth, as the system to copy. And there was
{hope}, tha the United States as a nation would be a friend of
these nations, and cooperate with them in their exercising their
right to this kind of system: And that's the way it has to be
today.




About LaRouche - the American economist and statesman that has become a legend in our time in the fight to advance civilization, protect mankind, and create a new renaissance: 

" We are at a point in world history. 
At the present time, the international monetary financial system
of the world is in the process of disintegration. That does not mean the end of the world. It means that we either make certain changes, or this
planet will go in fact into a prolonged new dark age, comparable
to what happened to Europe during the middle to late part of the
14th century." (LaRouche, June 15, 2006)


About the series:  Truth versus Guns,
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