At the June 9, 2006 Washington webcast by the LaRouche Political Action Committee, Lyndon LaRouche was introduced by his national spokeswoman Debra Freeman who chaired the seminar. An excerpt from dialogs with Mr. LaRouche is presented below.
Freeman: Lyn, I'm going to ask you this question because it's unique in that it comes from a Republican office in the House of Representatives. I'm bipartisan. It says, "Mr. LaRouche, over the last several weeks, the market has been crashing, and events that would normally result in an upswing in the market have had little or no effect in stopping the downslide. Under these conditions, there is a growing fear among all of us that if the Federal Reserve Open Market Committee raises interest rates again when they meet in mid-June—and all indicators are that that's exactly what they're going to do—that it will touch off a panic that has the full potential to become a systemic crisis. If you were chairman of the Federal Reserve, what would you do?"
LaRouche: It's very simple. I'd say to the President of the United States and the Congress: Be smart. Put this thing into bankruptcy now.
Because, you see, this is a product of monetarist thinking. And if you think of the number of people who have been to school and gotten degrees in this or that, who say you don't have to raise interest rates, lower interest rates, to deal with these problems, it's nuts! You don't want to raise the basic interest rates. You want to control the flow of credit. Different thing. What does it mean?
We want a 1-1/2 to 2% basic credit rate in the United States for expansion of the economy. We want this concentrated largely in long-term loans which will go toward 25-year development projects. What we want to do is put caps on prices, to keep prices in line. The thing is bankrupt anyway, and this idea of managing an economy by monetary methods of this money management by interest rates, is absolutely insane! All you're doing is driving up the basic ratio of debt. You've increasing the degree of bankruptcy! You're going too far! So therefore, you go the opposite way. You freeze the thing by putting the whole banking system, the whole financial system, under Federal regulation because it's bankrupt! Remember, the Federal Reserve system essentially controls this whole monetary mechanism anyway. So if you bankrupt the Federal Reserve system knowing that the banking system is bankrupt, you put it under regulation for reorganization, now you impose a low interest rate, but you steer—you don't let it float—you steer where the credit goes.
You steer it into things you want to have happen. You want this industry to exist. Okay, it gets a 2% long-term rate on borrowing. Somebody else wants to bet on the horses. Aha! Well, we've got a 150% rate for you. You want to bet on the stockmarket? Well, that's going to cost you 15-20%, per month.
I say it lightly, but that's what you do. That's exactly what you do. Forget the so-called truisms of management of a monetary system. Forget monetarist policies altogether. You have to go back to the American System, instead of the British System, otherwise known as the Brutish System! Go back to the American System. We have a Constitution which specifies accountability of the Federal government for the utterance and regulation of U.S. currency, a monopolistic power of the Federal government, subject to control by the House of Representatives. Fine. Okay, we control where that money goes. Other money, aha, well, there are no other sources, buddy. But we'll help you out.
So therefore, you don't want to shut something down, as a way of trying to bid prices down, by raising interest rates higher. What you want to do is keep interest rates lower, but freeze the flow, through Federal control over the monetary system, by taking the Federal Reserve system back into receivership. And the Federal government now has to run—the Treasury Department of the U.S. government now takes charge of dictating policy to the Federal Reserve system. Because the Treasury Department is the agency of the Federal government. The Federal Reserve system is a coalition of banks under special sponsorship by the Federal government. It goes into bankruptcy, therefore you put it into bankruptcy. Then, the U.S. Treasury takes over, and the Treasurer of the United States, who would be Paulson at this moment, takes over from poor Ben Bernanke, who is a distress case.
And you cut out this nonsense about trying to manage the economy, or manage inflation, through interest rates. You manage it by direct intervention, because you have to decide what your purpose is, and Federal government credit will be given only for purposes in the Federal national interest. Our interest is to keep people employed, to keep them housed, to keep essential functions working, and to expand the physical economy, expand production, raise the level of productivity. And to take a view of one generation to two generations. We have a mess. If it takes us two generations to get out of the mess, we'll take two generations to do it. If we can do it in one generation, we'll do it in one generation. But we're going to have to have the Federal government take this thing in charge, function through the Treasury, not the Federal Reserve system. Bring it under control. And adopt a program of public works, which will be a driver for stimulating the overall economy.
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About Rolf A. F. Witzsche
Rolf A. F. Witzsche, is an independent researcher, publisher, and author of eleven novels. The novels are focused on exploring the Principle of Universal Love, the principle that is reflected to some degree in every bright period throughout history, with the added challenge for today to give our universal love an active expression with a type of 'Universal Kiss' for all mankind.
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