Excerpts from the proceedings at Lyndon LaRouche's lecture to Prof. Wilhelm Hankel's senior adult economics class at the Johann Wolfgang Goethe University in Frankfurt, Germany on May 29, 2006.
LaRouche: Now, this is what's called the "surge potential," you may be familiar with that term: That, in the economy which is collapsing, and which is the case of all of the economies of Western and Central Europe, as well as the United States, you have to find a way, not merely to recover employment—as you know from Europe studies, that doesn't work: You've got to find productive employment which cause actual growth, as was done, with my associate here, with the Kreditanstalt fuer Wiederaufbau here in Germany. It was the regenerative capability of developing more and more production which is essential.
Now, the way it would work, and what we're working on in the legislation, is, I've also proposed that we add six new divisions to the military Corps of Engineers. This would be like a driver for many of the projects which need construction, which are Corps of Engineers types of things. The United States has a tradition of the peacetime use of military Corps of Engineers for whole categories of large-scale construction. And in my view, it's a better military policy, than the alternative. Especially these days.
Now this would be supplemented, because a lot of work is required to implement the utilization of the things produced by this reformed section of the auto industry. Among other things, we have an AmeriCorps organization which was actually set into motion under President Clinton. He signed that bill into law. Now, this was aimed at utilizing youth who otherwise had a very poor future, to bring them into programs of education and employment which would enable them to become part of a future. What we would do is expand the AmeriCorps. And together with the Corps of Engineers, we would have a government-sponsored section to implement the measures of growth which would be possible with the drive of a reformed machine-tool industry.
The characteristic of this, of course, is the American System of political economy, which is sometimes not understood in Europe: But the American System of political economy is quite different than any other Constitutional system in the world. We do not have a monetary system, though we sometimes pretend we do. We have a national credit system. And it was known in Germany through Friedrich List, for example: That is, the power to print money is a monopoly of the Federal government. The printing of an issue of money has to be authorized by the Congress, specifically the House of Representatives. The authorization for the printing of money is not merely the issuance of money; it is the creation of state credit, which can then be loaned through a regulated banking system to supply credit for both public purposes, and also for private functions which are considered to be important to the nation. This means that the United States has, contrary to the European systems which are dominated by central banking systems, its own authority to create its own system of credit, as such. This would imply, of course, in relations to a future Europe, we would be going back to something like the Bretton Woods system of fixed-exchange rates, which was what was necessary for the great recovery in the post-war period.
So that's the general picture: It's to have legislation, with the intent to use the power of Federal credit, to fund both the takeover and expansion of an otherwise-lost essential part of production; to engage the military Corps of Engineers for its function, for example, national security, disasters, and things like that; and also, for rivers, and harbors, and things of that sort. And also to bring into play, as added employment, taking youth of our cities, who are now headed for a wasteful life, otherwise, and absorbing them, as the Clinton legislation did, into forms of employment and education. And with this kind of expansion of production, we can absorb them, as we did the CCCs and others back during in the 1930s; we can absorb them into a process of employment, education and personal upgrading. By doing so, it would be sufficient in this way, to get a sufficient margin of increased production, which would bring the U.S. economy physically above breakeven.
Most of the details of what I'm discussing in terms of this reform, this legislation, is either already being reported in the United States, or it will be reported. We're still working on it with specialists, on the details of the design of the legislation, in detail. The kind of thing you do: You have a piece of legislation, then you go into work to turn it into legislation, by going through stage of making specifications and in bringing the experts in. That's in process. And that will be publicized by us, and also by others, internationally, as the process ripens, as the material is finished, because this has another purpose to it.
We're now at a point where the entire world system, financial-monetary system, is in a state of collapse in its present form. It is not necessary to have a collapse, but the way we're going, we're going to experience one. So, you have two purposes: To try to the collapse from actually occurring; and if it does occur, what do you to deal with it, when it has occurred. So, the legislation fits both purposes. But, as I said, if we lose the machine-tool sector of the U.S. economy, the recovery's going to be very difficult.
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