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This article appears in the April 12, 2013 issue of Executive Intelligence Review.

Glass-Steagall: Alternative
to Murderous Looting Policy

by Helga Zepp-LaRouche

[PDF version of this article]

April 5—A monstrous crime is occurring before our very eyes. Instead of admitting that their "business models," globalization and the euro, have failed hopelessly, the global financial institutions and their willing governments are resorting to the worst possible means: the lethal combination of hyperinflation and outright robbery of the bank deposits of the population. The effect, as expected, is to crash the real economy and reduce the life expectancy of millions of people. There remains only a very short window of opportunity in which to establish the alternative to this murderous madness, namely the policy of banking separation, in exactly the same form as it was introduced by President Franklin Roosevelt in 1933 in the United States, with the Glass-Steagall Act.

The decision by the Bank of Japan to double its money supply within 21 months, and to pump $140 billion a month into the economy for the purchase of government bonds, index funds, and real estate funds, represents the most massive monetary injection ever by the central bank of an industrial nation. It overshadows even Fed Chairman Ben Bernanke's "quantitative easing," which "only" spends $75 billion a month on the purchase of government bonds.

Scott Minerd, the chief investment manager at Guggenheim Partners, commented April 5 on this step by the Japanese central bank:

"The world's third-largest economy may be setting the stage for a global inflationary spiral, perhaps beyond anything previously experienced. As Japan seeks to deal with the longer-term consequences of its current policy, it could easily slide down the slippery slope that leads to hyperinflation. Troublingly, the rest of the industrialized world is at risk of going down with it."

Just as Lyndon LaRouche has been warning for years: that the international financial oligarchy would, as a final step, open the monetary floodgates, to bring to an end a system hopelessly overloaded with worthless gambling debts, and, of course, to dispossess the population in grand style through inflation.

The mouthpiece of the City of London, Ambrose Evans-Pritchard, announced this last phase of disintegration in the Daily Telegraph, in an article with the incredible title "Helicopter QE [quantitative easing] will never be reversed." He quotes Prof. Michael Woodford of Columbia University as a leading "monetary theorist," to the effect that it is now time to lay the cards on the table and cease the talk of "exit strategies"—now it is all about eliminating the national debt from the bloated balance sheets of the central banks. In this way, the public debts (which are for the most part the result of the bailouts for the gamer-banks) will evaporate by hyperinflation, but, of course, the life savings of the population will evaporate as well. Say Hello to Weimar 1923! But this time, world-wide.

From 'Bailout' to 'Bail-In'

A further aspect of the blatant dispossession of population and destruction of the real economy. is the phase change from "bailout" to "bail-in," i.e., from taxpayer-financed rescue packages for the banks, to outright theft of bank accounts with deposits of more than EU100,000, as in the case of Cyprus. This grabbing not only of savings accounts, but also of checking accounts, with deposits of €100,000, will cause a giant wave of insolvencies of small and medium enterprises, which therefore cannot meet their regular operating expenses such as wages, rent, and cost of materials, and are driven into bankruptcy, as we have seen in Cyprus over the past two weeks.

What emerges from numerous documents—from articles in the financial press (Economist January 2010), to documents of the European Commission, to the EU directive in June 2012 ("Framework for Recovery and Resolution of Credit Institutions and Investment Firms"), to the Dodd-Frank Bill in the United States, to a joint paper of the Bank of England and the American FDIC—is that such deposit grabs have been in preparation for many years. Citizens were to pay for the gamers' system from the outset: first as taxpayers (and including massive cuts in social spending), and now that this model has been exhausted, as account holders, by brazen theft.

The phony argument, that ultimately the investors must be held liable, is nothing more than sand in the eyes of the citizens. For both monstrous measures—the hyperinflationary policy of printing money, and the predatory access to accounts—have only one purpose: to keep furnishing the system of high-risk speculation with obscene profits. At least, until the mega-speculators have finished feathering their nests, and the preparations have been completed for a new system.

LaRouche had just warned in his Feb. 15 webcast—without any advance knowledge of the events in Cyprus or the decision of the Japanese central bank—that a system was being prepared in which the majority of the population will go empty-handed, and only selected members of the elite club will have the requisite volumes of money at their disposal.

The Murderous 'Cyprus Model'

In the rest of Europe, we would be well advised to watch carefully the consequences of the policy in Cyprus, which, according to the new head of the Eurogroup, Jeroen Dijsselbloem, is the template for all states. The Cypriot economy is in free fall. The forced taxation of account holders means that foreign investors, who accounted for 40% of government revenue, have withdrawn their funds already or are about to do so; small businesses and family businesses are going bankrupt; and the health system is in a state of collapse. The memorandum that the Troika (IMF, European Central Bank, European Commission) is attempting to ram through in Cyprus has led already to a systemic reduction in life expectancy to an average of 80 years to 75.

The same type of thing is happening elsewhere, such as in Athens, where cancer patients cannot be treated because the last oncology clinic was closed. In the U.S., budget cuts to Medicare are forcing oncology clinics that treat patients with expensive chemotherapy deny treatment in order to keep their doors open—tough luck [see article in National]. This is a foretaste of the genocide that threatens in the short term to be a consequence of global hyperinflation.

The escalation of the crisis in Korea, with people in the Anglo-American countries already debating, in all seriousness, the legality of a nuclear first strike against North Korea (if a threat from North Korea were detected), demonstrates the following: The world is on the brink of thermonuclear apocalypse, and it would not the first time in history that collapsing empires attempted, as a last resort, to stay in control using wars. Except this time it could cause a global thermonuclear war that would obliterate the human race, and then no one would be left who might enjoy the result - not even the Queen of Great Britain.

No Partial Solutions Are Possible

The faster a large part of like-minded people (optimistically, maybe 5% of the population) realizes that we are dealing with a systemic collapse, in which there can be no partial solutions, the greater the chance that we can implement the existing solution to this crisis in time. Individual issues, be they ever so legitimate in and of themselves, will not do any good, whether they be the policies of opponents of military exports or the anti-euro parties.

Only a complete paradigm shift can bring an answer to the systemic collapse: a shift which places man back in the center of politics and economics; which makes the general welfare, certified by Germany's constitution, into the basis for domestic politics, and international law into the basis for foreign policy; which, instead of a return to barbarism, chooses scientific and technological progress and human creativity as the method of problem solving; and which, instead of mind-numbing banality and the cult of ugliness, promotes Classical culture and the idea of freedom through beauty, to achieve a new renaissance.

The absolutely essential first step must be the introduction of the two-tier banking system, not in the deceptive packaging of "ring fencing," the Liikanen proposal, or the Volcker Rule, but exactly as it was done by Roosevelt in 1933. The casino economy and, more fundamentally, monetarism, must be replaced by physical economy, which enables the long-term survival of human civilization.

Our planet is not in a vacuum or a closed system, in which we asymptotically adapt to an absolute limit as in the Second Law of Thermodynamics, but rather our planet is part of the universe, whose laws present us with new challenges that we must overcome if we are to survive as a species. We are also reminded of the concurrence on Feb. 15 of the flyby of the asteroid, and the unexpected asteroid explosion over the Urals.

In the U.S., a movement is growing for the reinstatement of the Glass-Steagall Act, where 13 states have bills and resolutions on their agenda calling on Congress to take such action. This is exactly what we need in all European nations. Then we can dispatch the Troika to their retirement home—in Hell!

Translated from German by Daniel Platt.

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