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This presentation appears in the July 4, 2003 issue of Executive Intelligence Review.

How a Concert of Sovereign Nations
Can End the Global Economic Collapse

Lyndon LaRouche gave a major economics address to the Chamber of Commerce of Turkey's capital, Ankara, on June 16, 2003. The subject was the world financial-economic crisis, and Turkey's situation within it, as well as LaRouche's personal role as Presidential candidate and leader, in solving that crisis.

Here too, the participants' questions to LaRouche are paraphrased, while his answers are given in full. [See overview of Lyndon LaRouche's June 13-18, 2003 visit to Turkey.]

Thank you all. Thank you, Mr. President, very much. I think I can assure you, from the reports I have received from Europe, and indirectly from the United States, that partly because of the international connections of some Turkish television, what I had to say at night, here, on Saturday night, has been broadcast into Europe and into the United States.... I've had reports from Germany, in particular, and from the United States, among Turkish-speaking people there, who are elated about my being here. It reassures them, that somebody still cares about what they're concerned about.

Now, what I shall try to do, is to—in a compact way, not answering all questions, but I'm prepared to answer those that come up—what the situation of Turkey is, as I see it now, in respect to the current crisis with emphasis on the crisis of the world economy and the world financial system.

We're now at the end of the system. That is, as some of you know, or recall, who are younger—that at the end of the last war, the United States emerged as virtually the only world power. We had the highest rate of productivity in physical terms, per capita, of any nation of the world. In the immediate period, the first 15-20 years, of the post-war period, the monetary system which had been designed by President Roosevelt, the so-called "Bretton Woods system," brought prosperity and growth to many countries of the world. We continued to be a great nation, despite all the mistakes we made—and we made some bad ones.

IMF Usury and U.S. Parasitism

But then, about the time of the assassination of President Kennedy, a fundamental change occurred in the United States. We changed our national character, from having been the world's leading producer-society, in terms of per-capita physical output, to becoming increasingly a consumerist parasite upon the world. This parasitical role, which began to emerge about 1966-68, was consolidated under President Nixon, during the years 1971-1972, with a sweeping change in the world monetary system. As a result of that, the United States, Britain, and a few others took over the world monetary system, and used the world monetary system, the floating-exchange-rate system, to loot the world.

If you go into a country, from London, the London speculative market, you organize a speculators' run against the currency of Argentina, of Mexico, or some other country—or India, as was done in 1967, against India. Then, you threaten to crash the currency of that country. Then someone says to that country, "Why don't you call in the International Monetary Fund or World Bank? They will help you out!" The International Monetary Fund or World Bank says, to that country, "Drop the value of your currency. Devalue your currency."

And the country says, "Fine. That means that we'll pay our debts in our currency, as before. Right?"

"Nooo! You will not pay your debts in your currency! You will pay your debts in dollars! We will take your old debts. We'll reclassify them as dollar debts, and you will now pay in dollars."

And thus, you have a situation, for example, in Central and South America: That, in point of fact, morally, no country of South America owes any money to anyone on account of its honest debt: They've more than paid every debt they had, as of 1972-72. They have only the artificial debt, dictated to them, by the IMF and World Bank. No money was paid to them. They received no value for this debt; it was a postal mark.

In similar ways, they would dictate to countries what the prices of their exports would be; what their import/export policies would be. They would tell them to sell valuable industries, to certain preferred companies, which were preferred by the IMF. The riches of the world were robbed, especially of the poorer countries, by IMF methods.

Then, we came along to a later point: 1989-1991. The Soviet system collapsed. And the Anglo-Americans said, "No! We run the world! There is no other superpower! The world must do, as we tell them. We are the power to rule the world forever." Now, some people thought that was wrong, even in the United States, until recently. Even Bush—the father of the present incumbent of the empty chair, in the White House—was not willing to go along with his Defense Secretary Cheney and others, the people that are called "neo-conservatives," in continuing the war in Iraq; or going toward a war policy of nuclear preventive war against nations of the world, including those without any nuclear weapons! Bush said, "No." Scowcroft said, "No." And Cheney sat there, grumpily, and saying, "Wait, until I get my chance!"

Then came Clinton. Now, Clinton was probably the most intelligent President we've had since Roosevelt; or perhaps Kennedy (we never really had a chance to really try Kennedy out; they killed him, too soon). But, Bill—whom I liked, and still do—while he's got a great mind, tends to compromise too much, to my liking. And, he was compromised, by somebody putting something in the basement of the White House. But, Bill was a fine fellow; I still like him; he's still useful. I think he's useful for the cause of peace and for some other things. But, I wouldn't put him up front as a soldier. I'd put him back there, somewhere else, probably tending the wounded or something like that he'd be good at; or encouraging them.

But, then what happened is: With an operation in place, Bill ended two terms as President, and they put two fools up to run for President that year, the year 2000. One fool was just as ignorant and incompetent as the other one. One could spell, the other could not. One could read a map, the other could not. But, they were both fools. And either one becoming President would leave the country open to a non-leadership, which would get us into a war we didn't want, very soon.

The Sept. 11, 2001 Reichstag Fire

So, when you create a vacuum in power, when the parties are weak and disoriented and corrupted, then, at that time, you can have what happened to us in the United States: on Sept. 11, 2001. Through a provocation, like the Reichstag Fire in Germany in 1933, a dictatorship was established in the United States, on the presumption that someone outside, from the Muslim world, a bunch of amateurs had captured planes and attacked two towers in New York City and the Pentagon—none of which is true. What happened immediately is: Cheney, who had been sleeping there, awaiting his chance, since 1991-1992, when the other Bush, and Scowcroft and Co. had forbidden his going ahead with this policy, suddenly marched out in the evening of Sept. 11, 2001, and said, "Here it is! We're going to war!"

Now, President Bush is not the most intelligent man we've ever had in the White House, and that's a rather ingenuous statement. But, he was easily managed, and by December of the year 2001, he was going into his State of the Union speech, talking about an "axis of evil." An "axis of evil" is a plan for a war against the world. It's a war of intimidation, using nuclear weapons and terrifying the world to the point, "If you don't obey us, we'll hit you with nuclear weapons, and we'll destroy you in other ways! We are the Empire! We run the world! You do as we tell you, or we kill you!" That's Cheney's policy. And, that was said, specifically.

When you say, you're going after the Muslim world, as a target; as you list a few other nations beside it, including, implicitly China, as well as North Korea; then you're talking about world conquest, using the threat of actually using nuclear weapons in preventive warfare for world empire!

I explained the reasons for this a number of times; it's the same reason that Hitler was put into power, by a combination of New York and London bankers, back in 1933: When a great financial-monetary crisis occurs, that leading bankers can not control by conventional means, they think of creating a dictatorship, which they control, to do the dirty work which will ensure their power, no matter what else happens to their monetary-financial system. And that's what's happened.

But, this is being done by a tiny group—you would call it, for example in some parts of the world, you'd call it a "junta." And then, a few names, a couple dozen names, are key to this junta—no more! But, they're backed by powerful financier interests, and they're backed by a vacuum in the opposition party, my party, the Democratic Party, where a bunch of right-wing thieves, organized-crime types, actually control the Democratic Party machine top-down. And, the result of that: The party organization, that is, the elected officials in the party, those who are any good, have tended to show more cowardice than courage in dealing with the issues confronting it, up until recently.

We now have a change: that's the optimistic side. After the completion of the initial phase of hostilities, in the Iraq War—so-called Iraq War, which is really going on now; it's getting more intense now than it was before—and will continue to do so, under present management! There's no bottom to this war. There is no exit. This is "Vietnam in the Desert"; and something worse—as we see also in Afghanistan, where the situation is becoming worse as time passes.

So people decided to fight. We had people who were fighting. We had people in the U.S. military, as I think many of you may know, among your acquaintances: Army generals, retired and serving; Marine Corps generals, retired and serving; large sections of the civilian apparatus in the U.S. Department of Defense, associated with the military; others; diplomats of long standing; members of the intelligence community, of long standing. That is, influential layers, within government, which constitute the power of strategic policymaking of the United States, within the Executive branch, had shared essentially the views that I had, on the question of the Iraq War.

But a small junta from the top pre-empted the use of powers of the President—through a President who probably doesn't know which way to the front door or back door—and thus, through the President's mouth, imposed these commands, which led to this war, which every competent military figure said, "No!" So, we're at war.

Can the U.S. Get Rid of Its Junta?

The question, therefore, is: Can this problem be overcome, within the institutions of the United States? Because every other part of the world is absolutely terrified; maybe not terrified immediately of what will happen to it—China still shows a certain amount of independence; not that much, but a great deal. Countries in Europe are fearful. They're terrified by the United States. They're afraid to fight, unless they're really pushed. Where's the initiative going to come from, to clean up this mess, inside the U.S. government?

My view has been, it had to be from inside the U.S. government. And for those of us, who understand how our Constitutional government works, the question was, "How do we get rid of this junta, and prevent the things it's trying to do, within the framework of our Constitutional institutions?"

Now, the normal procedure would be—the Constitution of the United States was very carefully framed: The founders of our republic decided to create a great Executive power. All essential Executive functions are concentrated in the Presidency of the United States, a Presidency which is headed by an elected President. Now, the President himself does not always control the Presidency. Often the Presidency will control the President—fortunately, because we've had some dumb Presidents, from time to time. In those cases, the institutions of the Presidency, which exert a powerful influence on the President's decision-making, find ways to control the President. (As every chief executive knows, the bureaucrats will try to control him. And the Presidential bureaucracy of the Presidency, will make a lot of effort, usually, to control the President. And most Presidents will tell you about that.)

But, in this case, the normal way, in which we would deal with this problem, would be to have the opposition, in the Congress— especially in the Senate—use their Constitutional powers of "advice and consent" to act as a check on out-of-control impulses by an incumbent President. What the problem was, is that the Democratic Party, which is the nominal opposition, is dominated top-down, presently, by organized crime. We're going to change that. But, it's dominated by that: right-wing organized crime, typified by Lieberman, the former Vice Presidential candidate, still a Senator.

So, nobody would challenge the President on illegal decisions, unconstitutional decisions. The Constitution is explicit in its terms, and the discussions around the Constitution's framing, originally, are also very explicit: We knew, that in creating a powerful Executive as our form of government (as opposed to a parliamentary government), there was a danger that some President would use those powers, the way George III of England used his executive powers against the people in the Americas, in that time. And therefore, we provided the qualification of "advice and consent" in a procedure for going to war, to prevent a President of the United States from being a runaway organizer of war. Now, the President has the authority to direct the military, to continue in response to an attack, under rules of engagement. But to continue a war, beyond the limits of rules of engagement, is still unlawful. It is also unlawful, and specifically specified, by our laws, that an official of the United States government, who lies to the institutions; who lies to induce the institutions to go to a war, premised on lies, has committed a crime, an impeachable offense, tantamount to high treason. Such a liar, such an offender, in the case of the Iraq War, is Vice President Cheney. Others as well.

Therefore, my effort has been, and that of others, has been to move toward impeachment of those who are responsible for the lies, specific lies, which induced the Congress to tolerate the President's push to war. Such action, in conformity with our Constitution, is the form of action which could save our Constitutional institutions, and not result in some mess. And it has to be done, immediately.

The process is under way. I was involved in prompting it, with our discussions with some Senators. But, some Senators and others have begun to move, and they moved in the direction of the impeachment of some officials of the crowd around Cheney, or of Cheney himself, in the government. Or, inducing Cheney to resign, as Nixon resigned, to avoid the embarrassment of being impeached. Let him out, if he gets out. But take his chicken-hawks with him.

So therefore, there could be a change. I think that change should be sought. I think it's indispensable, because I don't think that other nations of the world, even together, would have the stamina to force down the President of the United States, at this time. They just don't have the knowledge, they don't have the stamina.

Therefore, we in the United States, have one singular responsibility: That, while we know that most parts of the world are opposed to that Iraq War; most are opposed to this policy; most are opposed to the economic policies that go with it: That these nations do not have the will, to force those measures through by themselves. Therefore, I take it as the responsibility of my United States, to take certain actions, which will encourage the nations of Europe, and others, to do something about this international financial mess.

Put the Old System in Bankruptcy

I believe the following, also: I know that the international monetary-financial system, the present IMF system, is doomed. It can not survive. There is no trick, that can keep this thing going much longer. We are facing the greatest financial collapse in all history, right now. What day will it happen? You don't know, because they're continuing to pump inflationary money in, hyperinflationary money, to try to postpone the crisis, yet one more day. Week by week, day by day, the money's being pumped in; the money's being printed, to try to keep the system alive. So, we don't know when the bubble is going to pop, but it's a bubble, and it's going to pop. You can not go down, to about 1% or 0% interest rate issued, of monetary aggregate, or debts related to monetary aggregate, and not have, under the present conditions, a hyperinflation, which will be comparable to what happened to Germany, between July and October of 1923. That's where we are.

The system is going to go bankrupt. We can not prevent the system from going bankrupt; that's impossible to avoid. But we could, using the authority of a concert of governments, the same concert of governments, or type of concert of governments, which created the initial Bretton Woods monetary system; or, it changed the monetary system during 1971-72: The same authority of sovereign nation-states, conspiring together, can walk in on the IMF and World Bank, and say, "Gentlemen, you are being put through bankruptcy reorganization. You are bankrupt!" Because, in point of fact, the international monetary system, which is based on the central banking systems of the world, is bankrupt The banks in it, are bankrupt. Citicorp is bankrupt! J.P. Morgan Chase Manhattan is bankrupt! Every leading bank of the United States, is hopelessly bankrupt! Freddie Mac and Fannie Mae are about to blow up. The international credit derivatives market is about to blow up. They're bankrupt.

The banks of Europe are generally bankrupt, too. Therefore, the central banking systems are bankrupt. Don't worry about Turkey's financial problems: They've got bigger ones! Yours are just proportionally more painful, for you!

Therefore, the authority of governments, as sovereign nation-states, as the sovereign nation-states of the world, can act in concert to say, "We are going to create a new world monetary-financial system—now! Turning on a dime! We are going to take the central banking systems of the world, into receivership, by joint action of sovereign governments." Each government will take the banking system of its nation into receivership, for reorganization. And, the system, as a whole, will do two things: It will take the whole system into bankruptcy, reorganize it, as a fixed-exchange-rate system; that's what has to be done. Because you can not generate long-term credit—25- to 50-year credit, which we need, as I'll indicate to you—without a low[-interest], fixed-rate monetary system. It will probably have to be gold-reserve denominated, as was done with the original Bretton Woods system. We may be talking about the equivalent of 1,200 euros per troy ounce, in order to have enough credit in the gold system, to maintain a fixed-exchange monetary system.

We're going to have to create vast amounts of credit, and this is what I'm going to concentrate on here, where it comes to the question of what's Turkey's perspective in this kind of process—if we get to the point, where governments agree, to do that.

The Moves Toward a New System

Now, first of all, who is going to do that? Who is committed to moving in that direction? Well, we have Tremonti, the super-economics minister of Italy, who has made certain proposals, in that direction. I have my friends in the Italian government, and also in the Senate and Chamber of Deputies, who have resolved to support my motion for a New Bretton Woods system—that is, a return to the original Bretton Woods design of an international monetary system. We have the proposal for a European Development Bank, outside the limits of the so-called Maastricht system, which would create long-term credit, for large-scale infrastructure projects.

We have some other interesting things: China and India, which are the largest exports markets for Germany—and Germany, of course, is the key of the Western European system; if Germany goes under, the whole kit and caboodle goes under. Therefore, if we can expand the exports from Western Europe, including Germany, into developing Asian markets, which are the largest markets in the world—we're talking about more than 1.3 billion Chinese; we're talking about more than 1 billion Indians; we're talking about hundreds of millions of people in Southeast Asia, with their large Mekong development project now being moved forward.

We have large-scale projects in China, infrastructure projects, the largest in the world. Some in progress, some opening up. A geographic transformation in the internal territory of China, is in progress. If we get through—and this week, we have some good news: Our friends in South Korea have pushed through that rail link across the Demilitarized Zone; it's now open. We have to put some more rail track on it, to connect the Demilitarized Zone to the rail lines, leading to Rotterdam, by way of the Siberian route, and by way of the so-called Silk Road route, which also involves Iran.

So, we have the opportunity for one of the greatest projects in history, today. Consider the territory of Eurasia—total Eurasia: Now, look within it, at Central Asia and Northern Asia. Central Asia and Northern Asia, which are relatively undeveloped areas of the world, contain one of the largest sources of mineral resources, for the future of humanity, sitting to the north, generally, of the populations of China, India, Southeast Asia, and so forth. This is one of the greatest mineral resources for all Eurasia, undeveloped, almost unreachable, for lack of development, for lack of population. We have to move water from the River Ob, down toward Central Asia, toward Lake Aral, to bring Lake Aral back, for example. We have to bring water from the eastern part of Siberia, near Irkutsk, and bring that down, too. We have to have the largest water-resource management projects in history, done within a short period of time, of 25 to 50 years.

We have to build large, mass-transit systems, which can transport goods from Rotterdam to Pusan, on the tip of Korea, and into Japan: faster, quicker, and cheaper than by boat. Because every time you're moving freight through a territory, in general, you are stimulating economic growth in that territory, and therefore, in effect, a good mass-transit system costs you nothing to transport goods: Because what you generate, as income, that you would otherwise not receive, along the route of such a transportation development corridor, is itself a net profit. These are the kinds of projects.

Now, we have in Western Europe, we have a concentration of what used to be called engineering capability, scientific and engineering capability. We have populations which, in part, are still skilled in skilled manufacture of high-technology goods. We have, in China, some people who have skills; there is some improvement in that department in China. You have scientific capabilities in India, Japan, and so forth.

Turkey's Role in the Eurasian Land-Bridge

So, we have, not only a market for the export of European finished goods into Asia, but we also have a reciprocal market, in which technologies being developed in Asia come toward Europe, and technologies being developed in Europe flow toward Asia. So, the products of the world begin to show the reflection of incorporating these various technologies, which are being shared among various countries, as they're developed.

We're talking about long-term projects, at 1-2% credit, 25-year contracts, 50-year contracts, trade agreements among nations; and through these mechanisms, plus the mechanisms of states, through international treaty agreements, we can create the mass of credit needed to organize the greatest economic recovery the world has ever known.

In that process, you know where Turkey lies: Turkey lies between the Balkans, which Turkey is familiar with, historically, and Iraq/Iran. High-speed routes across Anatolia, toward Iran, under peaceful conditions, are Turkey's route of self-development internally, and also routes to China, and routes to India, if we can get the pacification along the way.

We have the greatest potential in the world, in many respects. We have high-temperature gas-cooled reactors. These gas-cooled reactors are much better than petroleum, especially for inland areas, where you don't want to transport petroleum over the long distances; it's costly and difficult to handle, and unreliable these days. If you have high-temperature gas-cooled reactors, say in the 120-200 MW range, then you can generate hydrogen-based fuels locally in areas of high-temperature gas-cooled reactor operation. You are no longer dependent upon burning so-called fossil fuels as a source of power. It's a transformation in efficiency of society. So, under these conditions, these long-term agreements are possible.

The function of the United States should be, to catalyze, by its assent, its cooperation: To catalyze what is already in development with certain circles in Italy, within the government of France, in the government circles of Germany; other government circles in Europe; in Russia, certain forces in Russia; in Korea; in Japan; in China; in Southeast Asia; in India. We are now moving toward a Eurasian development orientation, among sovereign nation-states, which agree on common interests, common funding programs, and so forth. The United States' function must be, above all, to give its blessing and encouragement, and participation to those negotiations, which must establish the new system, that this implies.

That's there. Why is it going to happen? Why will it probably happen? Because the world has no alternative. There's no way, that you could make limited reforms, in the present monetary-financial system, and survive. The world is bankrupt. The amount of financial derivatives outstanding—especially the irregular ones—on the world market today, is such that the debts which were associated with financial derivatives, and trafficking in them, could never be paid, under the present conditions. If you try to find a way to reorganize the payment of those kinds of debts, you will cease to exist.

And therefore, the world is coming at the edge of a breakdown crisis—not a depression, but a general breakdown crisis, which is going to force the issue, among nations: Are we willing to take the hard step, of creating a new monetary system, representing the successful experience with the original Bretton Woods system, on a world scale. Except, this time, the United States can not sponsor the world system by itself. The United States is bankrupt. It does not have the means, as it had before, to finance, to back up, and to guarantee a world system, a world monetary system. There must be a concert of nations, which plays the role today, which the United States played in organizing the world recovery of the late 1940s-1950s. That's where we are.

Not Cheaper Labor, But More Skilled Labor

So, the characteristic of the economy, that is so created, will be, not the export of finished goods—that will occur, but that will not be the characteristic of economy. We have another problem in the world: Go to India. Go to China. Go to Southeast Asia. Talk about increasing the productive powers of labor significantly, on this scale, in those parts of the world. You have parts of India that have high degrees of skill in science; but, you also have a large population, which is living on the verge of desperation, uneducated, poor, incapable of defending themselves in terms of modern technology. China has a similar problem, which it's addressing. It's a transformation of China, to move populations from the concentrated areas where they live in marginal poverty—successfully, but marginally—into new cities, new centers, inland; by moving water north, by moving water in toward the interior of Asia, to develop the interior of China with new cities, and new technologies, to raise the level of production of the people of China over two generations, which means, approximately 50 years. China thinks in terms of two generations, and that's one good part about China: They don't think about next year; they think two generations ahead. And, that's the way we should all think.

Now, under those conditions—the basic problem of society, under these kind of conditions, is the fact that we have many poor people, who lack the technology to be productive, in the degree we require, in these kinds of large-scale developments. There are too many poor people. Now, the solution is not to kill them off. The solution is to educate them. The solution is to give them the opportunities, the conditions, under which the productive powers of labor over two successive generations can accelerate, as has been done in some parts of the world, already.

Therefore, the premium is not on cheap wages. The premium is on developing a standard of living, which is consistent with a population which is developing high degrees of skill, technologies, and so forth. And also, motivation: a sense of history. In many parts of the poor among the world, they have no sense of history! They have a sense of their local experience. The world, as a whole, befuddles them. They don't know their place in the world. They don't have a sense of national mission. If they have a sense of caring for their children and grandchildren, or the immediate neighbors, that's a sense of mission.

So, we have to change the world. We have to change the world in a way which goes with the continued production of improved technologies, with higher rates of scientific progress, and the spill-over of these sciences into new technologies, being developed within the pores of society.

So, what we will be exporting, from one to another, will not be just finished goods: What we'll be exporting is our technologies. We'll be sharing and selling our technologies to one another, in order to incorporate these shared technologies in the products we produce. In that way, we shall be driving the productive powers of labor at the highest rate. This means a lot more emphasis on research and development. This means a heavy emphasis on changes in the educational system, in this direction.

Man's Capacity for Discovery

It means we no longer tolerate in the world, the idea that large masses of humanity shall be sustained in the way a farmer cares for cattle. We have to tap into that characteristic of man, which distinguishes man from the animal: the ability of man, to discover those unseen principles, those unseen physical principles, which lie outside our sense-perception—principles like gravity, other principles. And that quality of man which enables us to increase our species population, from an original potential, perhaps, of about 3 million individuals living on the planet at one time—the potential of a higher ape—to the 6 billion or more, living today. We have to increase man's potential; the main object of economy, should be the development of man, as man. Man as a creature distinct from the beast.

And, if we do that, I'm confident we can win. My job, as a Presidential candidate—and fortunately I have a relatively leading position now, in aspiration of that office, not because of my talent, but because of the lack of nerve and will and guts, among my rivals—my job is to persuade my nation, above all, to do this, to play this part: To create a community of sovereign nation-state republics on this planet, as the only form of organization of humanity on this planet. My job is to orient my people in the United States, toward playing this kind of role, in the world. My job is to talk with you, to talk with people in each of these countries, to share with you what my intentions and visions are, and to hear what you have to say, so that we together, through that kind of dialogue, can begin to resolve the difficult subjects that we have to debate among ourselves, in order to bring this new kind of order into being: an order of community of nations, in which each nation is perfectly sovereign; no supra-government, but a community of nations, operating on a set of common principles, on which we must come to agreement. Not a utopia, just a set of principles, based on the simple concept of what is the difference between man and an animal.

Thank you.

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