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This memorandum appears in the September 30, 2005 issue of Executive Intelligence Review.

Shocks in Unsound Economies

by Lyndon H. LaRouche, Jr.

A memorandum to associates, Sept. 23, 2005:

The principles of "economic shock-waves" which we have employed in our association, date from the second half of the 1970s, a discussion which occurred under the topic of my discoveries in the science of physical economy a quarter-century earlier. This discussion reached "critical mass" in a meeting held in a Bronx location among Uwe Henke, Chuck Stevens, and Steve Bardwell, in preparations for an invitation to an immediate Soviet science event.

At this meeting, I emphasized that the party to visit Moscow should be prepared by study of Riemann's 1860 "shock wave" paper, on my assumption that relevant Soviet non-classified literature would contain material of value bearing upon thermonuclear isentropic compression. I emphasized that such materials from the domain of physical science would be of implicit collateral value in our polishing of the program of LaRouche-Riemann quarterly U.S. economic forecasting which we were in the processing of launching, as a joint Labor Committees/Fusion Energy Foundation project, from our New York offices at that time.

This mission to Moscow, etc., was successful on that account.

ÃThis study of Riemannian isentropic compression was premised on both the general features of Riemann's dynamic method, and on the specific example of Riemann's 1860 "Über die Fortpflazung ebener Luftwellen von endlicher Schwingungsweite" ["On the Propagation of Plane Air Waves of Finite Amplitude"]. On this account, that Riemann paper was translated into English, by Parpart and Bardwell, for the Fusion Energy Foundation, and was, otherwise, an integral part of the internal work of the Labor Committees on both economics and the rudiments of application of Riemannian physics to relevant classes of phenomena in general.

This occurred in the interval I was already leading our work in setting forth the case for what was to be later introduced by me to the Reagan Administration, where it assumed the form of what President Reagan named a "Strategic Defense Initiative." The fact, that the visit to Moscow had identified material in the open Soviet science literature indicating the existence of relevant Soviet scientific capabilities, was a crucial consideration in the making of my proffer of what became known as "SDI" to relevant representatives of President Reagan.

It should be readily recognized, among those with relevant training in physical science, that the phenomena which Riemann predicts for sonic-wave "fronts" in the referenced 1860 paper, represent a general principle, derived from the concept of Dirichlet's Principle of applicable physical science, including my speciality, the science of physical economy.

The following consideration is especially noteworthy.

‹ntIn both the present case, as in 1923 Germany, a hyperinflationary explosion was building up over an extended period. In this case, the origin of the condition which caused this chain-reaction-like present explosion of primary commodities and other prices has been building up since the mid-1990s, with the subsumed points of inflection of 1997-1998. Ironically, the measures used to control the aftermath of the LCTM hedge-fund crisis, actually created the preconditions for the explosion which has now occurred, that in a manner similar to the way a building-up explosion of prices was contained until approximately the middle of 1923, when the explosion of the wild hyperinflation then occurred. A condition of "overload" was approached, akin to the discomfort of the supersonic aircraft (or would-be supersonic aircraft) as it approaches the relevant boundary-condition of the process.

Thus, this present hyperinflationary outburst has been building up since the immediate aftermath of October 1987, when the U.S. economy slipped into the implicitly hyperinflationary mode launched under Alan Greenspan's assumption of the post of Federal Reserve Chairman: a point in the process comparable to approximately May-June 1923 in Germany has already been reached. The attempt to bail out the hedge funds has triggered the shift from contained hyperinflation to explosive hyperinflation, a critical, uncontrollable phase of the present system, a phase comparable to a Riemann shock-front has been entered. Without a sudden change in the system, as Riemann's work implies, the world economy is now doomed to an early and ugly, chain-reaction collapse.

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