Organizing the Recovery
From the Great Crash of 2007
Here is Lyndon LaRouche's address to a LaRouche Political Action Committee webcast on Nov. 16, 2006. (See also questions and dialogue following the main presentation.)
Audio and video archives of the webcast, including simultaneous translation into Spanish, German, Italian, and French
About 220 people attended the event in Washington, D.C. In addition, there were many "satellite" showings, among them: one group in Paris; five locations in the Mexican Congress and environs; one university in Mexico; four universities in Bolivia; five universities in Peru; two universities in Argentina, and one additional site in Cordoba; and in Colombia, the CUT labor federation invited all members to watch and participate in the dialogue.
The proceedings were moderated by his spokeswoman Debra Freeman.
Freeman: Good afternoon, everyone. I'd like to welcome you on behalf of the LaRouche PAC. My name is Debra Freeman. I serve as Mr. LaRouche's National Spokeswoman and his representative here in Washington....
I think there's really no question that today's event takes place in a much happier environment, than events in the past may have, and I hope everyone is happy, because happy people work harder. And we have a great deal of work to do.
So, if everyone now will take their seats, we're going to close the doors for the next part of the presentation, and then I'll come back, and when I come back, we'll open the doors again. But right now, I'd like to bring Mr. LaRouche up here, and he'll introduce the next part of the program. Lyn?
LaRouche: Thank you. As you will understand better, I think, in the course of the next three hours, the subject we have to address now, is of momentous world importance, and you will appreciate better, later, as we get into the discussion, that the moments which in past history, in past history of European civilization, correspond to what we're going through now, should remind us of 1648, the Treaty of Westphalia: Where, as over a period from 1492 with the beginning of the expulsion of Jews from Spain, through the Treaty of Westphalia, the question of European civilization's existence as civilization, was in doubt, as today. Similarly in the middle of the 14th Century, Europe was plunged into a dark age, after centuries of cruelty under the Norman/Venetian tyranny.
So, in 1648 and immediately afterward, Germany in particular, as the center of the great conflict of the Thirty Years' War, rejoiced in liberation from religious warfare through the Treaty of Westphalia. This is comparable to the great terror which threatens us today, a monetary crisis like that of the middle of the 14th Century, the so-called "new dark age crisis." Today, at this time, as will become clearer not only from today's discussion, but from the events which are about to occur on a global scale, you're living in one of the most terrifying periods of history known to you. Now, right now.
In this circumstance, in the rejoicing in the liberation from religious warfare, in Germany, around Lutherans, of all things, a hymn was developed, called Jesu, meine Freude. Later, in the course of the early 18th Century, Johann Sebastian Bach re-set and treated this as the greatest of his several motets. Today, we're going to have a performance of it, to begin this, in celebration of the kind of the great moment of history which we're trying to bring forth again on this planet, in this time of great danger.
Unfortunately, we're in a hotel, where the acoustics are not those you would get in a good church, so you will not get the full beauty of the performance, because it doesn't fit these walls. But, with a little stretch of the imagination and some good hearing, and some insight into music, you will appreciate what they're about to do. And after you hear them sing, I'll get back to you.
[The LaRouche Youth Movement chorus performs J.S. Bach's motet Jesu, meine Freude. For a high-quality recording of the performance, see the bottom of the webcast media page.]
Freeman: Once again, let me welcome you to today's event. Certainly, after the last few weeks of this campaign, it's with a certain amount of pleasure that we can say that the Democrats now control both Houses of the U.S. Congress [cheers, applause] and I think that there is broad recognition, both here in Washington and across the United States, that that victory was in fact, sparked by Mr. LaRouche and by the Youth Movement that is associated with him. Because, in fact, the Democratic Party itself was not in the greatest shape during the course of this Spring, when the campaign really did take off in earnest.
The situation now in Washington is an interesting one. Because, for many of us who work here and who represent Mr. LaRouche, we've listened to our Democratic colleagues on Capitol Hill tell us—for months!—that they agree with Mr. LaRouche, and that they absolutely agree with Mr. LaRouche's economic policy. But the only problem, you see, is that we Democrats are not the majority party! And what would be the point of introducing this legislation? The Republicans would just strike it down.
And we've heard that refrain, over, and over, and over again. But now, the Democrats are in control. So, there's really no reason at all, why we should not expect that they will, in short order, introduce all of this legislation, and we can get on to the important tasks at hand. And it actually—and I'm not being facetious: It's my full expectation, that that is in fact the way we will start the new year, because it's the way we must start the new year. The fact is that the Democratic victory is an important one.
But now that the election is over, we also have to face the simple reality that the onrushing strategic, financial, and economic collapse will accelerate. And now, the question on the table, is not a question of who will run for President in 2008. The question on the table is how, in fact, the American people, and this nation, are going to organize their way out of the Great Crash of 2007. And there is no better person to address that, than Lyndon LaRouche. Please join me in welcoming him.
LaRouche: Thank you, young lady. Thank you.
Just to start with a few observations, our subject will essentially be the question of the economy as such, which requires a lot of attention. It will get more attention: I will producing, this weekend, for publication over the weekend, in EIR and in other publications, a study of the U.S. economy and how to save the U.S. economy. The title is "Saving the U.S. Economy." It will cover some of the same area, that I'm addressing here today, but it's a more in-depth treatment, of the type due to an audience for a written publication, as opposed to an oral presentation. And there are some things which I shall say here, I will not say there, because this is an oral discussion between me and people out there and people here. So, that's a different kind of communication than writing to a reading audience.
Now, there are three subjects which I would call to your attention as reference, and then I shall return to the one, which is the economy.
What Bob Rubin Knows—And Doesn't Know
First of all, you may know that Bob Rubin, the former Secretary of the Treasury, made some remarks recently, and some other people made similar remarks, but he in particular: In which he did not exactly go all way, but he did warn that we are facing an immediate crisis, an immediate collapse of the present monetary-financial system, which he has been saying for some time. He did not propose the remedies for this, but simply indicated the need to address the reality of the threat, which he much understated.
But I don't object to that, because Bob Rubin is committed to two things: He's a professional in the banking field, which is his basis for having been Secretary of the Treasury. He's a very bright person, very intelligent, and very courageous. But he is a banker, not a politician. He's not a commander of a field army. I'm more inclined to the latter profession, as you know.
But I agree with him on this point: that he is what he is, and I am what I am, and I have no objection to the fact that he's greatly understating the problem, and not identifying the solution, even to the degree that he does have a solution. Because his job is to move things forward, to get people off their butts, so to speak, to recognize that there is not a happy economy out there, there is a terrible economy, in which the lower 80%, even the lower 90% of family-income brackets of the United States, in particular, are suffering greatly. In which every nation-state of continental Western and Central Europe is in the process of disintegration. In which there is some recovery in some parts of South America, but the extent of misery is massive. The situation in Africa is unspeakable. And if the United States goes down, as I shall explain, in that case, China will go down, India will go down, and the rest of the entire world will go down! Go down in a chain-reaction, not into a depression, but into a general breakdown crisis, comparable to what happened to Europe in the middle of the 14th Century, a period which became known as a New Dark Age: in which half of the municipalities of Europe disappeared from the map, and one-third of the level of population, in a period of one generation.
We're now facing a condition which potentially threatens that on a global scale. So, I don't object to what Bob said, because his job is to try to move some dead-heads to life, to realize that this is not a happy situation, that we're in a very deadly situation, which requires rather strong and exceptional remedies. Fortunately, those remedies exist, if we have the will to adopt them.
The Iraq War
You have a similar kind of situation around the Iraq withdrawal issue. Now, we are all committed to the Iraq withdrawal, I presume. But there are practical problems in executing the withdrawal. So therefore, we have to be concerned that there's a serious commitment to getting out of there. That it's not a "baby" commitment, it's not an "if" commitment, it's an absolute commitment. But we are not going to simply leave the place! Therefore, as generals have said, leading generals, who oppose the war, have made the same observation: You have to adopt a process by which you successfully disengage, and don't increase the mess which already exists, created by the Bush Administration and its policies. So therefore, I agree with both those of us who say "immediate withdrawal," but who also say, "We've got to have a scheme for withdrawal, which fits the requirement."
Impeachment: We Press, They Process
There's another question of the same nature: Some Democrats are not saying "impeachment," if they're in the Congress. Why? They're for impeachment. We are for impeachment. But why are they saying that, apart from the deadheads—like, we have a Democratic deadhead, he's called Lieberman, from Connecticut. He was elected by the Republican Party, and he's called a Democrat. But in general, they're right. Why? Because, as they will tell you, as Conyers, for example, who's the head of the relevant incoming committee of the Congress, will tell you, that when you are putting the President on trial, where you have to be a judge and jury, you can not be a prosecutor from the outset. You must conduct the proper procedure, because you can not destroy law itself and due process, in the process of seeking to do something which is even necessary.
However, we, who are not in the Congress, who are not in the Senate, who are not in the House of Representatives, have the responsibility to press for the impeachments we know are necessary: Cheney, number 1. So therefore, we press, they process. And as long as their processing corresponds to our pressing, we're going to come out just about all right.
This is the nature of the function of leadership, and function and process in government: You must have a strategic outlook as to what must be done, an understanding of the problem to be corrected. But you must also have respect for the process, so in the process of getting to where you want to get to, you don't destroy your destination.
So therefore, I speak as I do, and it's my job to do so. I'm the tough guy. They're the soft guys. They speak softly; I speak toughly.
Now there's another reason, which I'll return to, the main point here today, is, that Bob Rubin doesn't have a solution. None of the well-meaning, leading financial authorities, and economic authorities, in the United States, or in Western Europe, or in the world at large, have any conception of how to solve the presently onrushing international financial-monetary and physical crisis: None! I do! Now, in this case, therefore, it is my job to state frankly what that solution is, and to identify the nature of the problem to which this remedy, this medicine, is to be applied, in order to cure the sick patient. If we don't do what I know we have to do, if we don't take some of the necessary steps, then in the attempt to deal with the crisis, we'll make the mess worse. And if we make the mess worse, now, in a crisis which is far more serious than the 1929-1933 period—if we do that, we get a dark age.
So therefore, action must be taken now, decision must be made now; the medicine must be the right medicine; the solution, the plan, must be the right plan—and we can get out, alive and well. And be free of some of the diseases that have gotten us to this point. That's my job.
It's my job to say what has to be done, because others don't know what is to be done. Bob Rubin doesn't know what to do, and he's about as smart as they come in the United States, on this question. Nor does former President Clinton. Nor do any of the leaders of the committees in the Congress, the Senate or the House: None of them know what to do. They have the intention, the best of them, of doing something. They want to know what to do. My job is to tell them what the solution is, and what to do.
And let's hope they agree, for the sake of us all, and for the future generations of humanity.
What Happened to the Economy
Now, the present crisis is something which I warned of in particular, at the end of 1995, when I was a guest of a Vatican conference on health policy questions. And during the conclusion of that session, I presented a paper, in support of the proceedings, in which I specified the general nature of the crisis which we face, in which the whole health question had to be situated. The economic aspect of how do you address the growing health situation, the deprivations which were occurring, the failure to meet requirements around the world. And I published this same material in the form of what I called "The Triple Curve," publicly, in January of 1996, as the launching of my then-Presidential primary campaign. Since that time, there's been some change: One aspect of the curve relationship changed, as I noted around the year 2000, 1999 to 2000. But! What I had said then is absolutely true.
What has happened, the reality of the economy, is, that over the period, especially since about 1987, and the measures taken under Bush I—"Bush 41" as he's called—a process was set into motion under a raving fascist lunatic, otherwise known as Alan Greenspan. And this process resulted in a decline in the physical income, and productive output, of the United States. But this decline was apparently offset by an increase in financial aggregates. Because the Federal Reserve System and other mechanisms were printing money, in the wildest way imaginable, on the basis of so-called "financial derivatives." And therefore, you had a financial growth, a hyperbolic tendency in expansion of the amount of financial aggregate, while the physical aggregate per capita of production was going down! In the meantime, you were driving this financial aggregate, by expansion of the monetary aggregate, by new ways of creating fictitious money, which some people try to take to a bank. And every banker knows, you don't do that. You take fictitious monetary assets and you sell 'em to some sucker, to get whatever you can get in terms of physical assets, or negotiable assets.
So now we've reached the point, at which the rate of monetary expansion required to support financial expansion, to keep the whole blasted bubble from popping, or to cause it to pop, is such that we're now at the fag end of the system. We've now reached the point with the collapse of production... like for example, the Congress did nothing, the Congress did absolutely nothing definitive, during the entirety of 2005, to deal with the collapse of the auto industry. We said, "Change it." The Federal government should bail out the auto industry, by taking the sections of the auto industry which are not needed for production of automobiles, and use that section for other things we do need: such as fixing up the rivers, which are no longer functional; fixing up our infrastructure in general; producing new power plants. Basic economic infrastructure, which is what government does well, as opposed to the private sector. And use that driver, of using the high-technology section of the auto and aerospace industry, which is not needed any more for automobiles—use that sector, keep it fully in function, because it has a machine-tool capability, the ability to produce almost anything. So use that to build up our infrastructure, to expand our production in the private sector generally, and to go away from being a post-industrial society, which is another way of describing death, back into an industrial society, which means physical progress per capita and per square kilometer.
And all you have to do is look at the conditions of life of the lower 80%, even now, the lower 90% of family-income brackets in the United States, and you see that the President of the United States is, as we've all suspected for some time, a raving lunatic. There's nothing true in anything he says. I mean, a President who wants to go out and kill "tourrists" is not exactly doing something good for the United States, hmm?
Don't Sink the Dollar
Now, what has to be done? To get to the essence of the matter, what is the solution? Well, the first thing, is, don't sink the dollar. Because if the dollar is devalued, today, in a significant degree, say 20 or 30%, it would mean the entire system, the entire world system, would go, chain-reaction fashion, into a global dark age. Because the whole world system is dependent on a dollar, which intrinsically has no intrinsic value. The dollar has a conventional value, not a physical value.
In 1971-72, we destroyed the dollar. We took it off the Bretton Woods system, and we said it was "floating." What does it mean, "floating"? You know what floats, huh?
But the point was, the dollar was still used as the currency of account and denomination by the International Monetary Fund. So the world system is a dollar system, Despite the fact that some parts of the world are trying disengage from heavy implication in dollars, to other currencies, that's no escape either. Because the entire world system is based on the ability to collect on the U.S. dollar! If you can't collect on the U.S. dollar at parity, then you are bankrupt, too! Every nation in the world: China goes into a crisis. India goes into collapse. Every part of the world goes into a collapse, if the dollar goes down by 30%!
So, the first thing you have to understand, is, there is no solution unless you prevent the dollar from collapsing. How can you prevent the dollar from collapsing? Well, two things have to be done: The United States government has to get rid of this President, and Vice President. If you want to save your rear-end, get rid of this President. And have him go where you put your rear-end.
An FDR-Type Solution
Because, unless you can make a change from his policy—and the guy's pretty stubbornly insane—unless you can do what I want to do, what President Franklin Roosevelt would have done, unless you want to do that, you are useless; you are worse than useless; you are an impediment in the wheels of progress. If I'm President of the United States, or can get somebody else who is President, to do the right job, we can stop the crisis. By political power: We can say, "We are going to defend the dollar at parity, on international markets." On condition that other countries will cooperate with us in doing it!
So what we do, is we agree that we're going to set up a return to something like the Bretton Woods system that Nixon shut down in 1971-72. We're going to say that the policy of the United States is to establish a fixed-parity relationship with other currencies, other nations and currencies of the world; we're going to create a new system, which will be denominated in dollars, but at a fixed ratio. We are going to convert short-term obligations, en masse, into long-term obligations of up to 25 to 50 years by treaty agreement. And therefore we can stabilize the world, on the basis of the agreement with countries that are willing to do that.
We can then, on that basis, we can issue new credit, at 1% to 2%, as fiat credit of governments, or under treaty agreements, long-term trade and credit agreements among governments. For example, take the case between Germany and China, a good example, because Germany is pretty much a trading partner of Russia and China. That's the key to Germany's having any economy at all.
All right. So, these countries have different kinds of political, economic, and monetary systems. But therefore, if you have a treaty agreement, covering a 25- to 50-year period, at 1% to 2% simple interest rates, of government to government, over this period, you can now create a new vehicle of credit to finance the major projects, which Asian countries in particular require, because they don't have enough facilities now, to do the complete job they need to do for their own countries.
So, we can fix this at low rates of borrowing costs. We crank up Europe, starting with Germany. We crank them up to produce the product that Asia requires, particularly for capital goods, capital investments, capital improvements. We finance the thing on a 25- to 50-year basis, in bulk. We also use a reformed monetary system, of a Bretton Woods type—not the Bretton Woods system, but a Bretton Woods type—a fixed-exchange-rate system, and we lock the world up into a set of agreements for physical economic recovery and growth.
End the Greenspan Financial Casino
Now, we also do something else: The reason that this crisis is so severe, is because of Alan Greenspan. That man was no good. Wherever he is today, he's still no good. And you don't know where he might have gone in the meantime—if you know anything about him! Any follower of Ayn Rand might have gone anyplace. He may still be following her, for all I know! And when you look at the Ayn Rand supporters, who turned out to be some of the nastiest fascist types of neo-cons, in existence on the surface of this planet, you have to know, that Alan Greenspan, was, as they say of Satan, "no damned good."
So therefore, this is the mess. We have created by, instead of investing, instead of creating debt for investment, for investment in creating new plants, new production facilities, basic economic infrastructure, scientific and technological progress, large-scale investment in nuclear power plants, things of that sort; instead of doing that, we have invested in gambling! How many parts of the United States have opened up casinos, and legalized gambling, as a substitute for tax revenue? As a mode of employment? What is that worth? It's gambling! Now where in the Hell did gambling come from?
So, what we have, is, we have the entire world is based on a gambling system. Hedge funds: gambling system! The banking system is bankrupt, implicitly, because of its tie to hedge funds.
We're now getting to the point where the hedge funds are going to start collapsing, one after the other, by bubble-pricking. We have the real estate bubble. It's a fraud! The entire real estate investment in the United States is a fraud! Right where we're standing, across the river in Loudoun County, it's ground zero for the biggest financial real estate crash in all human history. It's going into a chain-reaction collapse, and other parts of the country are not far behind. That's the situation we're in. It's because we have incurred a mass of debt, of financial debt, in the system, based on a gambling system.
And instead of being honest gamblers, who accept their losses, after they've lost their money, they demand to be paid for their losses! At a profit.
So therefore, what we will do, is simply go at this through financial reorganization: We must save the banks. I agree with Bob Rubin on that. You must save the banking system. Why? Because of the function of the banking system in the circulation of credit, deposits, and so forth, and organization of communities and private and family life, and so forth, huh?
But they're bankrupt.
All right, we still save them: We put them through bankruptcy. We keep the doors open ... in bankruptcy. Guess where the word "bankruptcy" came from? From banks!
So, the Federal government now moves in, and takes over the bankrupt banks, and says, "You guys are going to keep the door open, by Federal order. We're taking the Federal Reserve System into receivership by the Federal government. And the Federal government is going to operate it. We are now going to take accounts, which can not be currently paid, we're going to put the entire system through bankruptcy reorganization! You can't close your doors! We will tell you what accounts you are allowed to pay. We'll tell you what accounts should be guaranteed, whether they're paid in order or on account. We will regulate where you can take your unpaid balances in the banks, and you can draw upon them, at nominal rates, for your own purposes." In other words, you may have savings, or something lodged in a bank, in a bank account. The bank doesn't have the money to pay you for your investment. But we can decide by Federal law that certain kinds of investments of that sort will be guaranteed, and therefore we can negotiate that a person who can not withdraw money from the bank because the bank doesn't have it, can get a loan at minimal charges, in which to use their own money, until we can get to the point that we can liquidate this, as we did with the bank holiday procedure—a much milder problem—back in the 1930s under Roosevelt.
So therefore, we can keep the banks functioning! We can selectively protect those things which are of highest priority to the functioning of communities and families. That we can do!
We will then, simply take the financial derivatives, and similar kinds of phony investments, and we will cancel them! Write them off. They're gone anyway! So why not write them off? The banks are bankrupt. You have to settle so much on the dollar. We may end up settling on 20 cents on the dollar for the entire banking system, financial system, in terms of assets, like that.
But if we do it, we go from an unregulated situation of chaos, to a regulated system. We turn short-term crisis into long-term stability. We eliminate things that should be eliminated from the accounts; we protect things that should be protected; and we enter into international agreements to expand physical production and development of infrastructure.
At that point, we really don't have a problem. Because, if we are keeping enough of the people of the United States working—not in McDonalds, but in actually useful things where you dare eat—you know, in your own kitchen you dare to eat the food, most of the time, don't you? When you go to McDonalds, you wonder, "What am really eating? Who am I eating?" [laughter] "It tastes like somebody from Australia. What's this pouch doing in my hamburger?!"
So, the problem is not insuperable. And you can look at what Franklin Roosevelt did during the 1930s, and turned an economy which had collapsed by one-third under Hoover, and he turned it into the greatest economic machine the world had ever seen. A machine which was the only thing which saved the world from a Hitler dictatorship—was the United States and its partnership with other countries, including the Soviet Union. Including an unwilling ally, Great Britain.
Great Britain had been fully for Hitler. And Roosevelt and some other developments convinced some people in Britain not to go for Hitler. The leading bankers of New York City were all for Hitler. They'd been for Mussolini, too. Roosevelt beat them over the head! Said, "Now you're against Hitler"; they said, "Okay! Yessir, ma'am." (They get confused on these things.)
So we forced these guys, who were actually the authors of the Nazi system, in the United Kingdom, among the French Synarchists, among the U.S. bankers, including the granddaddy of the present President of the United States, Prescott Bush! Who was a Hilter-backer! He, personally, signed the order which moved the money into the Nazi Party, as a loan, which guaranteed the non-collapse of the Nazi Party, in time for Hitler to become the dictator of Germany, and almost the dictator of the world. That was the "gran'daddy of this heah President!" This guy who wants to kill "tourrists." Not good Presidential material.
We're Coming to the End of the Road
Anyway so, the issue here is, that we can, as governments, if governments agree—and you need a conspiracy among some good governments in the world, and the rest will have to go along. This comes to another question I'll get to later: But we are now involved in a general collapse, where the amount of debt and the acceleration of the amount of debt, unpayable debt being paid off with more unpayable debt, is reaching the point, as typified by the housing crisis or the debt-mortgage crisis in the United States, that we're coming to the end of the road—as Bob Rubin says. As I said, I support Bob Rubin, because he's trying to awaken some idiots in the United States, to the fact that there is no prosperity, that the system is about to collapse: That we're already overripe for an immediate collapse—any day, any morning, any afternoon. And once it starts, if the U.S. government and some other governments don't do the right thing, the whole world will go into a dark age. We're at that point. That's why I have to do something.
Now the problem is, the psychological problem, is people believe in money. For example, the British have theories of money. Marx got his ideas from the British, therefore the Marxists have silly ideas about money. They have a theory of value about money.
Money, whether in metallic, or paper, or computer language form, has no intrinsic value. None. It is a medium, it's a contract, that's all. Or it's a medium of a contract.
Defeat the Oligarchical System
Now, especially in modern society, since medieval society, in fact, since ancient Greece, money, as a notion of value, has always been a characteristic of what's called imperialism. Now in the old days, they didn't call it "imperialism." In those days, in ancient Greece, for example, it was called "the oligarchical system." The oligarchical system—and this is where the problem arises inside the United States—it's where the problem arises inside the Democratic Party leadership. The oligarchical system, where you had people who were running the Democratic campaign, Howard Dean's Democratic campaign, who were looking at people like Felix Rohatyn, who is by all credentials a fascist—after all, he financed bringing Pinochet to power in Chile. That is not exactly what we consider a first-class Democrat!
But they said, "We're going to the upper 3% of family-income brackets to finance the Democratic election campaign. " I said, "Nonsense." They said, "No, we're going to do it, anyway." So the Democratic campaign organization, particularly under the Democratic Leadership Council and under Howard Dean, was going in this direction, to get money. From whom? From the upper 3% of family-income brackets. Now, what's the problem in the United States? The big problem is the lower 80% of family-income brackets! Even the lower 90%, these days, as some of you may have discovered. It used to be a safety valve to be in the upper 20%. Now, you have to be in the upper 10%, or the upper 3%.
So the Democratic Party politics was oriented toward the upper 3%! Because, whose butt did you have to kiss to get the money in order to run your campaign? Why did some Democrats want to work through Felix Rohatyn? Because they wanted the money that he controlled! Therefore, he could dictate their politics, based on their desire to ple-e-a-se him, in the way they ran the campaign. It's still a problem. We're going to have to sort it out.
Whereas, real politics is, the lower 80% of the family-income brackets, that is, in terms of physical standards of living, conditions of life. Of communities in which they live. That's real politics. That's real, American politics, as opposed to some European oligarchical system, where you have landlords running the world. This is called the "oligarchical system": A group of wealthy families run society, the way they ran ancient Sparta, where the helots were hunted down for pleasure, by the young bad guys of the wealthy families; where the poor were persecuted and treated as animals; where society was based on treating human beings as animals.
Take Quesnay, for example, the so-called author of the Physiocratic system, who said that wealth comes from what? From production? He didn't say that! What he said was, the property title, the title of nobility to property and land, for mining and farming, was the magical thing which produced wealth. And the people on the estate, engaged in production of mining and agricultural production, were no different than cows! Who should be fed enough straw in order to continue to produce milk and meat. But, the fruit of production, the gain in wealth, had been produced by that lazy bum with a title, sitting in his estate, and it was this magical title to that estate, which secreted this surplus value, this wealth. That's the oligarchical system.
That was the system of Sparta. That was the system created in European history by the Apollo Cult of Delphi, which created Rome. This is what created the Roman Empire; this is what created the Byzantine Empire; this is what created the form of empire of the Middle Ages, where the Venetians were running these bums called the Crusaders, the Norman chivalry, in running a system of persecution of Muslims—"Hey what d'ya know about that? Back then?" The anti-Islamic movement? Medieval! The Crusaders, who were not Christian. They were out to crucify everybody. And they were working for the Venetian bankers! This was the medieval system that led to the Dark Age.
This was what was restored in Europe, again, with the Fall of Constantinople, where the Venetians took power again. This is what led to the formation of British Empire, the Anglo-Dutch Liberal system, which is the same thing. They reintroduced slavery. Now, again, they've reintroduced the anti-Islamic movement, have a war against Islam! Same thing all over again.
So therefore, the system is to manage the planet, by treating the majority of the human population of the planet as animal life, which you can cull, kill, or maintain as a pet—and then eat—as you do a pet cow in a barn. The oligarchical system.
What was achieved in the Renaissance was the kind of idea represented by Solon of Athens, represented by Plato: the idea that the totality of the people—the people contain something which is not an animal. The people contain a spiritual, intellectual power, which distinguishes man from the beast. And therefore, human beings can not be treated as animals! And society exists for the benefit of humanity, for future humanity, and future humanity is the children of all of people living now!
A Community of Sovereign Nations
So therefore, real politics is not democracy. Real politics is care for the welfare of all of the people, for the benefit of future humanity. It is the respect for the sovereignty of cultures. Because different people have different cultural backgrounds, they can function only in terms of their language, their culture, which they communicate in. Therefore, people organize themselves in language-cultures, or cultures of tradition. Why? Because they think in those terms. If you want to have representative government, you have to give the people the access to the system which is theirs, in which they do their thinking, in which they can develop ideas.
And therefore, at the same time, you must then have a fraternity among relations of different cultures on the planet. Roosevelt such had such intentions, Franklin Roosevelt. Truman had the opposite intention. Franklin Roosevelt's determination, as he said repeatedly, was at the end of war, the great economic production machine which the United States had developed to defeat Hitler, would now be converted as a source of productive power, to enable the colonial nations of the world, and the suppressed people of the world, to develop their own government, independent. And to create on this planet, a fraternity among national self-governments of peoples. That was Roosevelt's intention.
What Truman did—Truman was a stooge for Churchill. The British did not intend to give up their Empire. Truman let the British occupy their colonies, again. The Truman Administration gave Vietnam back to the Japanese in order to turn it over to the French. The British government and the Dutch suppressed the people of Indonesia; the cause of freedom in Africa was brutally suppressed, repeatedly, throughout most of the post-war period. So that's the difference between Truman and Roosevelt.
That's the difference between the American System, the American Constitutional System, which we created in this country. We were able to create it, because we were at a distance from Europe, where the oligarchy was dominant. And therefore, we were able to take the best ideas, that had developed in Europe, and build a culture and a nation around the best ideas of Europe, but at a safe distance from the European oligarchy. Not completely safe, but relatively safe.
That's the difference in politics. That's the issue today.
The Indispensable Role of Youth
Look at what won the election. What won the election? And it's no exaggeration, as Debbie said: That our role, particularly the role of the Youth Movement, and what we were pushing as our policy, was crucial during the last weeks of the campaign, in securing a landslide victory for the Democratic Party in the House of Representatives. Where did the votes come from, that won the election in that way? Well, it came from the people between 18 and 29 years of age. Some of you people are acquainted with some people of that age group. It came, also, from a surge, a great surge of the population between the age of 25 and 35. That is what won the election! This was a part of the population which the Democratic campaign had done nothing to win over. The leading policy had been doing nothing to win them over.
That's where we played a role. We pushed. And the youth pushed hard: We won the election. Because we sparked a reaction in the population by the methods we used, here, to create a mass effect. You have a few people with ideas, you produce a mass effect. Not by person-to-person conversions. No religious conversions—please. By mass effect: You spread ideas. You deploy in such a way as to spread ideas among the people! And the spreading of ideas among the people, when the ideas are attractive to them, cause them to have a better relationship to each other. And the people who develop this better relationship to each other in terms of ideas, then become influential in the entire community around them. And that's what happened!
We went to everybody, in our campaigns, in the recent period. But we went especially to those in the 18 to 25 age group, as the base. And we also went to those in the 25 to 35 age group. And that's exactly where we had our success! We went to other people, but we never had the success in the older generation that we had in these two sections of the population. And this is particularly true of the college-educated population, or quasi-college-educated population—you have quasi-universities today. They're called universities, but they ain't really that.
So that's how we changed it: We created a mass effect. What happened? Where did we stimulate it? Well, tell me about people who are between 25 and 35. Tell me about people in the United States who are between 18 and 25: How many of them are rich? How many of them can afford a university education? How many can afford the effects of having had it? [laughter]
So therefore, there are two things about these two groups, 18 to 25, and 25 to 35: What is characteristic of them? Baby-Boomers are approaching the fag-end of existence, and in their cases you call it the fag-end of existence. 'Cause they don't believe in the future: They believe in their pleasure. [dumbo voice] "History stops with us." That's the Baby-Boomer.
Whereas people who are 18 to 25, either are going to go on drugs and kill themselves; or they're going to say, "I want a society with a future. I'm going to be around here at working age for 50 years to come! What kind of a future do I have in the coming 50 years? Can I produce children? Can I have a family? And if I try, what's going to become of them?" The person who is 25 to 35 faces the same problem: "I'm around, I may have 40-50 years of fight in me, of working life. I want to have a family, somewhere along the line. I want to have a family that can live, where the children can live! I want to look forward to grandchildren, who will be in a society which is at least as good as ours, and perhaps better."
Our Culture Was Destroyed
This is the motivation of people who have not yet reached the Baby-Boomer age as a result of the post-war culture. The 68ers have no sense of the future! They didn't believe in production! They hated people they caught wearing blue shirts! So they took their own shirts off completely! [laughter] Because, they were using, taking in stuff, and you couldn't tell what the color was—so, to get rid of all shirts.
So what you had, our culture was destroyed, by what was called in Europe, the Congress for Cultural Freedom. With the Truman Administration, various social measures were taken, especially in the upper 20% of family-income brackets, especially in suburbia, in educational systems, through television and so forth, in order to condition the population which was born after 1945 to about 1957, to condition that population to have no values; to condition them to be complete sophists. In Europe it was called the Congress for Cultural Freedom. In the United States, the same thing was done.
So the young people who went into universities in the 1960s, were generally products of this cultural indoctrination. The same thing that was spread in Europe, as the Congress for Cultural Freedom. And therefore, when they exploded in reaction to the fact that they were about to be drafted—they didn't explode as long as they could get exemptions from the draft by being in a university. But when the day came that the U.S. government said they could be drafted, that the college exemptions were cut back, they went wild!
And what did they do? They demanded clothes and took them off. They demanded freedom of the mind, and took drugs to destroy their minds. Like LSD: They would set up parties, where they would have parties, they would have coke, wine, and pot. And then when they had finished going to pot, they would say, "This no longer is a thrill, I want a real ride into insanity," and they would take some LSD. They were against technology; they were against production; they were against people who worked in factories; they were against farmers; they were against every system on which the welfare of the general population depends, and they called this "the new freedom."
And this is what happened to us: These were the Baby-Boomers. In Europe, as in the United States, the Baby-Boomers destroyed society. Not because they had intended to destroy society, but because they themselves had been destroyed by the Truman-Age culture to which they were born. Especially if they were in the upper 20% of family-income brackets of that period.
Now that generation has been running society, and therefore, leading members of the Congress, political parties, and so forth, are not exactly in the best mental condition. They have certain ... [parodies goofy mannerisms]. [laughter] And they don't really believe in anything. They believe in their pleasure. They believe in their advantage. They're looking for thrills of various forms, like getting elected or something. But they don't believe in a mission for the benefit of future humanity. They haven't got that kind of commitment.
Therefore, the future of mankind rests on the shoulders of people between 18 and 35, today. Because, unless they're destroyed already, they're thinking about a future. They're thinking of the outcome of the years to come. They're looking for a meaningful life in 50 or more years to come, whether they have children or not. As we used to!
In all my experience, and I go back a good ways, in terms of grandparents and so forth, well over 150 years—and in terms of people I know in the family, whom I didn't meet actually, go back over 200 years—so, in a sense, sociologically, I'm 200 years old. And I'm working on a third ... I think.
So, that's the situation: This generation is what we depend upon. This generation are in motion, as you saw in the election results! This generation will inspire even some of the deadheads of the Baby-Boomers to come back to human life. They won't initiate it, but they'll follow it.
All Revolutions Are Made by Youth
This is not entirely unusual in history, that you will find that all revolutions and wars are fought by people, generally, mostly, between 18 and 25. All great changes in society originate, within the development of people between the ages of 18 and 25. This is the way history has been run. Look at history! Look at what age-group in each generation played what part in shaping history: It's been the same. I used to warn people about this, I said, "You know, at the age of 27, you change your sex, if you're a university student. As you're about to get your doctoral degree, suddenly your mind drops away—because you don't want to destroy the perfection of what you already know by learning something new. If you're a professor at the age of 27, and you start to teach, and you begin to 'repeat after me' from index cards the same lecture you got, and you pass it on to the suckers in the next class to come that you're teaching."
So there's a phenomenon in society, where a lack of creativity in the development of the young people results from the age of about 27, 30 and so forth. At that point, they develop a kind of "the end of progress," "the end of development." They may learn new things, they may acquire new skills, they may gain in effectiveness, but they're not really creative any more. They really are not human any more. They're sort of an animal-like version of a human being. What they've learned and conditioned up to that time, stays with them, until the memory begins to fail. But they don't progress. They don't undergo personal, internal revolutions in knowledge, in breaking free. They tend to become stagnant. Oh, a minority can differ: You have an Einstein here or there, and so forth. But the majority of people, in a society of our time, still goes stagnant at about the age of 27 to 30. And very few actually continue to be creative beyond that point.
And so therefore, the key thing in society, is always focus upon what leads into the 18 to 25 age group, the 18 to 35 age group in our society: Focus on that; instill creativity, or a sense, an association with creativity, as a normal social process, in that age group. Because, if you can instill that in that age group, then you have set a new direction in society into motion. And then your life means something, because you're doing what the Baby-Boomer generation didn't want to do, is create their successors. "History stops here with us, and after that, we don't care."
So therefore, you see precisely in these election results, that.
So therefore, we're coming, in this time, to a point where my conception of economics is crucial: What is that conception? What's the difference between man and monkey? Bush could never tell you. His mother was never able to tell him. And if she'd been able to do so, she wouldn't have been willing to do so—because she's a very cruel person. She doesn't like children—uses them like Kleenex tissues.
The difference between human beings and the animal is creativity. It's typified by the discovery of a universal physical principle. Or what we've done with the Youth Movement, in terms of the work of Bach, which we celebrated again today: That, in Classical musical composition and its performance, if properly understood as Bach understood it, and the great composers after Bach, and the great musicians, the great performers, is creative. It is not playing the note. It's playing between the notes. It's playing the passage. It's playing the interplay of voices. And in this, this difference, between the literal note, and the music, is creativity. It involves the same powers of mind, applied to a social process, that the scientific discovery of principle applies to an object in nature.
Science and Classical art are the same. They involve exactly the same specific kind of creative mental powers. In the one case, the object is something in nature or animals. In human beings, it's something social, it's something in the cooperative relationship of human minds. And this is best expressed in art, in Classical art. When we organized the East Coast youth operation, Youth Movement, we had a meeting, and we decided—and my proposal was accepted—to take Jesu, meine Freude, the work we performed here today, and to use that as the emphasis for a cultural orientation which corresponds to the same mentality in physical scientific creativity. And to develop the practice, and development of this work in vocal music, with that mind. As playing between the notes, or the kind of thing that in John [Sigerson] has been working with the choruses on doing, on the question of the comma: What does the comma mean in music? When you get to the idea of irony, irony was the comma, as an ironical development, which distinguishes the music from the notes, it's irony! It's something between the notes. It's the same thing as the irony of the infinitesimal in physical science as defined by Kepler, in the discovery of universal gravitation, or the organization of the Solar System.
Irony: Because a universal physical principle is never an object of the senses. The effect of a universal physical principle is an object of the senses—but not the principle itself. Why? Well, gravitation is as big as the universe. Now how can you see an object which is as big as the universe? With what will you compare it? What you see, is the effect of that object, as it rolls over you, so to speak. "Oh! There's something there!"
And this is reflected as something that happens, that hits you in each instance. Well, how big is the instant? Well, the instant is as small as you can get ... and smaller. The same thing is true in poetry, Classical poetry. It's true in all great art: It's not the literal, mechanism interpretation, which defines the art. It's the irony! It's something between the cracks, which is universal, a universal principle. That's what defines art. That's what defines science, as Kepler defined science. As the ancient Greeks defined science, in terms of the concept of dynamis.
The Difference Between Man and Ape
So therefore, the function here, in economics, is what? The difference between man and the ape is creativity. If man were an ape, you wouldn't be bothered with more than a few million neighbors of that type, at the most. Because you couldn't sustain a larger population of apes, or gorillas, chimpanzees, and so forth. Human beings: We've got over 6 billion of them. How'd we get that? Because of development. What kind of development? Because humanity developed, in terms of art, in terms of the equivalent of science, humanity made discoveries. These discoveries were reenacted by successive generations, became part of the practice of society: Man's power in and over the universe increased. And the more individuals who expressed this power, and gained it, the more prosperous and better the society was; the more powerful the society was; the more we could conquer the world around us, to provide for a better standard of living for people, for future humanity.
So therefore, this is what's crucial. Now, in oligarchical society, the oligarch does not want the majority of people to understand this. It wants to reduce, like Adam Smith, or the Physiocrats, to degrade man to the status of being an obedient cow! And to tell himself to be happy. Tell the cow to be happy. Tell the cow to "shut up and be happy! Stop that noise at night! I want to sleep! The cow's keeping me awake, or I'll slaughter it in the morning!" Hmm? And people are treated as cows: You're supposed to "learn" things. Learn how to behave. Behave as your ancestors did. Behave as you're taught in school. Don't learn a principle by yourself. Don't learn something the teacher doesn't know. You'll be thrown out of class!
But that is the difference. In a society, which the United States was intended to be at its inception as a nation, even before then, even in the 17th-Century colonies, the Massachusetts Bay Colony, that was the intention: It was the development of the fullness of the creative powers of the individual, of all of the individuals, all possible individuals. To develop creativity! This creativity resulted in—Massachusetts was, up until 1688 when the British cracked down on it, was one of the most prosperous areas of the world! Why? Because creativity was fostered in that Commonwealth at that time.
It is creativity, the development of the creative powers, the nourishment of the creative powers, and the use of the creative powers of the individual, which defines the difference between man and the ape. It is also what is not understood, by the people I referred to, the so-called economists: That's the secret of economy! If you develop people and develop those powers in people, if you invest in the use and promotion of those powers, their realization, then you create a population which is capable of growing in its power per capita, per square kilometer: through creativity. Through the fostering of the creative powers of the individual. And that's what the oligarchy doesn't want.
Return to a Creative Economy
Now what happened to you? What happened is, we used to be a productive United States: We had farms, we had industries, we had skilled professions, and so forth. We prized these things. The more skilled professionals we had in a community, the more doctors, nurses, and so forth, all this sort of thing, the better off we were. And we knew it. But now, they said, "No, factory jobs are no good." That's what the Baby-Boomers said, factory jobs are no good. We'll take away the factory! So you won't have to slave at a factory. "What do I do now?"
"You work at McDonalds."
"What do you do at McDonalds?"
"You flip hamburgers."
"What do you do that for? What don't you do it at home?"
"I don't know how to flip hamburgers at home. I only know how to flip hamburgers at McDonalds—never at home."
So you have a degeneration of the U.S. labor force, into what's called a "service economy": of labor-intensive, non-productive, forses. The amount of product which we are producing per capita, physically, is not sufficient to maintain the existing population! We're dying! We're dying of Baby-Boomerism!
We have to go back to become a creative economy. This is what the problem is they don't understand!
We have a population on the planet, which is mostly very poor, the population of Asia, the population of Sub-Saharan Africa is extremely poor! They don't have the power, under existing conditions, to maintain their existing population safely! We need for them, an improvement, not only in infrastructure, but the creation of the conditions under which their productive powers, their intellectual powers are increased. To create the conditions of development, under which the power of generating their own prosperity is given back to them.
And that's what these guys don't understand. They think that value lies in money. An exchange system of value, that's where the Marxists failed, terribly, as in the case of the Soviet Union. The biggest characteristic of failure in the Soviet Union, was the Marxist theory of value! They didn't understand, that the promotion of creativity of the individual in society, is the source of production of wealth. And that money is simply a means of exchange which must be created and managed, to assist the process of transfer of wealth, in one form or another, among people.
Therefore, the secret of economy lies not, in management of money. The management of money is a system of slavery. Where some people control the money, control the economy, for the purpose of getting more money. They do not allow development, because they want to steal. They steal so much that the economy goes into negative growth, as has happened to us, as has happened to the world. They don't understand that value is a physical value, not in the sense of physical objects, but in terms of the increase of the productive powers of labor per capita and per square kilometer, as a result of this process.
And that's what they don't understand! That's what they don't wish to understand! That's what Baby-Boomers don't want to understand, because they would have to admit, that what they were in the 1968, they were the poison that was going to destroy this society! Not because they intended to be poison, but because they were conditioned and brainwashed, to be poisonous. They lost culture! They lost science! They lost jobs. They lost the opportunity of being productive. They lost the hope of getting health care. They lost the hope of a future for their children and grandchildren: because they didn't understand value. They assumed that getting more money is value. But getting more money, without increasing the physical powers of production, has no value.
It's to the extent we develop, not "democracy" as such, because democracy's a bad word—but freedom! The freedom of the individual as expressed by the development of the individual. And the opportunity for expressing those developed powers, in a useful way in society, in a way that makes you proud of being yourself. That makes you proud of what you're doing for the next generations that are coming after you. That's freedom! And the right to influence the process, influence the process of thinking, which pertains to thinking in this way.
And that's what they don't understand.
So therefore, if we can do two things—and this election has proven it! We've proven it by the turnout by young people as voters, in the 18 to 25 group, and the 25 to 35 group: It proves, that reposing inside the young people of America, the young adults of America, there is a core of young adults which does have an orientation toward the future, which will respond to the idea of a future. Where the Baby-Boomers in general have given up on the future, and have tried to cling to what they can salvage from their own past. That's what the problem is.
Therefore, the secret, which is universal—the secret of making this work, what I outlined, simply reorganizing the monetary-financial system, the secret is to take young people, 18 to 35, who are still open to the ideas of being useful in society, who are still open to the idea of being truly creative, who want Classical art, who want science, who enjoy it, and who have a future orientation.
So therefore, our purpose is two things: Define the reforms which will prevent a general bankruptcy from plunging the whole planet into a new dark age. But do that in a way, which involves inspiring and mobilizing the generation between 18 and 35, which still have an orientation toward the future, at least latent within them, as they've shown in this recent election. Concentrate on them, and realize that you have to look at the lower 80% of family-income brackets among these youth. Because it's not sufficient to inspire youth from the upper 20% of family-income brackets—that's not enough. If you can not inspire young people, from the lower 80% of family-income brackets, you do not have a future for the United States or the world.
Yes, inspire everybody you can. But never lose sight of the fact, that what you do for the people in the lower 80%, young people in the lower 80% of family-income brackets, is what is going to determine the future of this nation, and all humanity.
And that is what the Democratic Party leadership has forgotten.