LaRouche Jan. 11 Webcast:
The Old Economics Is Dead, the New Economics Must Begin
Lyndon LaRouche addressed an international webcast on "The Old Economics Is Dead, The New Economics Must Begin," in Washington, D.C. on Jan. 11, 2007. The proceedings were moderated by Debra Freeman. This is LaRouche's opening presentation. See also the two hours' dialogue with Congressional offices and others questioners which followed.
Freeman: ... Obviously, with the paint barely dry on the walls of the new Congress, we have come into a very important moment in American history. And I think that there is little question that what we do, over the course of the next days, will determine not only the immediate future of the United States, but in fact, the future of the world. We have a new Congress, one that many of the people gathered here in this room, and people who are gathered around the United States participating long-distance in this event, played a critical role in bringing about. It's a new Congress, which is full of promise, and hope, and optimism. But whether or not we can deliver on that is yet to be determined. Clearly, last night, the American people got something of a flavor of what the other side has to say [in President Bush's address to the nation]. And I think that it's fitting that today, the American people will have the opportunity to hear a more historically American voice, on what the future should hold.
There's a lot more that I could say, but I really think that these people have been so anxious to hear what Lyn does have to say in this new period in American history, that the best thing to do, is simply to ask you to join me in welcoming Mr. LaRouche.
LaRouche: Thank you.
I think we should begin by declaring this the Year of Bel Canto Choral Singing [applause] which is one of the more important weapons available to us, to change the world, and to transform people who look glum and miserable on the streets, into actually smiling and happy human beings.
But we have to justify that happiness at the same time. We can proclaim it, we can declare for it, we can call for it, but we must make it possible.
Now, what has to be done to save civilization, global civilization, not just here, must be done largely within a span of the coming 90 days, or less. Of course, the first thing we must do, in order to do the other things which we must do, we must put the Vice President into some form of retirement, involuntary or otherwise, and we must put the President of the United States under compassionate care. Because, without the removal of these two impediments, civilization will not continue. You see this madman, who's the unshackled husband of a terrible wife—they have such things in history—you're going to have war. You're going to have a war spreading throughout the entire region from Turkey and so forth, into Somalia, and beyond. The whole world will blow up.
We are entering a period of the greatest financial crisis in all modern history. Because this time, while there are comparable regional cases, such as the 14th-Century New Dark Age, never before has the entire planet been threatened by virtual extinction of its culture and mass depopulation, as now. So therefore, this is unprecedented.
What we're going to have to do, is what the Congress, in general presently, hasn't the slightest intention of doing. But it must be done, if the nation and civilization are to survive. There is no force outside the United States, which has the intellectual capability and influence to do what must be done, in reorganizing an international monetary-financial system and economic system, which is bankrupt beyond repair. The world will not continue as a civilized world under the present international monetary-financial system, and the prevalent policies which have evolved in the world, as from the United States and elsewhere, over a period from about 1970 to the present time.
Oligarchy vs. Republicanism
We went, during that period, from a nation, which, despite all our errors and follies, still had a residue of the legacy of President Franklin Roosevelt—. For example, look back at the historical setting which leads into the present: When Roosevelt came into the Presidency, virtually with a couple of exceptions, every President since the assassination of President McKinley, had been a national disaster. We allied ourselves with our traditional worst enemy, the United Kingdom, the Anglo-Dutch Liberal system. The killing of McKinley opened the gate, by bringing in the nephew of a Confederate traitor [James Bulloch], Teddy Roosevelt, into the government. Roosevelt marked the change. You had an intervention of a Taft Presidency which was not so bad, but the legacy of Teddy Roosevelt held over that. Then you had a man who was a passionate advocate of the Ku Klux Klan, and who re-launched the Ku Klux Klan's building as a mass movement from inside the White House: Woodrow Wilson.
So from 1901 to that time, you had a degeneration of the U.S. political scene, and of the mentality of our people. This was reflected in the 1920s, by the so-called Flapper Age. While the U.S. economy continued to stumble along into the middle of the 1920s, it actually was on the way down, and by the time of 1929, the whole thing began to collapse.
So from 1901, with the date of the assassination of McKinley, until the entry of Franklin Roosevelt into the White House in early March of 1933, our country was run, largely dominated by a corrupt clique centered on London and what was called Wall Street. These were the guys who, at the time that Roosevelt went into office in 1933, the leaders in Wall Street, such as the grandfather of the current President of the United States, were pro-Hitler! It was Prescott Bush, the granddaddy of George W. Bush, who signed the paper issued to a bank in Germany to release U.S.-controlled funds to revitalize financially the Nazi Party in time for Hitler to be made the dictator of Germany. This was typical of the wealthy families associated with Wall Street, all tied to London.
And they weren't doing it on a U.S. initiative. The initiative came from the Bank of England, from the head of the Bank of England, Montagu Norman, in which the British intended to set up a new geopolitical war, on the continent of Europe, focussed upon the issue of an attack on the Soviet Union, and this war was to demolish Continental Europe, as it had not been thoroughly demolished during World War I. This was a geopolitical move by the Anglo-Dutch financial Liberal circles of Europe. And we had, on Wall Street, and in our political system, we had the patsies who were going along with that.
Roosevelt changed that! Franklin Roosevelt returned the United States to the tradition of the Founders. Among the Founders, of course, was his ancestor, Isaac Roosevelt of Wall Street; an Isaac Roosevelt who was an ally, collaborator, of the Secretary of the Treasury, Hamilton. And that is the Roosevelt tradition. It is not a Roosevelt, as such, tradition, it's the revival of the principle of the U.S. Constitution, which had emerged in particular, in response to 1763, when the British Empire was first created at the Peace of Paris in February 1763.
So, this is a long American tradition. It goes back to the time that my first ancestors landed on these shores! From England, of all places! And some came by way of Canada, from France, in 1648. So, when my ancestors arrived here, they arrived not because they were running away from something as such, but they were coming to take European ideas, the best European ideas of that time, to bring them to a place at a relatively safe distance from the European oligarchies, in order to plant these ideas on these shores, and develop a new nation, a new civilization. That is our heritage: a heritage expressed by the American Revolution, by the formation of the Constitution, by the all-powerful, superior policy of our Constitution, the Preamble of the Constitution, which is the fundamental law of our nation for all true patriots! Because it's a commitment, which I referred to, of course, in this recent paper I've written on the question of Capital Budgets ["The Lost Art of the Capital Budget," EIR, Jan. 12, 2007].
All right. So, what Roosevelt did, was to respond to a deeply embedded tradition. Now, some of us know that we weren't born yesterday. That's not talking about our biological youth, it's the fact that our culture is transmitted, and enriched from generation to generation, as a body of ideas which belong to the specific qualities of the human mind, not to the physical characteristics of the body. And these ideas, which reach far back in history, in the form of the transmission of language and other things, determine what is lying within us. So that you could have a period where, of generations, from 1901, with the assassination of McKinley, to 1933, with the entry of Franklin Roosevelt into office in March, you have a period, a span in which the most rotten kind of ideas, the most rotten cultural things—like the Charleston, of all things! It's the orthopedic surgeon's income-promotion game.
But the ideas, which were planted in the United States in particular, in New England and then in Pennsylvania and elsewhere in the 1630s, around the Winthrops and later the Mathers, these ideas which were the ideas that formed our Constitution, with fresh enrichment from Leibniz and others from Europe, these ideas are the ideas of the United States. This is our soul. This is our character. We are the perfect sovereign, who, despite the fact we have a lot of fat oligarchs in our country, we do not have an oligarchical tradition. You don't bow when Von So-und-So comes by your house! You don't fall in awe, when someone says, "The Queen!" You say, "I know people with that sexual preference," you know.
You do not, because you have a sense: We are an independent people. The personality of the individual is sacred, and that personality has an equal opportunity. That's us! This European stuff, which we moved to get away from, that is, we had to build a republic for the sake of all humanity, which was as free as possible, and as far distant as possible from the European oligarchical tradition. And that's what we are. And whenever you have, in a time of crisis, an able leadership, our people have, so far, been able to respond to an able leadership, to rebuild this nation, even after it has spent drunken decades in a gutter of liberalism.
And here we stand today. And we have people who have entered the Congress. We now have the majority in the Congress, and the majority consists not only of Democrats, but also Republicans who are more inclined to share the general perspective needed to save our nation. Not is either a Lieberman, a so-called Democrat, or McCain, who is out to "raise McCain"—these clowns, I say, advisedly, "clowns," otherwise if you think of them as bozos, you don't have to hate them, you ridicule them; and it's a much better thing to ridicule than to hate.
So therefore, we have a nation which is not accustomed to leadership. We've had some leaders of importance, in the post-war period after Roosevelt's death. Eisenhower tried to do things. He was actually a product in a sense, a very significant sense, together with Douglas MacArthur, of the Roosevelt machine of the 1930s. He understood these things. But he also understood, when he became President, he was operating within limitations of the time, and had to work within the limitations imposed upon him by things like Arthur Burns and so forth, at that time.
Also, we had Kennedy: and Kennedy promised to be a great President, with some fits and starts. For that, he was killed. Johnson was terrified. And since that time, the time that Johnson was terrified, after the killing of Kennedy, knowing that the fellows who killed Kennedy were on top in the United States at that time, Johnson was cautious, and went into the Indo-China War.
Destruction of the Presidency
So, thus, we had 1968: 1968, the British had collapsed the British pound-sterling in 1967. And the way this had happened, is Macmillan, the British Prime Minister, had been kicked out of his post by an orchestrated Profumo scandal. And after an indecent interval, Harold Wilson's first administration was brought into the prime ministership in England. The Wilson Administration destroyed the English economy, physically, to the degree that in 1967, in the Fall of 1967, the British pound collapsed. And because the United States was being drained by this crazy war in Southeast Asia, because of that and the 68ers, Nixon and what he represented, and Henry Kissinger, came into power in Washington.
And from that time, despite what Bill Clinton tried to do—he didn't touch effectively, the core of the problem—despite that, we've now reached the point, of another long siege of corruption, of one sort or another, in which the objective of the enemy, from London, from the Netherlands, and even among us, has been to destroy the United States, as a force, because we represent a threat to the kind of empire called globalization, which the Anglo-Dutch Liberal financier interests, the same ones that brought Hitler to power in Germany, are determined to accomplish today.
So therefore, we have a government which has not been trained by experience to live up to the measure of its responsibility on this crisis occasion. We have no President in sight. We have a "thing" called a President. A sick man, who's called a President. A sick, wicked man who's called a President. We have a Vice President, who should be called the President of Vice. He's a criminal. He's evil. But he's only a stooge for his wife, who is more evil. If you really look at what she is, and what she represents. They represent, not the United States, they represent their friends in London, who own them.
So therefore, our Presidency has been damaged. There is no sense of a Presidential leadership in the nation generally, except in the bones, so to speak, of some of our leading people, and in the population generally. Therefore, we have an important thing: We're not a parliamentary system. And the center of what has to be done, is what can be done through, largely, the major committees of the House of Representatives, as backed by a flood of representatives recently elected to the House, who in the majority represent a force which can be rallied behind the leadership typified in the House by the major committees, relevant major committees, starting with the Ways and Means Committee, and others.
So it's on these people, that we depend to have an interim transition, toward a real Presidency, which can act as a real Presidency according to our Constitution, which can, then, with cooperation with the Congress as a whole, fix what must be fixed in the United States, within the next 90 days, to fix the future of humanity as a whole.
The Greatest Economic Crisis in History
I can assure you: There's no country, there's no part of world outside the United States, in which that capacity for that quality of necessary leadership exists. There are many useful and good people, and useful governments in other parts of the world. But they don't have our Constitutional system. And it's only under our Constitutional system, that we can, so to speak, turn on a dime, to deal with the greatest financial and economic crisis in all modern history: a global crisis, which is coming on, now. The world is ready to go into general bankruptcy.
Now, look at this from the other side. Take an example: Take the case of Joe, who wants a minimum wage. What's the other guy say? "Well, we can't afford it! It'll sink the economy, if we give them a minimum wage."
Joe says, "But I can't live on anything less than a minimum wage."
"Well," they say, "go die, for the sake of the economy."
Now, what's the problem? The fact is—two problems: First of all, the tax imposed upon the economy, by the loan sharks such as the hedge funds and similar financial things in Wall Street, is sucking so much blood off the top of the economy, by various methods of usury, that the cost of usury on the economy, is so great—yah, you can't pay the bill for usury and you can't pay the people, too. So therefore, the usurers are going to have to be reformed, and reduced in wealth.
But the problem is also deeper. The fact is, that Joe, who is looking for a minimum wage, at least as a floor on which to walk, is not, on the average, productive enough, to justify the cost to the economy, of that minimum wage. What're you going do? Well, you have to change something. You have to change a policy. Well, the policy is this: Since 1970-71, we have made a transition, inspired by the 68ers, to go from an agro-industrial economy, producing food, not biofuels—and I mean, "biofools," the people who support that nonsense—so, we've gone to a post-industrial ideology. We no longer produce for ourselves: We shipped our jobs out to cheap labor in other countries, where their conditions of life there, on the average, are becoming worse.
Take the case of China. Now the recent discussion is that China faces a crisis, because it must sustain its economy, it must have a certain rate of growth. This growth now is dependent upon its export market. Who's the export market? Ha! Us, chiefly. So therefore, China is facing a very dangerous crisis, in itself. Because, why? Because it has too many poor people! Not that people should be eliminated. But the point is, the economy has so many people who are poor, and not sufficiently productive, that it does not have a sufficiently developed internal economy, and is dependent upon selling the labor of its people as cheap labor, largely abroad, to sustain the internal economy of China.
You have a similar situation, somewhat different but parallel, in India. You have a similar situation throughout the world, of the countries which seemingly are growth economies, to which industry and agriculture have fled. So therefore, you have a situation in which the world as a whole, is collapsing. As a matter of fact, you have probably seen in the Triple Curve [Figure 1], which is now again, published in the edition of this report on Capital Budget, in EIR: that over the recent period, most emphatically since about 1977, the productivity of the United States, per capita, has been going down at an accelerating rate. That is, the physical productivity, per capita, per square kilometer, of the United States has been collapsing, actually since about 1971-72, but visibly in terms of statistics, per capita, since 1977. That is: Since 1977, take the lower 80% of family-income brackets, their physical income, the physical income measured in terms of physical services and other things, their income has been collapsing, at an accelerating rate. You have a section of the upper 20%, that is, within the upper 3% of family-income brackets, which is super-rich without actually earning anything. And those who are working, in the lower 80%, are getting nothing for doing all the work that's available.
But in the meantime, we have changed the composition of the economy [Figure 2], from a productive economy, to a failed economy, a so-called post-industrial society economy, a services economy. And therefore, the services economy employment is largely fake makework. It's the dole, it's like the Roman dole, of the Roman Empire. It's a fake.
Now, our problem is, is to restore the United States, in particular, to a major agro-industrial power based on high rates of technological progress, and which will require a very large investment in nuclear fission power. We are going to have to essentially eliminate much of the reliance on other modes of power, and eliminate all these biofuel, and other pieces of nonsense, that will actually destroy the area, and destroy the food supply and destroy the population. We have to go to a high-technology, high-energy-flux-density power system. We have to do this.
Take the case of the Western states, west of the Mississippi. You have a large area that runs from Dakota, down into Texas, West Texas in particular, it's called the Ogallala aquifer. This is the major water supply for that whole region. This area is now subsiding, especially in the southern part in the United States. This whole area of the United States is doomed, unless we reverse it. Why? Because the combination of fossil water in that area, and the water supply flowing into the aquifer, is such that it's less than the rate at which we consume the water in the aquifer. And therefore, you have, in West Texas, for example, and similar areas, you have a very serious subsidence of the territory. A destitution, a desertification, as a result of this. You have a loss of the potential productivity in a large part of the areas serviced by the Ogallala aquifer [Figure 3].
You have, around the world, southern India, and other parts of the world, living on what's called "fossil water." That is, water which was embedded in the crust of the Earth, or the upper crust of the Earth, since about 2 million years. For example, in southern India, one of the largest reserves of water in India, in the Deccan region of southern India, is fossil water, 2 million years old, left after the melting of the great glaciation.
So now, what's happened, much of the world is living on fossil water. We have to make water. Now, that has two meanings. In this case, take the case of Australia. Australia has abundant water, and much desert inside. Now, how's that possible? Well, the water's outside, it's around Australia. It's saline. And Australia has a wonderful opportunity to use this water! In the oceans around it! But how do you use it? How do you desalinate it? Well, the only efficient means we have for desalinating water, and cleaning up water, on a mass scale, is nuclear fission power. It's not the best one for the future, but for the time being, this is what you do.
Also, the fuel problem: If you have the proper type of nuclear fission reactors, you can take water—which we should be producing by aid of nuclear fission—we can take water, and we can get fuel from water, through high-temperature, high-flux-density temperature operations, through nuclear power. We can generate fuels, hydrogen-based fuels, from water, using certain types of nuclear reactors. That means, in every part of the country, if you have a sufficient water supply, even dirty water, you can process it. What you can do, is you can turn that water into hydrogen-based fuels, and similar derivatives. You don't have to bring oil from Saudi Arabia. You can make a better fuel right here at home!
Fusion: Technology for the Future
Now, this is the direction in which we have to go. We also have to go for the future, down the line, we have raw materials management problems on the planet as a whole. We have rich sources of raw materials in Northern Asia, and parts of Russia. We can generate in that area, a great improvement in the supply of raw materials, at acceptable prices, for Asia as a whole, an area of growing population, and need for growth, technological progress: We can do that.
But to do that, we have to go into thermonuclear fusion management techniques for our materials, to reprocess and process materials in a creative way, to ensure that the supply of raw materials, at a reasonable price, reasonable cost, is available to every person on the planet: We can do that.
So don't talk about what seems practical because it was done in the past. Progress is existence. Progress is the only future worth having. Therefore, we have to think in terms of an economy which is oriented toward progress, toward technological progress. And to go away from the post-industrial society, which has been killing us. Reject the post-industrial society! Go beyond to the future society, the future-economy society.
Which is what Roosevelt, in a sense, did. He mobilized the people, who were poor, destitute, who'd lost skills, put them to work. And moved, such that, from a nation which had been broken, and destitute, in 1931-33, Roosevelt produced a nation which represented a power beyond the imagination of anybody who had existed before that time! Producing 50,000 planes a year! For war. We won the war! We saved the world from Hitler! Yeah, we had partners in it, but without our role in that, we wouldn't have saved the world. Britain would have joined Hitler, but for the United States, but for Franklin Roosevelt. It was Franklin Roosevelt who got the British to abandon their intention to support and cut a deal with Adolf Hitler! It was Roosevelt! His leadership. And the development of the economy, mobilized under his leadership, which made us the greatest power the world had ever seen. We did it, under Roosevelt's leadership.
We can do it, again. We can do it, with this broken, depleted population. We can do it, again.
What Went Wrong
Now: The problem is, that most people today, particularly Baby Boomers, were trained in the post-war period, not to think like that. You had the various things like Dr. Spock, who turned your baby into a monster, and gave you a recipe to do it: "Just feed your baby this soup every day, and it will become a monster." And it did.
So therefore, we have to look at what's wrong, spiritually and intellectually, as well as physically. Because the physical wrongs are a result of intellectual wrongs, mental wrongs. We make mistakes, we make the wrong choice, we vote for the wrong candidate. We vote for the wrong policy. We support the wrong idea. And that's how we get into trouble: Because we are a nation; according to our Constitution, the people can actually control their government, through their influence on the selection of people, and behavior of people in government. We are not an oligarchical society. And when the people move, and have leaders that enable them to move in a unified way, we can accomplish miracles. And we're going to have to pull a miracle out of the hat, right now.
So that's the task before us.
Now, what does this mean? The problem with the Baby-Boomer generation—and this was intentional—the day Roosevelt died, the people who came into power, were largely people who were determined to destroy Roosevelt's life's work. They could not completely destroy it, because of what had happened—the effect on our returning veterans, for example. There were limitations on what the new administrations could do, to destroy the United States from the inside.
So we had a Bretton Woods system for the world, a good system which worked, until it was destroyed in the middle to late 1960s, and absolutely destroyed in 1971-72. We had a good system. There were many legacies. But what happened was, these characters said—as in Europe with the Congress for Cultural Freedom—they said: "We have to destroy the next generation." And they did! With the aid of Dr. Spock. With the aid of the Congress for Cultural Freedom. With the aid of the theory, which is actually a Nazi-like theory, of the authoritarian personality. The guy who says, "I don't believe in conspiracy theories." He's a nut! He's been brainwashed! If he says, "I don't believe in conspiracy theories," what's he saying? He's talking like that Nazi, Martin Heidegger, with his conception of "thrownness" in society. He's saying, the individual is in a conflict with society. That the relationship between the individual and society, should not be affirmative, but is negative: existentialism. This is the book called The Authoritarian Personality, through which many of the Social Democrats and others in this country worked to destroy the United States from the inside. This was the program that raised the Baby Boomers.
And the upper 20%, the white-collar section of the upper 20% of the family-income brackets: They were the ones who were going into universities. They were the ones who were destined to go into business, and government, and other influence. They came up, and, as the 68ers, not as a collection of individuals, but as a social formation, a social formation which split the Democratic Party in particular, between white-collar on the one side, and blue-collar on the other side. And it was a split between white-collar and blue-collar, done by the 68ers themselves, under the direction of these clowns, which destroyed the Democratic Party and made the Nixon election possible.
The problem lies, in a sense, in this direction: that the Baby-Boomer generation was conditioned not to believe in truth. They call it, they're against conspiracy theories. Well, all progress in humanity is done by a conspiracy! People agree to change the way they behave, as in technological progress, as in changing the character of institutions, as going for full adult education programs, developing professionals, bringing in new technologies, changing the relations among nations. These are all ideas around which people organize to make things better. Everything good in society, is done by a conspiracy. Everything bad in society, is done either by abrasion, or by conspiracy theories! If you don't believe in conspiracy theories, you're a mental case, and need adult supervision!
Because that's the way history has worked. History works on the basis of ideas! The difference between a chimpanzee and a human being is ideas! Chimpanzees don't have ideas. They can't think. If you want to find a society free of the authoritarian personality, look at a cage full of rhesus monkeys. They are true existentialists.
The problem is, therefore, by denying the importance of principle, the existence of principle, what we did, is we gave a generation which is now empowered, in our institutions, a generation which is empowered to say, "I don't care about the future. I don't like my children. I don't like my grandchildren. I'm tired of supporting them. I don't want to pay for their education. I don't care what they think. I have to live out the remaining few years of my life, in what I consider comfort. I don't care about what comes after me! I care about what I feel in the here and now, today!" Short-term, quick gratification. The sexual behavior and marriage patterns of the American Baby Boomer.
A New Generation Rises
What we have now, the thing we have, which is demonstrated by singing choruses in bel canto mode on the streets of the United States, and also in Europe: what we have, is the affirmation of a generation of young adults. These young adults are the same generation which was organized by Benjamin Franklin from about 1763 on, when he knew the nation was in danger; organized by him, which made the American Revolution, fought the American Revolution, led the fighting of the American Revolution, and created the Constitution of the United States. The generation of Alexander Hamilton, for example: a product of Benjamin Franklin's mobilization of the young adult generation, no older than the young people of today, between 18 and 25 years of age, between 18 and 35 years of age.
In all history, all important changes for the better, and sometimes for the worse, in the history of nations, have come from that generation of people who are past adolescence in their character, their outlook on life. They are adults in their orientation, and they're looking forward to two generations, approximately 50 years, of their coming life. These are the kind of people who, when they grow older, look at their grandchildren as their investment in the future.
The Baby Boomer, by this kind of operation that was done to them, in the post-war period by the Congress for Cultural Freedom in Europe and in similar things here, was destroyed. They were destroyed. They destroyed their moral sense that the human being is not a physical thing alone. It also represents a quality of being, a personality, which is immortal. The part that pertains to ideas, of the type that no animal can generate. And if you lose that sense of immortality, then you don't have a sense of living in the future after your own death. If you can say, "I can live in the future, after my own death," then you have morality, you have reason. And you can live, and fight, and risk your life. Because it's not your mortal life that you're defending, it's your future existence, as the embodiment of ideas, and the transmission of ideas that makes the future function. And that's what's lacking in that generation.
And that is what we're doing, and what you saw reflected in the results of the recent midterm election. The role, the crucial, marginal role played by the increasing turnout of young Americans between 18 and 35 years of age, in two groups—first of all, the 18 to 25, and then the 25 to 35. And if you look at the statistics on the voting, and the turnout patterns with this last election compared with the previous elections, you see there has been a fundamental, revolutionary change, in which a new adult generation is providing the basis for new leadership in the policy-making of the nation as a whole, and the policy-making of the world.
And therefore, we get the old Baby Boomers out of their slumbers and their fat dreams, and we tell them, "C'mon! Come back to life. Don't be dead all your life. Come back to life. Commit yourself to the future of this nation." Because the work we have to do, must be done over a period of not less than 50 years to come. And we must have a policy for rebuilding this nation, and the world, over the coming 50 years. And we must realize that, in our time, we must adopt the design, and lay the foundations, for the future of humanity, in the sense that Franklin Roosevelt attempted to do so, when he entered the White House in 1933. That's our mission. And that's what stands before us.
Tasks at Hand: The Next 90 Days
Now: Since we don't have a President right now, we have a "thing," like some comic book character, and sitting there, babbling lunacy—the poor guy doesn't know any better; he's sick, he's mentally ill. And he needs care. He has not received the parental care he requires; maybe we'll have to get some surrogate parental care for him. But we've got to get him out of what he's doing! We don't want to shoot him—he's a human being. He's just a sick guy. What do you do with a sick guy? We try to help him. Well, the first thing to do, is help him out of that terrible job he has in the White House!
The Vice President: I think we ought to chain him, and his wife, up at night. And get ourselves a bright, new, shiny Vice President.
Now, we don't have those things accomplished right now, though they might come sooner than Cheney likes. But we must have that perspective, and in the meantime, we must say, "What're we going to do in the House of Representatives and the Senate, as those are central focus of institutions—what're we going to do, to get this nation safely through the coming 90 days, or so? Preferably less."
Now, the main thing we have to deal with, apart from this threat of war, which is essentially a byproduct of the general sickness, what we have to do in the main, is, we have to recognize—despite all objections to this reality—that we are now in the down phase, the terminal phase of a general global financial system collapse. This is not a depression. This is a breakdown crisis. That, if you don't make certain reforms in institutions, you have a situation in which the world is collapsing, disintegrating physically, as a result of the economic situation, financial situation. So that, unless you can change the financial system, you just go into a permanent slide, into a bottomless collapse; a biological collapse as well as a financial collapse.
This is worse than a depression: It's a breakdown crisis, comparable to what Europe experienced in the middle of the 14th Century, the so-called New Dark Age. That's what the world as a whole faces, unless something is done about it. And what has to be done, can not be done from any other place of origin than right here in the United States. And it must be done essentially in the Congress.
Now, the Congress is not inclined to want to take on that job. They would like to have a list of our priorities—you know that. Priority 1, 2, 3—which way do you arrange them? As if putting each of these pieces together will somehow work—it won't. So, what the Congress is trying to do, in general—the better side of the Congress is trying to do, and more and more Republicans joining, is to try to take some of the pieces, some of the local issues, specific issues, and deal with those one at a time—on the assumption that will work. It will not work!
Physical Economy, Not Money Economy
The specific thing is—two things: First of all, an economy should not be a money economy. An economy requires the use of money, as a way coordinating the relations among particular individuals, regions, and so forth, within a national economy as a whole. But a national economy as a whole is a physical economy, not a money economy. Now the difference here, is the difference between the British System or Anglo-Dutch System, which is a monetarist system. In other words, a system based on the authority of money, money per se. So what you do, is you're going to have to behave in the way money wishes you to behave. That's the principle that rules the British System; that's what's ruling us today.
The American System is exactly the contrary. The American System of economy is a system of physical economy, not monetary economy. We use a monetary system, just the way the inhabitants of Massachusetts, before 1688, established a money system, a scrip system, to promote the increase of circulation of goods and production. That's what our system is. This is on the subject of paper money, dealt with by Benjamin Franklin, which is part of what our system is. We are not an Anglo-Dutch Liberal system! We are not a Marxist system! And Marx was a student of the British System, and a defender of the British System. A rebellious defender of the British System. So, you're either a Brit, an Anglo-Dutch Liberal, or a Marxist derivative of Anglo-Dutch Liberal, all of which are based on monetary conceptions, the so-called "notion of value," the notion of money-value—as a substitute for physical value. The notion that money-value determines physical value!
Now most of you know this is silly! Because, if you look at the curve, between the ratio of physical consumption per capita, and production per capita, in the United States territory—per capita, per square kilometer—you see that the physical output and consumption per capita, per square kilometer of the United States' territory has been accelerating downward. While the money part of the economy has been soaring upward! It's passed the Moon a long time ago! It's now left Mars behind, and it's heading we know not where.
All right. Therefore, as a result of this situation, you have a situation which the American economy faces, that the amount of debt, of monetary debt outstanding today, is so great, that the Federal Reserve System has suppressed reporting of M3. Because they suppressed the degree to which pure, wild-eyed inflation, you know, at electronic rates, has been soaring away, in order to keep this economy from blowing up. Now, what they do, by doing that, the economy is not just blowing up, what you're doing is building up an explosive charge, because the discrepancy between physical value, which is downward, and monetary claims, which are upward, as related by the price of things, is such that this system is now finished. There's nothing that can save the present world monetary system: Nothing! If you want to obey the rules of the system, you want to keep the present international monetary system, you're going to go to Hell—and probably quite literally. Because you committed a big sin, by doing that.
Put the System Into Bankruptcy
So therefore, we're going to have to liquidate the international money system!
How do you do that? Well, the way you do it is you go to the principles of physical economy, as a way of thinking. Now, you do what Roosevelt did, but you go a little bit further, because the situation's worse. What you do, is you put the whole system into bankruptcy. For example: We in the United States must, if we intend to survive—we're talking about the months ahead, not some far distant program, but months ahead—if we wish to survive, we will have the Federal government put the Federal Reserve System into receivership in bankruptcy! We will put it into bankruptcy to prevent a banking collapse, because we have a super-banking collapse in every major bank in the United States, and relevant system. Every one of them's about to go! They can not be sustained.
Therefore, to prevent a catastrophe, a social catastrophe, and an economic catastrophe, we must put these banks into receivership, for reorganization in bankruptcy. We do that, in order to maintain the continued function of these same banks, in their normal function, in respect to the economy and the population. We have to have things paid; we have to have people employed; we have to keep trade in motion. But we're not going to pay this thing on time as demanded. We're going to put it into bankruptcy. And the Federal government can do that, very simply, by putting the Federal Reserve System, itself, into receivership in bankruptcy. And reorganizing it, in bankruptcy. The power of government to conduct bankruptcy.
If we can't do that, you're not going to save the United States, you're not going to save the system. This is not a far distant prospect: This is now!
So, within the next three months, we must expect to face, as early as that, we must expect to face the point of crisis, where you either put the systems into bankruptcy, or you go straight to Hell! With no return ticket.
That's our situation.
Okay. You have to have the guts to do that, and you have to have the knowledge to know how to do it. That's number one.
Then you have to realize that economy is not a monetary economy. Money is a mechanism which is realized and regulated, as under what we call the "fair-trade system policy" of the 1950s. There, you had a protectionist system, which recognized that money is an idiot. Money does not know, what is physical value. So therefore, you regulate money by your selective taxations, tariffs, supports, subsidies, all these kinds of things, so that the money system is now trained to try to stay within values which correspond to physical values. And above all, you want to make sure that an industry which is essential, is able to earn enough money through the prices of its goods, and through regulation, to survive. You don't want the industry to close. If it's a useful industry, you don't want it to shut down because of price competition! So you have a fair trade system, use tariffs, taxation, other mechanisms, regulation, to make sure that the business is not forced to sell its product at a price below the cost of production. That it's able to maintain and increase its capital investment, that is, physical capital investment—so you have regulation. You have regulation, such as protecting wages, wage levels: You don't want families to fail, so you regulate, to ensure that the flow of value through the economy enables families, normal families, in normal communities, in normal areas, to survive, and to progress. And that can only be done by the power of government to regulate the economy, including the money economy, the financial economy, to ensure that the physical effects we're creating for people and for the future of our society, are what we want.
And we also place a special reward, on ingenuity. And we do not like large corporations, particularly. We hate them. Because large corporations have no conscience. Whereas a closely held enterprise, particularly one which is technologically progressive, or performs some essential service under the motivation of its leaders, this economy has a personality. A corporation, a large corporation has no personality. It's not human—it's a monster.
So therefore, what you prefer, is you prefer closely held firms, usually with less than 200 employees—sometimes as high as 500, but less than 200—which are closely held, in which the future orientation is fundamental; in which the leader of the corporate entity, and the leaders have two characteristics: Number 1, they are looking for the future they are building with that production. They are thinking of the future of the community, or the state, in which they operate. They're thinking of a future leadership of the corporation, to maintain the continuity of development. They're part of a community, of similar, like-minded entities, which work together to ensure that the local needs of the community are addressed. When these corporate factors become crucial in determining, what's wrong with the school system, the local corporations are part of the process of discussion: "What can we do with our resources in this community to deal with this problem? What can we do to improve things in our community?"
The Traditional American Way
So you have a national approach of policy, top down, but you have, bottom up, the implementation of the same idea, reflected at the local region. You have, not a place where people gather, like a mob gathering at a circus, but you have a sense of people combined in their community, as neighbors, to function together, to take care of much of the requirements of that local community and state. That's our Federal system. It's based on that.
So therefore, what we want is people who are physically useful to society, producing, and improving what they do, and gaining in influence as they earn their way, to recognition. People who, as investors, and leaders of industries, are responding to the needs of their community as a whole. Who defend the economic interest of their state, their county, their town, their community; we need that. Who think about the interests of the nation as a whole from that standpoint, recognize they're part of a nation, and are concerned with the leadership of the nation as a whole. This is the traditional American way. This is the traditional way described by Hamilton, in his own terms, in his On the Subject of Manufactures report to the U.S. Congress, as Treasury Secretary. That's what we have to get to.
But the objective is physical. Because the increase of the productive powers of labor, does not come from the skill in stealing. Enron is not a good model of economy! Productivity comes from the increase in the productive powers of labor per capita, per square kilometer. For individual labor and individual enterprise to succeed, you must have an economic environment, which enables them to amplify their powers of production in that region. You need water systems; you need power systems; some of these things are private, some of these things have to be public. But you need all the elements of infrastructure, all the elements of government administration, which enable the local producer, as an individual or as an enterprise, to make a contribution which contributes to the productive powers of labor as defined in physical terms, and defined in service to necessary goals in the society.
This is what we had, as our tradition. This is what we had as the Franklin Roosevelt tradition. This is what we had still, in the 1950s, as the idea of a fair-trade system of society. This is what we lost, when the 68ers came into power, and said, "Blue-collar is no good. Post-industrial life is good. Industry is bad, production is bad. Everything stinks." The Great Unwashed, telling us that "everything stinks." And apart from that, bad breath!
So, the question here, which I'm focussed upon with this report on "The Lost Art of the Capital Budget," is to understand how this kind of system works.
Stop-Gap Measures Won't Work
Now, the other aspect of this, which I emphasize there, which is crucial, here, today, is you look at people, the way they think about the economy, they think about society: They think in what is called a "Cartesian" way. Look, for example: Let's take the case of 1998, August-September 1998. The collapse of the LTCM corporation speculation, a speculation which threatened to blow out the entire U.S. economy. And the government, under Bill Clinton, with the direction supplied by Treasury Secretary Bob Rubin, acted massively to prevent a general collapse of the system, at that time. They did not do what they should have done, because the enemies of reform arranged a constitutionally illegal indictment of a President of the United States. And that disruption of the Clinton Administration, in August, but especially in September of 1998, prevented the Clinton Administration, together with its Secretary of the Treasury Bob Rubin, from acting as they knew they had to act: to reform the system to eliminate this factor from the system. What they did, instead, as Bob Rubin would probably do today, in a similar situation—he's not a politician, he's a banker—what they did, was they adapted to the political reality of what they were not allowed to do, which they should have done, to come up with the best possible stop-gap arrangement.
But nothing was cured!
When George Bush came in, after the collapse of the Y2K bubble, in 2000, and where you had the prospect of poor Al Gore with this fellow, this sexually interchangeable political figure Lieberman, there was no optimism in the population. And the voters reflected that in the dubious election of George W. Bush Jr. If you had an ambiguous potential in the Democrats, you had a certain doom in the Republican choice. And therefore, people liked certainty over doubt, and therefore they elected that which was sure to doom them: George W. Bush, under the control of baby-sitter Cheney.
So, the issue was never faced. We've come to this point, after six years under Bush, we've lost it all. There's no more hope. It's gone. Nothing you can do about it, within the terms of the system.
So therefore, you have to go back to the American System. You have to go back to the ideas which were generally accepted under Franklin Roosevelt as we went into war, ideas which worked well, even after Roosevelt's death, to the extent they were used, through the middle of the 1960s. And we have to go back to that. We have to go back to the case of the Kennedy launching of the manned landing on the Moon, and things like that. That has to be the measure of policy-making: You always have a physical goal, a generation ahead, which is the model way of reference, of thinking, the benchmark of thinking, which points to the future! Because you mobilize people about their sense of immortality. Their sense of immortality lies in what they think they're doing today, for the future of the nation and mankind. They're thinking of people who think in physical terms and in moral terms; it's not short-term, it's long-term. Why do you go to a university? For the long-term effect on your life. Why do you reject most universities today? Because they give you no long-term perspective for your life. We need universities which do that, again.
So, that kind of thinking is what's necessary. And the problem is, again, that kind of thinking is missing.
But people think in terms, not of society as a process. They think of society as a jungle, a Hobbesian jungle. A sea of conflict in which war is natural, natural is inevitable. Everybody makes war as an instrument of policy. Other kinds of idiocies are natural, competition is inherently good, just because it's competition, even if it's stealing. That's the way it goes.
So people don't think about process. They get a statistical report, like the Myron Scholes design or the Black-Scholes formula, which was used by LTCM. Most economists, today, who do forecasting, are idiots just like Myron Scholes, because, they're like Cartesian thinkers, in terms of Cartesian mechanical-statistical systems, that you can project the future by taking a trend in bouncing balls, from the present into the future. And statistical forecasting is intrinsically incompetence. Because the way the economy functions, we work within boundaries. And we are always approaching a boundary, a limit. And as we reach toward that limit, a collapse is inevitable unless we change the boundary. And you change the boundary by introducing a new condition, by a political improvement, a social improvement, especially by a physical-scientific improvement in technology. Like the shift into nuclear power, the shift into thermonuclear fusion, the shift into an isotope economy. Recognition of the need that we have to manage the planet's supply, by improving the supply of life on the planet. Don't complain about the environment: Change it! Don't worship the environment: Change it! It stinks! Change the baby, it stinks!
So therefore, the way you forecast, the way I forecast—and remember I've never made a mistake in a long-range forecast yet—but I forecast in ways they don't like. Because I say: Here's a boundary condition. Now, let's look at where we are with respect to this boundary condition. And as you converge on a boundary condition, you're headed for a crisis. And you have secondary boundary conditions and primary ones. And I've always forecasted on the basis of seeing the way the system is functioning with respect to a boundary condition. This is called dynamic analysis, which most economists have no knowledge of. And most people in government have no knowledge of this, of dynamic forecasting, of thinking of processes in dynamic terms.
This is what the younger people, the young adults, in the LYM, are studying. They are working progressively, they worked through, to a large degree, the study of the ancient Greek roots of modern science, among the Pythagoreans and Plato. They've gone directly into reliving, page by page, chapter by chapter, the process of the discovery of modern astrophysics by Kepler! They're reliving it. They're not saying, "I learned this." They are reliving the moments of tension, in the work of Kepler, where they get to a chapter, a page, and an unresolved question is posed! Now! What's the answer? Well—they've got to apply their minds to thinking what the answer is, and find the answer. They go to the next chapter. "Ah—we still don't understand it, but it's a big problem." They see the problem. And this starts, in the chapter, in the first book—that is, the New Astronomy—it starts with this issue of the equant, which breeds a crisis in understanding the data of the relative positions, of the Sun, Earth, and Mars. And you try to measure this in terms of an equant, and you got a tilt, boy! Tilt! And this became, of course, the basis for Leibniz's creation of the calculus. So now, we're going on from there. We're going through some work on Gauss which is relevant to this, into the continuity of the emergence of dynamics as a scientific method, by Bernhard Riemann.
Now, these fellows coming through this, and they're going to get through it within months, and others will repeat it, and have the same experience, will now have a grounding, in understanding modern physical science. They won't know many things, but they will know the fundamental, central principle of modern physical science. And they will be able to think in those terms, which most people in society can not, presently, think in those terms. Most university professors in scientific fields, for example, are not able, today, to think in those terms.
So therefore, the principle here, is to equip a coming, young adult generation, in the 18 to 35 age-group, to become self-consciously responsible, for the future of humanity. And to engage all of the generations of existing society, in an effort to make the physical changes in economy, by introducing new principles, or higher principles, which will enable us to increase the productive powers of man, per capita, per square kilometer. To go to a point of cooperation, rather than conflict. And to base their personality, on finding their personal identity in the future well-being of mankind, the kind of commitment which brought my ancestors, from England and from France, into New England and Quebec, respectively; to find a place on this continent, at a safe or relatively safe distance from the oligarchy of Europe, on which to take the best achievements of all European civilization, and bring them, personified, into a new country, a new territory, from which to organize the elevation of mankind, to free it from the curse of oligarchy, which grips Continental Europe, still today.