Mr. President, Forget the Fed—LaRouche’s Laws Are Needed Now
March 1, 2020 (EIRNS)—Speaking to media on Feb. 29, President Donald Trump was asked about Federal Reserve Chair Jerome Powell’s unusual statement Friday afternoon, Feb. 28, at 2:30, amid stock traders’ desperation, that the Fed would take action to “support the economy.” Every bank and financial firm heard “more quantitative easing,” “more repo market liquidity,” and “emergency rate cuts” in Powell’s statement; and financial media today were speculating about another Fed statement in the evening, before Asian markets open for Monday.
The President responded,
“Our Fed should start being a leader. We should have the lowest interest rates. We don’t have the lowest interest rates. Our Fed rate is higher. You look at Germany, you look at Japan, you look at other countries: many of them have negative rates, and we are not put in that position because of our Fed. And now we have this problem. You saw where Germany is lowering and also infusing a lot of money into their economy. I haven’t heard our Fed say they should do this.”
Trump otherwise referred to more tax cuts, “near the end of the year.”
President Trump faces a serious challenge: Preventing a public health emergency; reviving falling manufacturing and stagnant industrial production; and getting quickly to a disarmament summit with four other heads of state and government while some of his military officials make first-strike statements and proposals about Syria which could mean nuclear war.
But looking to the Fed to put QE in overdrive now, will only mean a more and more stagflationary liquidity-printing binge aimed at nothing but supporting falling stock prices.
It would lack any national productive mission.
Schiller Institute President Helga Zepp-LaRouche has just made clear in her appeal for a four-power summit, that Lyndon LaRouche’s “Four Laws” must be on the agenda. Obviously, the protective firewall of a restored Glass-Steagall Act, against a threatened crash of speculative financial firms, is needed right away. But also, to quote her: “There must be the creation of a national bank in every country, in the tradition of Alexander Hamilton’s Bank of the United States or the Kreditanstalt für Wiederaufbau in Germany after World War II, so that state credit for productive investments can supply the physical economy with the necessary funds.”
Just as President Franklin Roosevelt created the Reconstruction Finance Corporation when banks stopped lending productively and the Fed would not participate in productive loans in the 1930s, President Trump and Congress need to forget the Fed and do that now. Among the institution’s missions, would be funding emergency construction of new hospital and healthcare infrastructure—as China just did—which has gotten critically low in the United States. Another mission: participating in increased commercial and industrial lending—again quoting Helga LaRouche, “The issuance of these credits must be guided by the principles of high energy-flux density and an optimal increase of the productivity of the productive capacities and the powers of labor through an emphasis on scientific and technological progress.”
Instead of reading Monday’s stock market quotes, read her “Urgent Appeal to President Trump, President XI, President Putin, Prime Minister Modi and Leaders of Other Countries for the Emergency Implementation of the Four Laws of Lyndon LaRouche,” which is now posted on the Schiller Institute website.