EIR LEAD EDITORIAL FOR FRIDAY, MAY 28, 2021
Energy Flux Density as the Criterion for Physical Economy, by Helga Zepp-LaRouche
May 27, 2021 (EIRNS)—The annual Moscow Academic Economic Forum was held on May 26-27 on the theme “Global Transformation of Modern Societies and the National Development Goals of Russia.” The founder of the Schiller Institute, Helga Zepp-LaRouche, was invited to address a panel at the Financial University of Moscow on May 27, as part of that conference. A report and evaluation of the many other speeches, which included top representatives from the political, economic, and financial institutions of Russia, will be forthcoming. The following is an unedited version of Mrs. Zepp-LaRouche’s remarks, and should not be published in this form.
I want to thank the organizers of this very important conference for inviting me to speak to you. It is almost one and a half years since the outbreak of the COVID-19 pandemic: What have we learned about how the different models of governance and economics—the U.S. and the EU on the one side, and China and some other Asian countries on the other—were able to cope with the crisis? You know the answer: While the pandemic is still not under control in the so-called “West,” and is raging out of control in many countries in Latin America, Asia, and Africa—China had brought the situation pretty much under control within two months, and so did some other Asian countries, whose basic value system prioritizes the common good over the exaggerated individualism one finds in the West.
The pandemic also revealed the fundamental flaws of the privatized health system in the West, such as the vulnerabilities in the supply chains for medical equipment due to outsourcing production to “cheap labor” countries, as compared to the efficiency of the Chinese model.
But it was the developing countries that have had the highest price to pay, as the neo-liberal system deprived them of any health system worth mentioning. Already in 1973, my late husband, Lyndon LaRouche, had warned, that the IMF policy of conditionalities imposed on the so-called Third World, which put debt payments before investments in health, education, infrastructure, etc., would lead to the emergence of pandemics, old as well as new diseases, since one can not lower the immune system for entire continents over longer periods of time without causing such effects.
After the 2008 systemic financial crisis, nothing was done to correct its root causes. Instead, central banks relentlessly pursued a policy of QE, zero and even negative interests, favoring speculation at the expense of investments in the real economy. That widened the gap between rich and poor, eroded the productivity of the physical economy, and built up an inflationary bubble, which remained hidden for some time. When the COVID-19 pandemic and the subsequent lockdowns hit, the various “stimulus” and “recovery programs” served as a welcome pretext to continue to bail out an already-bankrupt financial system.
The total assets of the Fed grew from under $1 trillion in 2008, to $4.1 trillion in September 2019 to $7.8 trillion by the end of 2020. Similarly, the balance sheet of the ECB grew from €1.5 to €4.6 to €7.5 trillion by the end of April 2021. At this point, there is an unprecedented 75% increase in money creation year on year, heading into a hyperinflationary collapse, which a recent report by Bank of America ridiculously called “transitory hyperinflation.”
It is that imminent bankruptcy of the trans-Atlantic system which the central banks are trying to postpone by means of the “Great Reset,” “Green New Deal” or “Green Deal,” which is supposed to loot tens of trillions of dollars out of real industrial and agricultural production and direct all investments into a “green finance” bubble. The exit from fossil fuel-related industries into “carbon-neutral” production, construction, and architecture (wood and bamboo) represents a gigantic technological leap backwards. For the so-called advanced countries, it would lead to enormous price increases, a drop in the living standards, and social chaos. For the developing nations, it not only means the perpetuation of poverty and underdevelopment, but also, in particular under the present conditions of pandemic and famine, massive depopulation.
With his science of physical economy Lyndon LaRouche developed the yardstick needed, by defining the exact correlation of the energy flux density used in the production process and the associated relative potential population density which can be maintained on each level. Since wind and solar have very low energy flux densities, and many countries, such as Germany, are exiting nuclear energy, the “Great Reset” threatens to lead to a population reduction of billions, which is the result desired by the neo-Malthusian advocates of “green finance.” The Green New Deal is the opposite of the New Deal of Franklin D. Roosevelt: It is the revival of the economics of Hjalmar Schacht, with the same results: mass death and war.
Fortunately, the recent agreement by the Russian and Chinese governments to cooperate closely in the development of nuclear energy represents a powerful counterpole. More generally, the Chinese economic model—which famously lifted 850 million people out of poverty—has allowed China to develop in 40 years from a very poor, underdeveloped country into one which has by far the most impressive high-speed train system in the world, which was able to quickly catch up with the leading space-faring nations in the world to become the first to land on the far side of the Moon, and which is in the forefront of the development of thermonuclear fusion technology.
The Belt and Road Initiative offers for the first time a concrete perspective for the developing countries to overcome poverty and underdevelopment, which is why almost 150 nations have joined it. It is the greatest infrastructure program in history, and holds the potential solution to addressing the urgent needs of regions of the world now threatened by the pandemic and famine of “Biblical dimensions,” as David Beasley of the World Food Program (WFP) put it, such as Southwest Asia, Africa, and Latin America.
In light of the threatened hyperinflationary collapse of the trans-Atlantic financial system, there is an urgent need for a real global New Deal, as a protection against the impact of such a blowout, starting with a global banking separation in the tradition of Roosevelt’s Glass-Steagall Act, which puts an end to the casino economy and allows for a new credit system based on a system of national banks in the tradition of Alexander Hamilton. A New Bretton Woods system—as it was intended by Roosevelt, and not as it was implemented by Truman and Churchill—must provide the necessary long-term credit with low interest rates, in particular for the developing countries, to make real industrialization possible.
This pandemic, and looming new pandemics, such as WHO director Dr. Tedros Adhanom Ghebreyesus is warning against, underline the urgent necessity to immediately implement a World Health System, which means that every single country on the planet must have a modern health system like that the Chinese were able to mobilize in Wuhan.
The human species is the only one capable of creative reason, and the development of mankind up to the present point is the proof that Vladimir Vernadsky’s conception of the increasing power of the noösphere is the law of the universe. Therefore, there is hope that geopolitical confrontation can be replaced with a new paradigm of cooperation toward the common aims of mankind, including international cooperation in fusion research and space cooperation, which will demonstrate that there are greater gains to be made for everybody by bringing civilization into a new era. The summit of the permanent five of the UN Security Council proposed by President Putin could become the beginning of such a new paradigm. We must organize an international anti-Malthusian alliance to support such a new paradigm!