EIR LEAD EDITORIAL FOR FRIDAY, OCTOBER 29, 2021
Energy Inflation Storm: LaRouche’s Triple Curve Explains It, His Four Laws Solve It
Oct. 28, 2021 (EIRNS)—In the late 1990s Lyndon LaRouche drew a picture of the coming death of the American and European productive economies in the crash he forecast coming. LaRouche called his instructive graphic “Typical Collapse Function,” which became known a “The Triple Curve.”
The Triple Curve shows the case in which productive economic activity—industry, infrastructure building, agriculture, mining, construction—is declining at a worsening pace; the total volume of debt burdening the economy is growing at an increasing pace; and the money supply is also growing at an increasing pace to keep the debt liquid. That nation or region will go into physical-economic collapse unless financial reorganization policies are forcefully introduced and quickly backed by credit for economic development.
And when the money supply is artificially increased more rapidly even than the debt itself—at that “crossover point,” a financial crash is looming. In mid-2007 LaRouche publicly announced that that crash was unstoppable except by a complete reversal of financial and economic policy, and it came in late 2008.
Observe the path of inflation in commodities since then. Take a representative sample of 20 major international commodities: oil, coal, natural gas in Europe, natural gas in the United States; soft red wheat, hard red wheat, rice, beef, chicken, shrimp; lumber, rock phosphate, rubber, aluminum, tin, lead, nickel, copper, zinc, iron ore.
During the five-year period from July 2000 to July 2005, almost all these commodities rose in price by between 50% and 100% on the way into the 2007-08 crash. The crash itself deflated the great majority of them, along with the prices of financial assets (stocks, bonds, other securities, derivatives), which collapsed.
For a decade, the major central banks intervened on a scale never seen before that time, with tens of trillions of dollars to “support” financial assets, vowing that by doing this, they would also restore inflation and economic growth. The value of financial assets of all kinds grew steadily, during some of that time explosively, and global billionaires sprouted like mushrooms after a storm. But from July 2010 to July 2019, the prices of all of the commodities above (with the sole exception of beef) declined, by anywhere from a few percent to 70%.
But at the August 2019 central bankers conference in Jackson Hole, Wyoming, Mark Carney and a gang of central bankers and executives at BlackRock, Inc. determined to push “regime change” and take central bank control over government spending and private sector investment flows in order to launch a dramatic shift into “green finance,” sometimes called the Great Reset.
QE5 started on Oct. 4, 2019. The COVID pandemic then cut off production across the world. The Federal Reserve and European Central Bank in March 2020 launched a completely unprecedented pace of QE of more than $250 billion/month between them. The so-called “Green New Deal” was driven forward, which—it is now very clear—reduced productivity, cut production of all fossil fuels, and spread energy chaos. In a “Fed-Treasury partnership” brokered by BlackRock, Inc. the U.S. Treasury borrowed $5 trillion in “COVID relief” funds in a year through the CARES Act and the American Rescue Act, to drive private sector spending. “Trillions were shifted” toward the new green finance bubble.
The worldwide collapse of production and productivity, since very early in 2020, continues: Look at the American productive economy: Since 2019 it has shrunk by 500,000 productive jobs, 5.5 million overall jobs, and lost 3% of industrial production. The American workforce itself has shrunk by 5 million since 2019.
With that going on, the $14 trillion Fed-plus-Treasury-plus-European Central Bank money-printing policy meant that the Triple Curve collapse function would now end in a combination of an economic breakdown and an explosion of inflation.
And in fact, in just the two years between July 2019 and July 2021, all 20 of the above commodities’ prices rapidly inflated: the agricultural commodities by 20-25%; the rest by far more, up to 250% in two years. Most of these inflated in the range of 20-50% in those two years. In the energy commodities, the inflation has accelerated further from July until this present end of October. This is the hyperinflationary process described by LaRouche’s Triple Curve collapse function.
During that earlier period LaRouche also named the actions which must be taken to stop such a spiral and start recovery.
Long-term, state-to-state contracts for energy commodities, freezing out speculators in “paper gas,” “paper oil,” etc. What LaRouche insisted on in 2001, when oil first rose above $100/barrel, Russian President Vladimir Putin demands now for natural gas supplies.
Glass-Steagall reorganization of banking, breaking up megabanks’ speculating with deposits.
“Hamiltonian” national banks in every nation, to participate in the credit for projects of new infrastructure, as pioneered anew by China with the Belt and Road Initiative.
Funding of development with the most advanced energy-dense technologies, and of crash programs in fusion energy development and collaboration in manned space exploration.
Rapid increase of food production, to double it worldwide, and building of new health systems—obviously, the focus immediately falls on Afghanistan, Haiti, and other nations where economic life has collapsed.
This outlook is the subject of the Schiller Institute’s Nov. 13-14 international conference, “All Moral Resources of Humanity Have To Be Called Up: Mankind Must Be the Immortal Species!” for which the program and registration are available at the Schiller Institute website.