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LaRouche: Don't Nationalize
the Banks' Toxic Assets

Jan. 26, 2009 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).

A pattern of intensifying discussion about the possibility of "nationalizing" the bankrupt U.S. banking system, is evident throughout the U.S. press. The latest example was a signal front-page piece in the New York Times of today, which characterized the debate going on behind the scenes. A similar, more alarmist piece appeared on the front page of last week's Wall Street Journal.

In one respect, it is not surprising that such a discussion is going on. The reality is that the U.S. banking system—not to mention that of the world—is bankrupt, and that condition threatens the very survival of the nation. In contrast to keeping on with the practice of one bailout after the other, each failing more miserably than the last, a radical break is required.

However, a process of nationalization, which accepts all the toxic waste which the banking system has accumulated, is just another bailout in disguise. It is no break at all.

What need to be done is what was laid out by leading U.S. economist Lyndon LaRouche in his Jan. 22 webcast: adopt Hamiltonian national banking. We quote:

We're a bankrupt nation: We need bankruptcy protection. We go to our Federal government for bankruptcy protection. We put the banking system under protection in bankruptcy; we put the Federal Reserve system into bankruptcy. We take, and proceed to enact, a national banking act where we put all the essential functions of banking under protection of a national banking act system: a Hamiltonian National Bank. We use the National Bank as an instrument of credit, which absorbs the Federal Reserve System. Because the Federal Reserve System is bankrupt! And it needs bankruptcy protection. We put it in bankruptcy protection under the creation of a national banking act, a Hamiltonian National Bank.

Then we take national credit. We take what is worthless, and we call it worthless; we classify it as worthless, as in bankruptcy. We put it out of its misery. And banks which are bankrupt, but which are useful in their function as chartered banks, we'll keep their doors open, we'll maintain their functions, and we will generate Federal credit, as a source of lending power, to get the economy moving again. We will build agriculture, we will build infrastructure—especially infrastructure.

The alternative to this approach, LaRouche emphasized, is to permit the banking system to collapse into chaos. That is exactly what happened when that traitorous Democrat Andy Jackson destroyed the Bank of the United States in 1836, an act which, in the name of "helping the little people," wreaked absolute havoc with the credit and livelihoods of the vast majority of the American people, especially in rural communities. Today, given the global nature of the crisis, and the fact that it's occurring after 40 years of destruction of the physical economy of the planet, failing to replace the current banking system with an American-style national bank will unleash a process of genocide.