- (LPAC) -- The fevered efforts to save the financial
system, typified by today's panicked three-quarter-point interest rate
cut by the Federal Reserve and the Bush/Paulson stimulus plan not only
will not work, but will backfire spectacularly, and soon, economist Lyndon
LaRouche warned today. The financial system is dead, and any attempt to
save the fictitious values of the trillions of dollars of worthless financial
paper will not only fail, but will destroy any nation foolish enough to
attempt to do so, LaRouche said.
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- The global financial system, emphatically including the
United States, is entering a period comparable to that of Weimar Germany
in the Autumn of 1923, but on a far larger scale. Whereas the damage from
the runaway hyperinflation in Weimar Germany was largely restricted to
Germany itself, the current crisis is global in scale. No national system
will survive its effects, and the nations might not even survive the present
year, he warned.
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- Under the Versailles Treaty ratified at the end of World
War I, Germany was hit with war-reparation payments so high as to make
it impossible for the nation to function. To meet its obligations, Germany
began printing money, funding its reparations payments and the needs of
its economy at the cost of debasing its currency. The monetary stimulation
soared to such unprecedented heights that the term hyperinflation was coined
to distinguish its debilitating horror.
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- As the German economy began to shut down, the government
responded by printing more money as a stimulus, and the value of the Reichsmark
began to plummet. During the 1913-1915 period the Reichsmark was in the
range of four to the dollar, rising to some six to the dollar in 1917 and
1918. The situation began to deteriorate badly thereafter, from 20 Reichsmarks
to the dollar in 1919, to 63 Reichsmarks in 1920, and 105 Reichsmarks in
1921. Then the bottom fell out, jumping to 1,886 Reichsmarks in 1922 and
an astounding 535 billion Reichsmarks to the dollar in 1923. During that
same period the cost of living index soared, from 100 in 1913 to 1,019
in 1920, and a staggering 657 billion on Nov. 23, 1923, according to the
German Statistical Office.
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- The world is now approaching a Weimar-style hyper-inflationary
collapse, for similar reasons. The actions of the Federal Reserve and the
European Central Bank, as well as other central banks and the governments
themselves, their determination to try to stimulate the dead corpse of
this financial system back to life, their blind refusal to recognize the
truth, is the making of a classical tragedy. Gripped by fear, these modern-day
Hamlets are choosing to destroy all they hold dear, rather than break with
their belief in failed monetary policies.
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- The nations of Europe, under the sovereignty-killing
Maastricht treaty agreements, have abandoned their capabilities to react
to this crisis, so it falls to the United States, under the powers and
responsibilities vested in it by the Constitution, to lead the rescue of
not only itself, but the world as a whole. Rather than continuing the foolish
attempts to stimulate the corpse, the United States Government must use
its sovereign powers to put its own financial system through bankruptcy
proceedings, setting a precedent and providing the context in which other
nations can act. The crucial first step is the passage of LaRouche's Homeowners
and Bank Protection Act, which will erect the fire-walls necessary to protect
the public and essential aspects of economic infrastructure to keep the
economy functioning as the damage is sorted out.
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- Lyndon LaRouche and his political action committee will
have more to say on this vital issue in the coming days, as the scope of
the disaster now engulfing the nation begins to sink in to the public's
consciousness.
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