This Week You Need To Know


LAROUCHE'S HISTORIC WEBCAST OF JUNE 16, 2005

The Urgent Changes Needed in Monetary and Economic Policy

Good afternoon, ladies and gentlemen. My name is Debra Freeman. As some of you know, I serve as Lyndon LaRouche's national spokeswoman and his representative here in Washington. And on behalf of Mr. LaRouche and the LaRouche PAC, I'd like to welcome you to this afternoon's event.

It's really hard to believe that the last time we gathered here, was just eight weeks ago. Because, indeed, the pace of events over the course of just those few weeks has been nothing short of absolutely breath-taking.

On May 23, here in the United States, in an extremely important victory for patriotic force, a bipartisan group of United States Senators delivered a very significant defeat to the Bush Administration by putting down what came to be known as the "nuclear option." The event was significant not only because it meant a defeat for the Administration, but in fact, because it was a defeat for what was nothing short of an attempted coup against the Constitution of the United States.

Just a few days later, on May 29, voters in France, in what would otherwise seem to be an unrelated event, overwhelmingly defeated the newly proposed European Constitution. In and of itself, it might have been difficult for Americans to understand that, in terms of its significance. But the French vote was perhaps more than anything else, driven by the absolute disgust by the citizens of the nation of France, with the economic disasters that they have been faced with since the adoption of the Maastricht Treaty Stability Pact, and the policy of globalization that it characterized.

The French events themselves had been foreshadowed a week earlier by a very significant election in the North Rhine-Westphalia region of Germany, where the German Social Democrats suffered a significant defeat, and a defeat that was attributed, above all else, to the failed economic policies of the Schröder government there.

When Mr. LaRouche addressed this audience back in April, he reiterated a warning that he had first delivered in mid-February, concerning the significance of the impending bankruptcy of General Motors. At that time, many people in the United States thought that Mr. LaRouche might be exaggerating, or might be a little bit off in his timetable. But, I think that recent events here in America have made absolutely clear, that Mr. LaRouche's forecast was more than accurate. And in fact, we find ourselves in a situation right now, where the intensity of the crisis, although it frightens many people, has actually set the stage for long-overdue fundamental change in global, and American, economic and financial policy.

Mr. LaRouche, who, as most of you know, is principally a physical economist, has called most urgently for the revival of the American System principles that governed FDR's reversal of the last Great Depression that our nation faced. The fact of the matter, is that the situation today, however, is really far worse: The post-Bretton Woods 1971-to-the-present system has brought the United States, and really the world, to the brink of total monetary collapse. More importantly, it has gutted global production of the vital physical goods, both industrial and agricultural, that the human race needs to survive and to prosper.

LaRouche, in a series of statements that he has released, has identified the conjuncture of the political shocks in Washington, in Paris, and in Berlin, and the accelerating disintegration of the financial crisis, as a moment of great opportunity. While it might be frightening, for someone with Mr. LaRouche's competence—and Mr. LaRouche's courage—this really presents a moment of great opportunity, not only for the United States, but for all of humanity. It gives us a moment, in which we actually have the potential, and the possibility, to return to sanity in our economic policy.

The fact of the matter is, that if we don't, the alternative is something that probably none of us want to consider.

I think that during the course of this afternoon's event, Mr. LaRouche will more than adequately address these questions—and a lot more. This event is being broadcast over the worldwide web. Mr. LaRouche will be addressing us from Europe, where—although he has an extremely tight schedule of meetings and activities—he felt that it was absolutely critical to address the United States in particular, at this moment, and to do it before we reach the end of this fateful quarter.

So, ladies and gentlemen, without further ado, I'd like to take this opportunity to introduce to you, Lyndon LaRouche.

Lyndon H. LaRouche, Jr.

I must repeat to you, today, what Franklin Roosevelt said to the American people under similar conditions. Because, what I'm about to say, now, would terrify you, unless I showed you, there is a solution for this problem. Roosevelt said, "There is nothing so much to fear, as fear itself." And that's the case now.

And let's take the top of the list right now: What faces us presently, as of July 1, is a termination of certain existing contracts, involving hedge funds, which are in the process of going down. In point of fact, what happened as a result of the General Motors crisis, the process in which the announcement of the pending potential bankruptcy of General Motors was announced, along with Ford, and in which, then subsequently, the General Motors stock was dropped to a junk-bond status, which means that the people who have invested, as institutional investors, in those bonds have to pull out of them, because they can not legally remain holding stocks which are in junk-bond status.

Now, this runs out by the end of the July—according to present schedule. No one can say exactly what's going to happen. But we know what the shape of things to come is, and we know what has to be done about it. So, if I say definite dates or timetables, the timetables are flexible, but we're in a very tight schedule, and however much the schedule might change slightly, the time for decisions is not going to be far off from what I indicate to you. All right.

During this period, there was an approximately 40% collapse, minimally, in the value of hedge-fund holdings, which were in lots of things. This is now getting worse. The reason you're not hearing much about the hedge-fund problem, as much as you should, if you realize that the fate of the whole world monetary system now hangs on it, is the fact that major banks, which are associated with the hedge funds, are now, at this moment, trying to decide which of the hedge funds to dump and which to support: Because the magnitude of the crash of the hedge funds, is so large that they can not be bailed out as a whole. The banks are going to try to protect themselves from the hedge-fund collapse, by throwing some hedge funds to the wolves. And are now in the process, from all we know, of still deciding which ones—whose throats they're going cut, in order to protect the banks themselves. And the banks we're talking about are the world's biggest commercial banks. These are the ones that are in jeopardy.

Now, the hedge funds are a form of insanity, which was introduced in 1987, approximately, after the October 1987 general stock market crash in the United States. In that period, when Paul Volcker was then going out of his position as the Federal Reserve Chairman, and about to be replaced by Alan Greenspan, Alan Greenspan said, "Ho-o-ld everything, until I come on board!"

What Alan Greenspan did, was he brought in a system called "financial derivatives." Now, financial derivatives sounds like some kind of investment. Well, it's not an investment. As every crooked gambler knows, this is nothing but a side-bet on the real action. Financial derivatives are side bets on the economy. Just like a bunch of guys up an alley, some people are shooting craps and putting their money on the ground. And beside them, a bunch of people are betting against the bettors, with side-bets.

Now, this is called, also, a "hedge fund," to dignify the thing. You can imagine a bunch of gamblers up in an alley, saying, "I'm investing in hedge funds!" This is an organized-crime type of thing—"I'm investing in hedge funds!" Great dignity, right? Big, important stuff!

No! But it's big. And right now, the financial derivatives bubble in the world is about to collapse. And the hedge fund collapse is right at the tip of it.

If the hedge funds go down, and the banks may be pulled down with them, or at least some banks, and may have to be bailed out as banks, or put into receivership by governments, then, against what are the side-bets placed? Things like mortgage portfolios of major banks, at a time that the mortgage portfolios of the United States, the United Kingdom, and some other places, are in deep trouble. As much of the major press has indicated, in parts, what the nature of the problem is.

If the mortgage bubble goes, as the result of a collapse of GM, then you're in trouble.

In the meantime, the GM crisis has created an additional problem: We have a Congressional institution which was created some years ago, to try to give minimal support to pension funds, which might be in trouble because of a corporate failure. Now, recently, a bankruptcy judge told United Airlines that it could dump its pension responsibilities to its retirees and to its current employees. The danger, of course, is that, with that decision, that the next step would be that Delta—which is already in a bankruptcy situation—and American Airlines might do the same! And it is known that General Motors management is planning to dump the pensions of its retirees and people onto the public funds.

This means an inundation of the public funds, which affect largely people in the lower 80% of family-income brackets. This means, that if you are an average person—not in the top brackets with special kinds of funding, but in the normal course of funding—your pension may be gone. The only safe pension you have left, is your Social Security pension! And the President of the United States, as you know, has been trying to rob you of that: by asking you to switch your Social Security assets into the private funding market, where these private insurance funds, these private pension funds, are collapsing!

They want to bail out the stock market, by taking your Social Security assets away from you—and giving them to somebody in the financial community.

That's what the President of the United States says he wants to do. Now, I don't blame the President for too many things, because I don't think he knows what he's doing. I think other people are using him. I don't think the man really knows what time it is, in a sense.

Now, the situation is, such that people now generally realize that the United States is in deep trouble. The U.S. economy's in trouble. It's about to go under in a chain-reaction collapse. When, nobody knows exactly. But we know it's oncoming. That's why I say, as Roosevelt said, "We have nothing to fear, as much as fear itself." Because there are things we could do about this. There are things the United States government could do about this. There are things the American people could force the United States government to do about this.

But the average person doesn't understand this problem. Therefore, they're not sure of what to do, and they're not sure about what kind of a proposal they should support. But they know they've got to get some action, from government, to protect them from the danger of a collapse, which, in point of fact, is much bigger than the 1929-1933 collapse; 1929-1933, which was given to you by Presidents Coolidge and Hoover, was relatively mild in its effect compared with the threat, to the world, as well as the United States, from the presently onrushing crash.

The situation is this: The entire world system is coming down. Not just the United States' system, but the entire world system. Now, there're many people who're whistling in the dark, and saying, "It's not going to happen. It couldn't happen"—well, it is going to happen! It's inevitable!

What do we do about it?

The United States' Responsibility

Well, we in the United States have the principal responsibility for dealing with this. Why? Because, the world system, the world monetary system, and the world financial system therefore, hangs on the basis of a monetary system, which is still a dollar-based monetary system. The holding of U.S. dollars by foreigners—China, Japan, South Korea, and so forth; Europeans: If the United States dollar were to collapse by 30%, this would be a catastrophe for the rest of the world. Because it would cause chaos, a chaotic collapse of the monetary system of the world. We, in the United States, have the legal responsibility for defending ourselves and cooperating in defending other nations, by taking appropriate actions to protect the world monetary system from collapsing.

Now, there are some people in various parts of the world, who are cheering, especially after the Iraq War and a few other things like that—they're cheering for any catastrophe that happens against the United States. They don't like the United States! They're happy to see the United States going down, because they think the United States has pushed them around much too long, especially since George Bush became President. But that's a very foolish attitude. There is no substitute on this planet for the American System.

Therefore, the responsibility lies with us, to prevent world chaos, by taking actions which will lead to a stabilization of the value of the U.S. dollar as a unit of monetary reserve, worldwide. That means, we're going to have to go back to something which was proven: the methods of Franklin Roosevelt in getting us out of the last Depression, and transforming a bankrupt U.S. economy of 1933 to the most powerful economy the world had ever seen, by 1945. We did it then, we can do it again. It's a tougher job now than it was then. We had more railroads, we had more farms, we had more industries, we had more places in which we could put people to work, then as now. But we can do it!

What does this mean? This means, we take these U.S. obligations, U.S. Treasuries—that's the principal obligation of the system: We must secure that the U.S. Treasuries maintain their value on the world market. We must make this as an arrangement, and a guaranteed arrangement, in cooperation with other nations on this planet.

Now, as I said, some other people say, "Let the United States go." That's a very foolish thing. Some people say, "We need a system to replace the United States." It's a very foolish idea. Any such ideas will lead to a crash of the entire world economy. Not a financial crash, an actual chain-reaction crash of the world economy: Because, some idiots, in their great wisdom, have tried to globalize the economy. What we did, is, we took our industries from the United States and Europe, we shipped the work that was done by our industries, out to countries where labor was cheapest. And we kept going, trying to find a cheaper, and cheaper, and cheaper labor market in various parts of the world.

Since we were no longer producing, since the lower 80% of our family-income brackets were going down, and down, and down, in terms of the physical value of their income, and their job opportunities, we began to lose infrastructure. What government did, under this silly policy, especially since 1971-72, we began to destroy the infrastructure on which our productive power depended. At the same time, we were shutting down our plants, and putting our people out of work, into cheaper-paying jobs! People moved from skilled productive jobs, into jobs at Wal-Mart, and things like that, which are not particularly productive. Producing cheap goods, which we would have been ashamed of, in old times, as what we consumed.

And we let our infrastructure collapse: We collapsed our railroads, we collapsed our power systems, we collapsed our water-transportation systems, like our river systems; we collapsed our municipal systems, we collapsed our educational systems; we've shrunken and destroyed our health-care system. All these things, which were the basis, and basic economic infrastructure, for skilled and productive employment were destroyed, as we destroyed employment, and shifted people from productive jobs, into make-work jobs, at low wages. We took people who were one-and-a-half persons of the adults in a family, which support the family, and now you've got the people having several jobs! Each of them, all members of the family!

You have real estate bubbles, where you have shacks in the Washington, D.C. area, around it, where people have moved in from all over the world, to live in the D.C. area: And they pile into these places, and combine their incomes, and they put up money for a shack—put together, not with nails but tacks!—and this shack goes at $600,000 mortgage up to $1 million. And these are just poor-class shacks, around the entire area. You have people tumbling into these places and out of them, living no regular family life, going to bad schools, with poor health care which is worsening all the time: These are the conditions of life!

And this thing is about to come down. And more and more is being done, to say, that when you can't pay the mortgage any more—they kill you, in effect. They throw you out, they milk you. This is what we've become!

Murderous Effects of Globalization

Now, what did we do to the rest of the world? We shipped production out of the United States, and out of Europe, into the poorest countries in the world. Into countries, for example: India is a respectable country, in many respects. China is a respectable country, it's a power in many respects. But, 70% of the Indian population is desperately poor, and has virtually no infrastructure to support them. China, 70% are still desperately poor, despite the success of China's growth in many other respects.

The other countries from which we take labor, as part of globalization—what are they doing in Europe? They're taking labor in Eastern Europe, in countries like Poland, where skilled people are working as stoop labor in Central and Western European countries. And now, they're moving people from those countries, at the wage levels paid in those countries, into France and Germany and so forth! And destroying the infrastructure of the countries of Western and Central Europe, which were once powerhouses of production in their own right.

So, what we've done with globalization, which is one of the most evil ideas that was ever conceived: We have lowered the productive power of the world per capita! We destroyed the infrastructure and employment in countries which were the powerhouses of production of wealth, the United States and Europe.

We destroyed the levels of productivity which existed, and standard of living in Mexico, and in South and Central America, while we put the employment there. We couldn't get enough cheap labor in the United States, so we got Mexicans to be driven across the border—by hunger!—as illegal immigrants, into the United States. We took the jobs which cheap labor, brought into the United States legally, was doing, and we took the jobs away from them and gave it to immigrant labor—illegal immigrants! The illegal immigrants are coming to us, because they were driven from Mexico: They're coming to us, because somebody sucked them into the United States, because they weren't satisfied with the cheapness of labor here! Even with what had been the cheapest. That's what's been done to us.

That's what's been done to the world.

And now, we're on the verge, where you've seen your health care, your public utilities, your education in the United States are collapsing. And you look around the world, you look in Argentina: Argentina had the fourth highest standard of living in the world, back at the end of World War II. Where is it today? What's happened to Mexico, which was on a track for growth, back in 1982, when we destroyed it, by imposing a policy upon it? And we've virtually destroyed a country, which was a growing, powerful country. We did the same thing to Venezuela, or we're doing it. We did it to Colombia; we did it to Peru; we destroyed Ecuador; we destroyed Bolivia. We're undermining our friends in Brazil. And what we're doing in the Caribbean is—.

What we're doing in Africa, especially Sub-Saharan Africa, is deliberate, conscious genocide! And spread of disease, because they want to help the genocide by spreading diseases, to get rid of the Africans. This was a policy from the 1970s; the policy was, that Africa has a lot of raw materials, and those raw materials are going to come to us, back here, in the United States! We're not going to let the Africans eat up those raw materials! We don't want their population to grow, we want it to shrink! We don't want the Africans to get a higher standard of productivity, because they'll use up more raw materials, which we're saving for us in the future.

That's what we've done.

We don't care, about the 70% of the population of India, which is still in worsening conditions of poverty—despite the progress of India in other respects. We don't care about the long-term prospects for the people of China. We don't care, about the people of Southeast Asia.

You see this tsunami thing. What does the tsunami represent, the tsunami crisis? You have these areas along the coast, which were hit by this tidal wave, caused by a major earthquake. What happened?

Well, the waves came in, and all the poor people, who were living virtually on the beach or next to the beach, in order to provide cheap labor service for tourists, were struck—and many of the tourists, too. But why were the people living there? Because there was no infrastructure. Why was there no infrastructure? People in the United States and elsewhere, said, that the policy for this area of the world: There will be no investment in infrastructure. The labor of this part of the world, will work in hotels, or in entertainment industries, and be the cheap labor, and the sexual recreation supplied for tourists!

So we created by our policy, instead of developing this part of the world, as we intended at the time that Roosevelt was still President, as his post-war policy—instead of helping these nations to develop, we actually lowered the conditions of life of the people of this part of the world, because we used them up, for cheap labor and entertainment, in resort areas.

That's what our criminality is. We did it! This is globalization!

And what it does, it's hit us. Because the values we are counting on, in terms of financial values, are not real values. They're fake values. They're highly inflated values—speculation.

Use the Roosevelt Model

What we have to do, and we can do, by using the success of Franklin Roosevelt's policy as a model, and that experience of 1933 through 1945, we have to guarantee the stability of U.S. Treasuries, which is the basis for the security of the U.S. dollar. We have to enter into agreements with Europe and with other parts of the world, on a fixed-exchange-rate system, which can be fairly described as a New Bretton Woods system. The kind of system which Roosevelt created at the closing period of the war, the fixed-exchange-rate system which worked, it worked fine until the middle of the 1960s. It was the system under which we in the United States helped Europe rebuild itself from war, especially Germany; which, with its Kreditanstalt für Wiederaufbau policy, created what was called an "economic miracle." With similar benefits in France, similar benefits in Italy, and so forth, during the period from the late 1940s, 1950s, 1960s.

We have to go back to that kind of system, which was destroyed by Nixon, where our troubles really began. And by getting long-term credit, instead of having short-term credit, we have to have agreements on long-term credit: credit in terms of investment in infrastructure.

Now, infrastructure's long-term stuff. A power station is 25, 30 years life-cycle, physical life-cycle of a power station. Maybe 50 years, with certain improvements in design. Water systems are 25- to 50-year systems. The water systems in the United States today are crashing, because of their old age; they have not been fixed. You used to be able to get fresh, drinkable water out of a faucet. You can't—in more and more places in the country, you can't get safe water out of a faucet. Because the water systems have been destroyed. You're not guaranteed the access to the power you need, for the things you need. We don't have a public transportation system. We have superhighways which are used as parking lots at rush hours. We have people out on the highways, spending more time on the highway, and other forms of commuting, than they are with home life, with waking home life—because of these conditions.

So what we have to do, is we have to rebuild the world economy. We have to build new infrastructure for places that don't have it. We have to rebuild the infrastructure of the United States and Europe. This is going to require long-term investment.

So, what's the plan? Well, we're now operating below breakeven. The basic problem, apart from the people that aren't paying taxes and should be—I'm talking about the really upper brackets, who, as you observe as they come out of court, didn't really earn it. Like Enron. They never really earned that income. They stole it. And this is your high-paid stuff. Look at the salaries people are getting at General Motors, who mismanaged that thing into the ground! Look at what they're getting for pensions! Look at what they're getting as executives. It's a parasite economy.

We have to rebuild the economy. We have to build up the industries, and so forth. We have to employ our people productively. A lot of the employment has to be in basic economic infrastructure: Building water systems; building mass transportation systems; improving our cities; building water systems; building new industries and expanding old ones.

You take one example—let's take the example of the auto sector: Now the automobile industry is a strategically crucial part of the U.S. economy. We are now producing too many automobiles—and we've been doing it too long. And as a matter of fact, the automobile manufacturers have been paying people to buy automobiles. And the people buy into a longer-term debt, but they're getting paid to buy an automobile. It's the only way that these companies can sell the automobiles they want to sell—and that's not working too well. That's why General Motors is bankrupt; that's why Ford's in trouble.

But let's look at the industry. Let's look at the large number of people who work in this industry and its associated industries, the people who depend upon those industries. What do they represent? Well, they represent, in part, the core of the machine-tool capacity of the United States. The United States power in World War II, was based on our ability to mobilize our machine-tool capacity. We won the war with sheer tonnage of productive power.

We didn't have the best army in the world. Most of us were just called into service a year or so, before getting into battle. But we won the war because of our power of logistics, the logistics we used to support our own forces, the logistics we gave to other forces of other countries of our allies. We maintained a two-front war, to defeat the Hitler empire. And without us, it wouldn't have happened. Without the U.S. economy under Roosevelt, it couldn't have happened.

We did that. We came out of that as the most powerful country in the world. We can do it again.

What we have to do, is use government credit, the power under our Constitution of the government to create Federal credit—long-term and low-interest-rate, 25- to 50-year bonds, loans. We have to get other countries to do the same thing, either by issuing credit in the form of state credit, or the form of credit in treaties, long-term trade agreement treaties. Such as those between Western Europe today, and countries in Asia, such as China, India, and so forth.

China needs everything. Seventy percent of the population is still poor. They must build new cities. They must build new transportation systems. They must upgrade their population, by development. They need long-term credit. They can generate much themselves, but they need to build their country.

Southeast Asia is a similar situation. Indonesia's a similar problem. Malaysia: They're building up fairly well, but they can do better—and will do better. India, Myanmar. These parts of the world need to be rebuilt.

The so-called Middle East, Southwest Asia: A cockpit of war and death now, it needs to be built up by water systems and other things, so a decent quality of life is available to people in that part of the world.

These are long-term investments of one to two generations. We must generate, together with other countries, the new forms of long-term credit, of state-guaranteed credit. We must organize this credit, into an international monetary system, modeled on the old Bretton Woods system, but adapted to the new conditions of today. We must have a fixed-exchange-rate system; we must peg these currencies and stabilize them. Therefore, under those conditions, we can guarantee the future payment against the bonds we issue in the form of debt, to do what? To put people to work today, such that we bring the U.S. economy above breakeven, in terms of current operations. If enough people are working, and earning money, a large enough percentage of our population are earning money, in productive occupations, in infrastructure and other forms, manufacturing and so forth, then, we are generating enough income per capita to carry this economy above breakeven.

If we can operate on that basis, above breakeven, and do it over a period of one to two generations, we can guarantee, therefore, the repayment of the debt that we issue and create in order to do that work. Under that basis, with agreements among nations to that effect, we can then say, we have a fixed value for the U.S. dollar, and you can count on it for 50 years to come. And other countries can do the same thing.

But we are in a situation, where it is our responsibility. No other country or group of countries on this planet could do that, without the United States. And since we took charge of this thing, and created this as a dollar system, we are morally and otherwise practically responsible. We are the ones who must step forward to save the world: Because, without us, if we go down, we'll be like Samson—we'll bring the world down with us.

So, this is our responsibility.

Foreign Development

Now, what is involved in terms of foreign development? What lessons do we have to learn from this? Well, for example, it'd be easy to do this, in one sense, because—take Germany: Germany is the key country of Western Europe. It is the country which is best able, if allowed to do so, to generate within Europe, a pattern of growth. It did it before. Germany, in the post-war period, accepted Roosevelt's terms. And Germany created an institution, under a leading banker there, but modeled upon the U.S. system of Roosevelt. It's called the Kreditanstalt für Wiederaufbau. It works.

If you put enough credit into the German system, and take the people who are becoming unemployed—take what are called the Mittelstand, these small private businesses which are the great producers of engineering and other things, which the large corporations depend upon; you get them back into business. Then you have a driver, an engine of growth. As long as Germany is operating above breakeven, which it's not doing presently, Germany works. When Germany works, with its connections with its neighboring countries, Europe works—at least Continental Europe does.

If Germany works, then Germany is going to follow the trail it's now started under Schröder, to extend cooperation with Russia, the countries around Russia, in a triangular cooperation among Russia, China, and India; bringing all of the countries of Asia into a system of cooperation with Europe.

My view is that we, as the United States, must be the partners of Europe, and Eurasia as a whole, in this kind of arrangement. We should bless their efforts to do that. We should seek to cooperate and participate in what they're doing. Under that basis, we can bring Europe back to life. We can make commitments to countries in Asia, that we, together with Europe, to perform the acts of justice that they need from us.

We, together, have the power to deal with the problem of Africa. The problem of Africa is one of great crimes, committed from Europe, and particularly since 1492. Since the Spanish introduced chattel slavery, treating Africans as animals who were hunted down to be captured and used as slaves. And that process has gone on. And relics of that process continue in Sub-Saharan Africa today. The human race outside of Africa has committed a great crime, in what it did, and what it continues to tolerate. And we are not going to be able to live with ourselves in the future, unless we do something to fix that.

And therefore, if we, in Eurasia and the Americas, are taking care of our own shop, then we jointly must intervene to help Africa.

What Is Our Conception of Man?

We must have a conception of man, which is associated with the idea: We're going to build the future; we're going to create a new future for humanity out of the dregs of the mistakes we've made so far. And because, you know, people think that the purpose of economy is money. And when they think the purpose of economy is to get money, they don't understand what it is to be human.

The purpose of economy is to realize what man is. Man is not an animal. No animal can discover a physical principle, and apply that to increase its power to exist in the planet in the universe. Only man can do that. This is done through the power of reason. We are not animals, we are creatures of reason.

The net thing that we do with our lives, the very conception of immortality, the practical conception of human individual immortality, is that, while we're alive, we can contribute something which will last into the future, as a foundation, benefit for generations to come. That what we're producing therefore, if we are wise, is not products. We're producing infrastructure; we're producing means of manufacturing; we're producing improved technologies; we're raising the standard of living; we're increasing the potential for the intellectual and moral development of the individual in future generations. What we're producing is man. What we're producing is culture. What we're producing, is better human beings—not simply better because they're moralized into being better, but better because they have risen to a higher level. They have more access to knowledge. They are able to make better judgments. They're able to be more productive. So that you can say, as many immigrants to the United States thought, when they came here—they sacrificed, so their children and grandchildren could have a better life.

The greatest motive in economy, is to use scientific and technological progress to improve, not just the standard of consumption, but the quality of existence. If we can say, that those who were born who come after us—our children, our grandchildren, and those beyond—are going to have a better life, as human beings—not just as consumers, but as human beings—than we have, today, then we have discovered the secret of economy.

Look at the world as a whole. Look at us from the United States, from South America, Central America, from Europe, who are on this broadcast today. Look at us. What's the meaning of our life? We're all going to die! When we die, what has the meaning of our life been? What have we done, now, in which we can take pleasure, can rejoice, that our lives have meant something? That we can face death, knowing that we have accomplished something while we lived!

How many people in the United States and other parts of world, have the right to think that way today, in practice? The conditions of life of people today, is, you think about your future. You think about the people in the United States, as having a worse future than you grew up under! That's been your experience for two generations, during the past 40 years. So, you can foresee your grandchildren as living, almost as animals, relative to your standard of life. Things are getting worse, under George W—much worse.

What we used to think, even in our own crude way, we used to think we were making things better, the community was better, the state was better, the nation was better; our children were rising to a higher standard of living and importance; your grandchildren were the promise of the future. And you could look beyond that, to say, we're going to build this nation. We're going to jointly build other nations, to make this planet a better place: And say, "I can go to my death with a smile on my face, because we're doing that." And that's the great purpose of economy.

It's not profit! Yes, we need to have a profit, we need to have a gain in productivity over what we put in in the first place. Yeah, we need that kind of profit. But the purpose of life and economy is not profit. The purpose is to build a better society, to develop human beings who could do what we never could do. And to hope that they would do the same for those who come after them. And we can say, "We mean something in the scheme of eternity. We have a right to think of ourself as something more than an animal."

That's what we really need.

The Crisis of Anglo-Dutch Liberalism

Now, we face a great crisis right now. Evil has overtaken us. And, being a person who's plainspoken, I have to say that Dick Cheney is evil. The President of the United States is a mental case. And the Vice President of the United States is a morals case. They're evil. What Cheney did—I don't blame poor George W. Bush; I don't think he had the brains to know what he was doing—but Cheney did. Or his wife did, and maybe she told him.

What he tried to do, in the Congress, is the following.

Very few people around the world know what the Constitution of the United States is. Because of the educational situation, nowadays, very few people do, still, even today—younger people. Only some of us older folks really know what the United States is. And a few, very sharp younger folks, who are beginning to come along.

The United States was a creation of Europe. From 1492 through 1648, Europe was immersed in religious war. Now, it was a Europe which had come out of a terrible period, and was beginning to develop modern society, the modern nation-state. But this was being destroyed by religious warfare, which ended in 1648. During this period, people in Europe said: What're we going to do? Well, let's get out of Europe, and go, as Nicolaus of Cusa proposed, go across the seas to other areas. And so, they came across the ocean, across the Atlantic, to North America, with the idea of building up settlements here, which would form a kind of society here, which would then feed back into Europe, and become the model for the freedom of Europe from the terrible conditions which existed there. That's what the United States was intended to be.

And from the Massachusetts Bay Colony's founding, in the 17th Century, on, that was the thing that guided all the best leaders of the United States in their thinking: to build a republic, not simply to have something that is our own, but to build something which we could not do in Europe, at that time! By building something here, and inviting people to come here, and join us, and be part of us. To build up a republic, which would then become a model and a force of influence for the rest of the world, to cure the great evils which had take over Europe. And continue to take them over.

So, in the course of time, when Europe became evil because of the spread of this Anglo-Dutch Liberalism, we became desperate. And we launched, beginning 1763, a struggle for our independence. It was a dangerous struggle, and we drew upon friends in Europe who knew what we were doing, and supported it. We won that war. We established a republic. And once we had won the war, we then had to think about putting our house in order.

The American System Solution

So, in the course of the 1780s, we had a process which centered around a number of institutions, including the military veterans of the war, the so-called Cincinnatus Society. And we met, our leaders met, to design a republic, an institution for the future. This republic was based on knowledge of the best experience of Europe. And it came to the time, as to what kind of a state apparatus we were going to have. The big fight on the Constitution was that: What kind of a state would we have?

And it was decided to have a Presidency. And when we decided to have a Presidency, we came to an argument. We said: "Wait! But, the Presidency, as we've designed it, is a very powerful institution. What if that institution fell into the hands of somebody who used it maliciously? Would our republic survive?" So, what we did, among our other checks and balances in our constitution of government, was to give certain powers to the permanent body of elected government. Now, the permanent body of elected government, is the U.S. Senate: It never goes out of existence. Approximately one-third of the Senators come up for election every two years.

So, the Senate, unlike the House of Representatives, never goes out of business. The majority of the Senate always remains seated, before and after the election. And the Senate is supposed to reflect. That's why this two-thirds rule existed on certain issues, that if one-third of the Senators said "no" on these issues, they could block the decision of the majority. Because the assumption was, the next two-year election will give the Senate the chance to reflect, and the people of the United States the chance to reflect, on whether that proposal was right or not. And to select their representatives they put into Congress, into the Senate, on the basis of settling that question.

So therefore, what Cheney tried to do—and it wasn't just he, it was people behind him; but he's just the thug, that led the charge—was try to overthrow the Constitution of the United States. Because this question of powers of the Presidency is crucial. The power to make war: We are still engaged in a war in Iraq, which is an unlawful war, in violation of our Constitution! A war we got into because we were lied to! Or, because members of the Senate believed the liars, who were the President and Vice President and others. That was a subversion of our Constitution! That was not a lawful act of war! Apart from being an act of war, done by authority of lies! Lies by the President! Lies by the Vice President! Lies by many others in government!

Then they come along, they say, "We want a dictatorship." Well, how do you get a dictatorship? "We got a majority in the House and Senate, and we just stole the Presidency, again. So therefore, if we could get a straight majority vote, in the Senate, by overthrowing the Constitutional provision, against precisely dictatorship, we can establish a dictatorship."

So, what happened was, men of conscience in the Republican Party joined with the men and women of conscience of the Democratic Party, in the Senate, and said: "No!" We just saved ourselves from a dictatorship. We'd be under a dictatorship today, if these men and women of the Senate had not acted to block Cheney.

Now, the President himself is now a lame duck. He doesn't really function. It's the duck that doesn't fly. He gets flown, but he doesn't fly.

But we're in danger still. Because in times like these, in most parts of the world, in the case of a financial crisis like this one, you often get coups. You get assassinations of heads of government, and other important people. This is characteristic of Europe! It has never happened in the United States. We've had a few Presidents assassinated—quite a few. For political reasons, by powerful interests, usually powerful financier interests. Often European-based, powerful financier interests, who have killed a number of our Presidents, because they didn't like our policies.

But never has our form of government been overturned by dictatorship. Europe's often has been. We're in a time, where that is the danger. Cheney and company tried once. If they get a chance, they'll try it again. You see the mood for it, all around you.

And therefore, you understand something else, perhaps, then: How important the United States is. So far, even on the 23rd of May, we did not become a dictatorship. Whereas during such periods of time, many times, most of Europe has gone into dictatorial systems.

Our system of government—which is not a capitalist system: It's the American System of political economy, which is what our Founders called it. It's not a socialist economy. It is not a capitalist economy. It's an American economy: a unique form of economy, a unique form of Constitutional system in the world. And this system of government, a nation which became a power because it had this system.

What are we? We're largely Europeans! We come from Europe. Some not, but most of us come from Europe. They came here, because there was a better opportunity to develop here. This nation was built up, because it created a better opportunity for development of economy and development of its people, than any country of Europe. That's why we became the power we were. For that reason. We are a unique institution! And there is a place for patriotism, in the United States: patriotism about our historical role in the past, and what our historical role must be today.

Toward a New Bretton Woods System

I've looked at the governments of Europe, South America, Central America, Asia. I don't see the capacity to make the kind of initial decision, that some great nation of this planet must make, that I propose that the United States government must step forward now—before it's too late; and after July 1, who knows when "too late" will come?—step forward and make the proposal, and make the decisions, together with that proposal, which will bring together the nations of this planet, or at least many of them, to establish a new world monetary system, modeled upon the Bretton Woods system, with the intention to make this planet a place that's fit to live in; to eliminate globalization; to promote the sovereignty of every people and every nation, but to promote in terms of cooperation, collaboration among sovereign nations, not trying to put us all into one minestrone soup. And to break this system up.

So, that is my message. This should be a time of hope. We are a great nation, or a great nation is somewhere hidden among us. We collectively can become a great nation, any time we decide to do it again. The members of the Senate who blocked the coup d'état on the 23rd of this past month, demonstrated that virtue among our people.

I would propose that that same body in the Senate, and others who agree with them, in the Congress and in other institutions, must now begin to cooperate and unite with an understanding of the great peril which threatens us, but also the great opportunity which stands before us.

The great opportunity is: We have made the most stupid mistakes imaginable during the past 30-odd years. We have, now—recognizing that stupidity, which got us into all this mess—we should now decide we're going to end it, and stop being stupid. And go back to being what we're supposed to be: Being a United States, again. And being the United States to which the rest of the world looks up, as the one which they turn to for action, when they need somebody to step forward and take leadership, in providing the kind of action needed to save the world from Hell.

And that's exactly where we stand, today.

Thank you.

Dialogue with LaRouche

(Preceding the dialogue with LaRouche, John Hoefle prepared and narrated a short video using the economic animations commissioned by LaRouche and a promotional video of the world's only commercial magnetic levitation transportation system, installed by Germany's Transrapid to run between Shanghai and its airport in Pudong.

The animated map shows how high-speed rail corridors from Pennsylvania to Indiana, from the Great Lakes to the Ohio River, typify the kind of infrastructure project that would act as a driver to rebuild the economy. New electric-powered trains would require new nuclear power plants, new steel plants, and new production at retooled auto plants, the combination of which would lift America out of economic depression.)

Question 1: Recognize the Synarchist Enemy

Freeman: For people who are familiar with the procedure here, we have a great number of institutional questions that are coming in either by phone or by internet, and I will read those and Mr. LaRouche will answer them....

Lyn, the first question, similar to the webcast in April, has come from the Democratic leadership of the United States Senate. And the question is as follows:

"Mr. LaRouche, as I think you know, we were very relieved on May 23, and consider that to be a great victory, not for one party or another, but for the nation. We were extremely hopeful that with the so-called 'nuclear option' behind us, that we could move forward with the nation's business, because, to be sure, there is no shortage of issues that require urgent attention.

"Unfortunately, that has not occurred. And, in fact, it may be the case, that the situation has worsened. Because the GOP leadership in the Senate has not been able to deliver on what the White House was demanding, they've been largely rolled over. And what most Americans don't know, is that the Senate's agenda is now being largely dictated directly from the Vice President's office. The spirit of bipartisanship is on the way to being completely squelched.

"I don't know if you're familiar with the President's remarks in Washington two days ago, at a Republican fundraiser. Those remarks were not only extreme, but they were reiterated and emphasized by the White House the following day. From where we sit, those remarks made clear that there is absolutely no interest on the part of this White House in working out any mutually agreeable solutions to the grave and urgent problems that we face. And although we do have some very specific questions on matters of policy, that hopefully will be addressed during the course of the question and answer period, this is really a very specific question, in terms of overall strategy or tactics, because, from here, I'm beginning to have some doubts as to whether we really did succeed on May 23.

"Very specifically, I understand what you're saying in terms of the approach we have to take to policy. But how do we approach this very immediate problem that we face, with a White House that seems to have no desire to work anything at all out?"

LAROUCHE: Well, I told people, you have to think like the great military commanders of modern history, and older history also. You're in a war. The war is not with Cheney as such, though he's a figure on the field. I think you'd probably ask his wife who's running him, because I don't think he knows.

But in any case, I know where the problem comes from: We all should recognize where the problem comes from. If we don't recognize what the real authorship of the problem is, we're going to make mistakes. And I think one of the problems you have in politics is, you know what I do, those of you in the Senate, who've had a good chance to see what I do and how I've acted recently in this matter: That I say things you would never consider saying publicly—and I say them publicly. And I speak like a commander in warfare, because I think I should have been President anyway: We wouldn't have had this mess to begin with. But, times being what they are, pay-in being what it is, that's past. Now, I've got to get you guys, in positions of leadership, to do what I would have been willing to do, earlier.

And therefore, I use the language of a commander in warfare. Because, if we have to think that way, then we put ourselves in the right frame of mind for dealing with a situation of the type that we face. We don't face an issue: We face an existentialist threat, of the type otherwise associated with major war. It's a situation like World War II.

We've come into a time, in which the planet has been increasingly dominated by groups of financier interests, of a certain type. These are the people who you were warned against by President Eisenhower, going out of office, who warned you against a "military-industrial complex." Now, at the time, that was an appropriate term for describing the situation, appropriate term by him. But it didn't capture the essence of the situation.

What happened was this—let me just go through this, and I've said it before; I've written it before. But I think in answer to this general question, that by my answering it again, here, on this occasion, with this questioning from this source, I will make clear what the general problem is. And I think if we have it clear about the general problem, the other problems become manageable, at least, conceptually so.

What happened in Versailles, was, a group of people who were called Synarchist International—which is actually a group of bankers, some of whom still exist today, as private banking interests—decided on a scheme for destroying Europe, and eliminating the factor of the United States in the time to come. What they did at Versailles—the bankers did—is, they created a system called the Versailles system. And you had a Secretary of State of the United States, who worked for a mental case, called Woodrow Wilson. Remember Woodrow Wilson? He reminds us of Laura Bush and George—that his wife was out there talking for him. George is hiding somewhere in the Oval Office, probably tricycling around there, and she's out there around the world, Egypt and someplace, representing him as she did at this recent correspondents' dinner, where she told a lot of jokes about George; I think sort of put the situation in perspective.

But so, the Woodrow Wilson of then, as opposed to George Bush today in his second term, had a Secretary of State, Lansing. And Lansing declared, in the Versailles proceedings, that from the standpoint of the United States, that Germany, and Germany alone, was the sole aggressor in World War I. Which is a lie. The sole aggressor in World War I was actually the then-deceased King of England, Edward VII; who got a war going between his two nephews, the Czar of Russia, and the Kaiser of Germany! These were his nephews. And they had a 1905 meeting on a yacht in the Baltic Sea, where this discussion came up, where the two nephews said, "Our uncle wants to get us to kill each other." And what this uncle did, which was a repeat of something that happened earlier, in the 18th Century, called the Seven Years' War, is that, what the British did—the British monarchy—put the crowned heads and others of Europe against each others' throats in what was called World War I.

So, the principal guilt for World War I, was a man who was already dead, Edward VII, the Lord of the Isles, who pre-orchestrated the war, which his suckers followed, and we were drawn into it later.

But Germany was not responsible for World War I. The Kaiser was an idiot; but the Austrian Kaiser was a bigger idiot; and the Czar was a weakling. And they all went down, as a result of being fools. And the French suffered far greater casualties in World War I than they suffered in World War II, as a result of this.

So, at this point, Lansing says this. Why does he say this? By getting Germany assigned a war debt, which was far greater than Germany could ever pay under those conditions, and then using that war debt to fund the war debt of France and Britain, which in turn funded the bankers of New York, who were the creditors of the British and French!

They set up a system. The system resulted in the collapse of Germany in 1923, and so forth and so on. And in the period they came into 1931, they established a new banking system, which resolved some of these debts, and these bankers put Adolf Hitler into power in Germany, just as the British monarchy had put Mussolini into power in Italy back in 1922. In Germany, Hitler came into power, strictly as a result on orders from the Bank of England, from the head of the Bank of England, through his friend Schacht and other people. This was intentional. The original intention, was to have Germany, under Hitler, march east against the Soviet Union. And then the French and British would pile on the tail of Germany and destroy it all over again, and thus, change the map of Europe.

What happened was, in the process during the 1930s, that Stalin, through Molotov, his diplomat, and Ribbentrop, the German Foreign Minister, held a series of meetings. There were negotiations between the French and the Russians and so forth, under the so-called Tukhachevsky Plan. When the French and British refused to accept the Tukhachevsky Plan, Stalin proceeded to have Tukhachevsky killed; because Tukhachevsky wanted a preventive attack on Germany. Then, Stalin, knowing that the British and French were coming after him, negotiated with Ribbentrop, an agreement that Germany would strike west first—against France and Britain, when the war broke out. So, the war was organized, that Germany invaded Poland, for the purpose of forcing Britain into a war against Germany. The French, the Belgians, and the Germans then went into the war.

Now, at that point, the bankers of New York, including the grandfather of President Bush, Prescott Bush and others, who had funded Hitler—as a matter of fact, Prescott Bush was key in putting Hitler into power, through funding—these bankers then changed sides. Or some of them, over the period. And the British, they changed sides too. And decided, at the last minute not to make a pact with Hitler, but to support Roosevelt to defeat Hitler.

So, Roosevelt was supported by Winston Churchill, among others—a very important action by Winston Churchill in 1940, in promising to send the British fleet to Canada, if Britain were invaded, and then the British fleet would fight on the side of the United States. That decision resulted in Hitler losing, in effect, the possibility of winning World War II.

So we fought the war, with American power. Aid to Russia; aid to other countries. We, in the United States, particularly with the Battle of Stalingrad and the Battle of Midway—we in the United States and other countries, opened up a two-front war against the Hitler machine, and we won that war, with American logistics and Franklin Roosevelt's guts.

At the end of the war, the same bankers who had supported Hitler before, but had turned against him because he wanted to go westward instead of eastward for his initial attack, went back to becoming fascists again. Because the issue for them, was not fascism. The issue was Hitler's policy. And they had been prepared to support Hitler if he'd accepted the policy they had intended for him.

They went back to the same policy. Truman, who was no good, when he became President discovered that we had two nuclear weapons, prototype weapons in the arsenal. And he was urged to drop them on Japan, in order to start a new conflict immediately, especially with the Soviet Union. So, he did that. What he did—there was a peace treaty negotiated with the Emperor Hirohito, under Roosevelt; it was negotiated through the Extraordinary Affairs section of the Vatican, by a man there who was later Pope Paul VI. The treaty involved, that the offer of surrender would be presented to Emperor Hirohito as the Emperor of Japan. And that Hirohito would accept it on that basis. As a matter of fact, the terms of surrender of Japan were the same, in principle, which were negotiated through the Roosevelt Administration, with the aid of a man who was a personal friend of mine who was involved in that negotiation at that time. So, they suspended and withheld proceeding with the peace treaty with Japan, in order to have an opportunity to drop the two nuclear bombs on Hiroshima and Nagasaki. That was the reason for it. To start the war.

The policy, under which Truman was operating, with Bertrand Russell as the author of the policy—the great peacenik, Bertrand Russell. He authored the policy, and he broadcast his authorship of the policy, in a publication he published in September 1946: To use preventive nuclear war against the Soviet Union, to establish world government. An empire of world government.

Now, this is what we faced in the United States, what I returned from war to the United States, then. That policy. The same banking circles, which had initially committed themselves to a coup against Roosevelt—a military coup against Roosevelt was planned in the 1930s: These same guys, who had changed sides, only because of this Hitler-going-westward question, now were going back on the right-wing policy, aimed for a policy of world government through our having a monopoly—the British and the United States—having a monopoly on nuclear weapons. And they were going to attack the Soviet Union with nuclear weapons as soon as we had an arsenal to deliver it. To make those weapons, and deliver them. That was the business.

However, in the meantime, the Soviet Union had developed its own nuclear weapons. And also in the meantime, developed a thermonuclear weapon, when we didn't have one.

So, we called off preventive nuclear war. Truman was told to quit, not run again. And Eisenhower stepped in, and for two terms of Eisenhower in office, he saved us probably from nuclear war. And what he was warning against on his way out of office, was, "Watch out for these guys!" It was a good warning.

But then, we had what happened to us, with the Vietnam War, which was completely orchestrated. It was done the same way, for the same thing. It was a no-good war, with no-good purpose: It was to change the United States—and it gave us Nixon.

The problem we have, which we see with Karl Rove, who was part of the attempted fascist coup in the United States by Nixon! It didn't work. But, it was an attempted fascist coup. The things you heard about, were only the tip of the iceberg, of what the Nixon Administration was doing. And this is the Administration that gave us Rumsfeld, later in his career; that gave us Cheney. This gave us the new monetary system! We destroyed the Roosevelt monetary system—done by George Shultz, Henry Kissinger and Company. We started a war in the Middle East: It was done by getting rid of William Rogers, the Secretary of State, an Eisenhower man, and putting Kissinger in there. That's how it happened.

So, we have been under the domination, for this period of time, by a bunch of right-wing characters, who are actually the authors of fascism, and similar kinds of enterprises during the 1920s, 1930s, and afterward.

This is the right wing in the United States. It is not some meathead out there with crazy slogans or swastikas. It is the people who buy these, and trade them in, and throw them away, and use them when they want to. What you have here, is the attempt to set up a dictatorship, in the interest of that kind of banking interest, that financier interest. And some of the banks are the same private bankers, who were involved behind Hitler, back then: The Synarchist International. That's the enemy!

Now, the question here, is not stopping bad activities. We have to stop them. But we have to understand, we're engaged in a war, as Roosevelt was—which was not just the shooting war. It was a war on the chessboard of grand politics, to try to save this nation, and save civilization, by defeating this crowd. Not to eliminate them—we're not killers. But to take the power away from them, by creating a new kind of power, which would protect the nation and the world against such enterprises.

We are, once again, engaged in that war. The war, the whole fight, is around financial-monetary issues. The present monetary system, which was launched officially in 1971-72, is now collapsing. It's collapsing, because the collapse was inevitable if we continued the system. It was rotten—it wasn't a mistake made here, a mistake made there: The whole system was wrong! It was part of the right-wing system. We may have defeated Nixon, but we didn't defeat the system. Cheney is still coming. This is the problem.

So therefore, the question is, we have to have a policy, which is based on a positive counter-policy: A declared and avowed counter-policy. Because, as you know, in the Senate, you know that most people in the United States and most people in the world—even people in government—do not understand these issues. They're a bunch of amateurs, trying to play at government. The American people don't really understand these issues, either.

The problem is, is how do you get the American people to mobilize in their own defense, as Roosevelt did back in the 1930s and so forth after that? You have to tell them the truth! You try to say, "Let's limit ourselves to the issues, these specific issues," They don't understand what you're talking about! They say, "What difference does it make? They got the majority, haven't they? Let them have the vote." They don't understand that the fate of civilization depends upon their not winning the vote! And when the issue is not civilization, you don't fight. When the issue is civilization: You fight! You don't go to war unless you have to—any kind of war.

And this time, the problem is, we are not doing two things: We are not telling the American people, and the people of the world, and the politicians, who don't understand this—we're not explaining to them what the problem is. We're not identifying what the enemy is. It's not Cheney—Cheney's just a hired gun, and a fool. He's easily dispensable. He's not the problem. The problem is this Synarchist International, this current in history, which keeps coming back at us. It's come back at us again.

It's responsible for the genocide in Africa—these guys are! Everybody's afraid of them. They're afraid of the bankers; they're afraid of the financiers. I'm not afraid of them. I understand their power. I understand they could have killed me a number of times. Sometimes they tried. It didn't work.

But, you're in a war. And the war is, to take a stand, to say, "What are we going to do?" And the issue is, as President Clinton came close to making that decision once, back in September 1998 on a similar issue, on the LTCM crisis. And this present hedge-fund crisis is an echo of that crisis then. And he told the New York crowd: We need some new financial architecture. And then he backed off, and they tried to kill him, with the impeachment effort—they might have tried further. But that's what happened.

These are the issues. This is where you have to stand. That's why I said what I said, today: You have to say, "We are going to create a new monetary system, under which we are able to pledge, with the consent of other countries, that the monetary system will not collapse. The U.S. dollar will not fall. We are going to save the banking system, by taking it into receivership, where needed. We're going to save the world economy. We're going to give the world two generations to fix itself, and hope that those who come after us will do the rest."

We've got to make that the issue of war. We've got to make winning the war, winning the cause, the issue, and then people will mobilize. And what the problem in the Senate is, they don't have the support that they need from the people. The reason they don't have the support they need from the people, is because the people don't understand the issue. Maybe some of the Senators don't understand the issue fully. We have to make the issue clear. If we know what the war is about, and we're going to stick to this war until we win it, in this case in terms of the Senate, save our country, and take some countermeasures.

Take the case of the GM crisis. If GM and Ford go down, the United States loses a vital part of our machine-tool capability, in which case we're no longer a serious nation, economically. Therefore, we have to put through measures immediately, to make sure that the labor force, led by the machine-tool component of General Motors, Ford, and the auxiliary companies, that this labor force stays in production, and produces mass transit systems, alternatives to automobiles as well as automobiles. So that we maintain this labor force in production.

We have to give the American people the sense that somebody is behind them. We've got to give especially the lower 80% of our population the sense that the United States will fight to protect them, and to protect their interests. And they don't now.

People say, people don't believe me. I laugh at it. I say, it's not important. They should believe me. The reason they don't believe me, is because they don't believe other people, the politicians. Because they think they have to kiss the butt of the politicians to get by. And therefore, they will say what they want to have those politicians, and other authorities—their prospective employers—overhear them saying. They don't want to know the truth. They want to know what they have to do, to get what they want, personally.

And only when political leaders stand up on their hind legs and make the issues clear to the people, then as Roosevelt did, will the people of the United States support you. The people of the world, in general, will support you, if you make the issues clear to them in terms they understand. And it's going to take a lot of work by a lot of us to do that. But once we do that, we're in this thing to win. We're on the march. We are going to win this war to save this nation, and save civilization.

Question 2: Putting the People Before the Banks

Freeman: There are several other questions that came in from Senate sources, that ask about the very question you just addressed. I may, because of the stature of the people who have asked the questions, I may read some of these questions in the course of the event that may seem to repeat things a bit. But if I do, it's because I don't want those guys to yell at me. I'll let you deal with it.

Okay, this is another question from the United States Senate. "Mr. LaRouche, popular wisdom tells us to put the people before the banks, especially if you're a politician. But the fact is that you can't run a modern economy without a functioning banking system. If all current indicators are accurate, and certainly your predictions are more dire than even those indicators, we're facing a banking crisis of unprecedented dimensions. 'Save the people, not the banks,' is a great slogan at a rally, but in order to save the people, we may have to save the banks. My question to you is, how do we approach this? What are your overall thoughts? And specifically, are there things we should be doing preemptively?"

LAROUCHE: Yes, there are. There are people who know me, who are in key positions in government and banking, and all that's required, which is what I have on my agenda, is for them to talk with me. Not to get me support, because I don't need any support. I'm right, therefore I don't need to be proven right.

What we have to do, is, I need them. Now, many of them are wrong. They've been wrong on the record on many issues. But: They're not useless people. They're the kind of people who can be assigned, or delegated, in various ways, to move in on the banking situation, as an institutional force, and to craft the specific, concrete policies needed for an overnight-type of operation to deal with any bankruptcy in the banking system.

We have people that we know—and you, Debbie, know some of them, and some people we know, know others of them. We have enough skilled people in this country, in the United States, who know how to run banking operations, and who know economics, at least from the technical side, if not always on the theoretical side. Therefore, we have to create a strike-force in effect, which is largely to be a voluntary force of people who simply discuss with one another, because they know each other. And we're going to have to delegate some hands to take certain roles. And say, "We have a taskforce which is prepared to move in, and—."

You know, the principle is not that difficult. The principle is the same principle as a bankruptcy. Now, I call this question a "strategic bankruptcy." You have two kinds of bankruptcy, in which an institution may come in as bankrupt, and you may decide the best thing is to let it go, and just put it through an orderly dissolution. But, there are certain kinds of institutions or combinations of banks you can't let go! Because there are too many people who have got their savings involved in it, and other things of that sort. So therefore, you're going to have to put them into receivership, or some similar type of reorganization.

Now, my action, and the action we all should think about, is, we're going to put whatever has to be put into reorganization, into reorganization. We are going to mobilize people of the type I was alluding to, as part of this force which will actually craft—they're knowledgeable in these areas—will craft the detailed policies which need to be applied, to deal with the situation.

We'll have to create a structure—which I think the Senate should sponsor in large degree—a structure, for dealing with what I call "strategic bankruptcy." And this takes in all aspects of it, including the banking system: In other words, if Citibank, or Chase Manhattan (or whatever it is now), goes down tomorrow, we need somebody in place, and an institutional capability in place, which is going to keep that place functioning.

We're going to have to—say, categories. We're going to have to say things like, "If it's derivatives, it gets nothing." We simply cancel derivatives obligations. They're side-bets. We're going to go at the things that are not side-bets. We're going to deal with the question of how we reorganize mortgages that can not be sustained. We're going to kill people because they can't maintain a million-dollar mortgage on a shack they need to live in? We're not going to kill them, we're not going to throw them out in the street! We're going to do something to take care of that situation. It may not be what everybody wants, but it's going to be fair.

So therefore, we have to make those kinds of decisions. We have people, I'm sure, that I know of in this country, skilled people, experts, who know how to do that. But, we're going to have to make the policies. We're going to need policies, through the Senate, which provide for this kind of emergency. So that when a case happens, or we know a case is about to happen, or somebody knows their institution's about to go into that kind of pit, that we move in, right away—as a preventive measure, to prevent a chain-reaction collapse. The thing we must deal with, is the danger of a chain-reaction collapse of the banking system, a disorderly collapse. We must keep this thing functioning. We must use everything we know from the past on how to do that.

And, if we don't give that assurance, that we're going to do that, I guarantee you we won't get the agreements. If we can give that assurance, as it's largely—we have to use the authority of law. We need a special law for an emergency. Not a dictatorship, but a special law, to enable the existing institutions of government, as duly constituted, in their present form, to do the job, by bringing in whatever else we need to assist them in doing that job.

Our purpose is to keep our system functioning, to keep the dollar at parity, to prevent a collapse, and to go immediately into a role of expansion.

Question 3: Preparing People for the Crisis - - The Role of the Senate

Freeman: Let me just say that we have a very large number of questions, coming in from various institutions here in Washington. And we also have a significant number of questions, from both state legislators and from labor leaders around the United States. Although we also have questions from international journalists, I'm giving the institutional questions precedence, and I hope people understand that.

Lyn, this is another question from the Senate: "Mr. LaRouche, the issues that it seems have to be addressed on an emergency basis, are truly overwhelming at times. The population has absolutely no idea as to the severity of the crisis, and they usually don't, until some particular problem bites them on the leg.

"My question to you is, how to proceed? Because obviously, one aspect that has to be addressed, is the adoption of the policies themselves, and trying to decide on policies that prepare to manage a crisis that could really cause tremendous chaos. But then, another aspect is actually to try to prepare the people themselves.

"My question to you is, what do you think becomes the priority? What has to be done to prepare the United States to manage this crisis? How do we prepare our people? Do we define an approach first? What's the order in which we address things? I know that the question is not as specific as it might be, but the overall situation just seems to be so vast, that I'm not sure whether to approach it specifically or generally."

LAROUCHE: All right, let's talk about the Senate. Because the Senate is—. We don't have a President. We have a lame duck. Very lame. And he became lame real quick. And I knew he was going to be lame, the minute that somebody said he'd been elected, particularly after Nov. 9, when I did the webcast on Nov. 9 of last year, and I said we could turn this guy into a lame duck. And we did! We, Democrats and others, turned him into a lame duck. And he's losing feathers all the time. Now, he doesn't mean a hill of beans right now, as a positive factor. He might say something nice, and it might be useful, and I would hope that would happen. But I don't expect to find a brain inside the Oval Office. I'm looking for Mrs. Wilson's husband there, on his second term.

What we have, therefore, by elimination—Cheney is less than nothing. You've got a zero as President, you've got a minus sign as Vice President.

What has been demonstrated, as on the 23rd of May, is that what we have, as a real focal point of government, for purposes of crisis now, is, we have a growing bipartisan association, of people in the Senate, in particular; or, other people in Congress and so forth, gathered about a bipartisan assembly in the Senate—a group of Senators who stand up, representing the majority of the Senate, who with the special powers of the Senate—of advice and consent, and with the support of institutions—can move the institutions, at least of the Legislative branch of government, can move those institutions in ways which are needed at this time. If the American people see a bipartisan coalition of the Senate assuming its responsibility, which is implicit in the design of the Constitution for this kind of crisis—a crisis where you have a President that's a zero, a Vice President—both of whom are impeachable under the intent of impeachment. I mean, impeachment is not just for a crime. It's for when the President's not competent. And the President's not competent, and the Vice President is terribly incompetent, or anti-competent.

So therefore, the question is, we've got to preserve Constitutional government. Constitutional government in this circumstance, can only be preserved in the short term—in the long term, the Federal court can do something—but in the short term, only by the Senate, taking its role of leadership in the agency which is Constitutionally responsible for providing advice and consent. And if the Senate takes resolutions, which are pertinent to the situation, and makes statements which are pertinent to the reality of the situation, the American people will listen. The American people will support.

And you have the election campaign coming up for next year. Commitments are already made. Support this, and that, and so forth. But, if the politicians who are running for office, see the American people going against what George Bush typifies, those politicians are going to run the other way. And there you will begin to create the mood, in government as a whole, under pressure of emergency, to do the things that have to be done.

This is a question of leadership. Under all happy circumstances, the leader should be the President of the United States, who uses the Executive power of the United States as the key fulcrum for dealing with a crisis of this type. We don't have a functioning President of the United States. The man is a mental cripple, at best. His putative successor is a vicious character, who's more of a disease than he is a cure.

Therefore, what do you have left? You've got the relationship of the other institutions of government to the American people. Under our Constitution, implicitly, that authority lies with the Senate. A coalition in the Senate, to save the nation—without changing anything, just that coalition—will mobilize the American people, and you can say, "Scat!" to Cheney, because he no longer has any power. The power lies with consent. And if he no longer has consent for his antics that he pulls, he won't be able to pull them. People will just laugh at him. And he'll go away. The bankers behind him are still dangerous.

But I say, the point is, if we can get a coalition, a majority in the Senate, to begin to take systematic leadership, of everything it can exert leadership on, now, and if it says the things that have to be said—because the people are going to say, "Is it true?" If a coalition of Senators say, "Yes, ladies and gentlemen, it is true!" the people will have confidence in them. Because they certainly are losing confidence in the Bush Administration, rapidly, now.

And then we have to do the right things.

But the questions I'm getting, are all in this direction. "What do we do, in an ordinary way?" This is not an ordinary circumstance.

Now, how do you use our Constitutional system, under these circumstances, in a crisis of this type? We already have seen the first step in that direction, on May 23, publicly: Where a bipartisan grouping in the Senate said "No!" to an attempted coup d'état against our system of government.

The same principle applies now. We need Senators and others to stand up, as a coalition, which may not agree with each other on every issue, but we have to get the dialogue going. We have to get a dialogue going among a coalition—is different than a dialogue of individuals who just run into each other. When the dialogue represents a commitment to come to an agreement, not based on who's got the loudest voice, but agreement on the basis of reason and a sense of actuality; and when the people out there know that that's what's going on, then I think that our problem, is—while it's still dangerous, our situation's still dangerous—I think our problems are soluble. And I think we'll keep coming back to that.

The question is: When are the members of the Senate, and others, going to realize that we don't have a functioning President, and we have an extremely dysfunctional Vice President? Under those conditions, the Senate is the institution of government, through its powers of advice and consent, which must shape the environment, and appeal to the American people for support. Under those conditions, we don't have to do a thing against our Constitution, to do what has to be done.

Question 4: Health Care vs. Shareholder Value

Freeman: Another question from the Senate. "Mr. LaRouche, I'm sure you're well aware that GM's management has already received assurances that they will be let off the hook on their pension obligations. At the moment, they have also delivered an ultimatum to the union on the question of contractually agreed-upon health-care benefits.

"There's probably no more compelling issue for most Americans, than that of health care. It's a question that has concerned this office for more than a decade, but past efforts that we've made to address it have failed miserably. Now, it has come to a point of crisis that it seems it must be addressed. The crisis in Medicare and Medicaid is far more compelling and immediate, than any anticipated crisis in the Social Security Trust Fund. Yes, we must begin to adopt policies of economic reconstruction in the United States. But it seems that the question of health care has such an immediate impact on people's survival, that that has to be addressed too, and it has to be addressed now. The question is how to approach it.

"Additionally, one very special feature of the crisis is reflected in a recent report that over 1 million Americans are currently suffering from HIV. A disproportionate number of those individuals are located in the State of New York. The number, which I personally believe is a gross underestimate, is nevertheless staggering. Do we address this in the context of overall health care? Or do we need some special provisions, and if we do, what sort? But it seems these are questions that really can not wait."

LAROUCHE: You're dealing with the same thing, the right-wing problem. It's the right-wing bankers, the Synarchists, the same thing that gave you Adolf Hitler. That's what your problem is. A key problem is, you have Confederate members of the Supreme Court, who have laid down a policy, which is called "shareholder value." And most of the fascist-tending law, including that which is used to destroy the health-care system and so forth, has come out of that kind of mentality, which is expressed by what is sometimes a majority of the Supreme Court: the support of the concept of shareholder value.

Now, shareholder value is unconstitutional. And this was a case in which those judges should never have been confirmed by the Senate. Never. Because that did more than anything else, to destroy our system of government.

But: The Constitution, especially its Preamble, still stands. Now, this becomes a big issue, a big legal issue. How? What happens is, the fascist tells you, or his dupe tells you that the Preamble to the Constitution is not law. It's just an introduction to the Constitution. Whereas if you know history, and the history of modern law and statecraft, you know the Preamble to the Constitution is the most important part of the Constitution, and is the highest authority of the Constitution! And the principle of the Constitution which is most central, except for the defense of the nation, and our national sovereignty, as such, is the promotion of the general welfare: That prior to the adoption of that policy, even though this was actually argued as law by Plato and others in ancient Greece, it was actually the foundation of the Christian policy as laid down by Paul in 1 Corinthians 13—the concept of agape@am, the concept of the general welfare. This is the principle on which the modern nation-state was established during the 15th Century for the first time: the responsibility of the government to promote the general welfare of all of the people.

The first time we had a government of such a form was in France under Louis XI. You had someone at the court of Louis XI, called Richmond, who went from the experience with Louis XI's court, and went over and overthrew a bastard—Richard III of England—and established the first form of commonwealth government in England! It was from this idea of commonwealth government, that the modern nation-state and modern society was formed.

This was the difference between feudalism in the medieval period, and modern society—this issue! Of the fact that the state is responsible not to treat people as animals! That all human beings have certain inherent rights. These rights are associated with the notion of general welfare, which is not simply taking care of them, but it's also thinking about their children and grandchildren, and those who are coming after them. To promote the improvement, the betterment of the condition of mankind, is the first obligation of government, and the care for every individual.

The same principle stopped religious war. Europe was being destroyed by religious war from 1492, with the Expulsion of the Jews from Spain, continuing through 1648 until the Treaty of Westphalia. The first thing in the Treaty of Westphalia, the first principle that stopped religious war—the thing on which modern civilized society and European civilization depend, is the Treaty of Westphalia. And the first condition is that the individual state and the person must promote the advantage of the other. That we are responsible, each of us, to the others, as the others are responsible for us. It is our mutual responsibility for the well-being of others—among which, we are one of the others—which is the basis, the foundation, of our Constitutional system of government.

Now the same law, the so-called law of the general welfare or the common good, is also law, in particular, in the constitutions of various governments of the world, its intention. Shareholder value says that if you are slave, you are property, and you shall never be released from slavery; because you are property. And your children, being children of you, are also property. This is the law of slavery. This is John Locke! This is the law of the Confederate Constitution! As opposed to the U.S. Federal Constitution.

Now, the way we have to approach this thing, is on the question of Social Security, which is obviously not in the Constitution, but the principle under which it was established in the Constitution, and the need for it, was well defined by the conditions of the 1930s. And the success of it, is that. The only reason we stopped funding it—why? Because George Bush stole the money! His Daddy stole the money! And he stole the money. But he didn't steal it, because he got the government to authorize a bond, a U.S. bond, to cover that money as returnable to the Social Security Fund. George Bush says it's "just IOUs." The idea of shareholder value.

So therefore, we're in a situation in which we have everything—health care's been systematically destroyed. We've destroyed it. Why? To cheapen the cost of labor. We sank the economy. We said, "We don't have money." We stopped paying the doctors. We put whole categories of medical professionals out of work! They couldn't afford the insurance fees. And similar kinds of things.

Therefore, we have to put it back. We need a comprehensive conception of law, the law of the general welfare, as it applies to persons and to communities. Health care is part of that. We had a health-care system that worked. Nixon destroyed it, with the help of a Democrat who helped him in that process. We had the postwar health-care policy of improving the health care, year by year, in every county in the United States. The New York City health system under that law, is an example of how it worked. Other states applied it more or less effectively. We destroyed that. We destroyed the Hill-Burton law, in 1973, under Nixon. We introduced this system, which is a system of looting our health-care system. Part of the Nixon policy, part of the neo-conservative policy.

Therefore, we have to recognize that the idea of shareholder value is a violation of the Constitution. It's a violation of moral law. No one can call himself a Christian, who accepts the idea of shareholder value. And those who accept shareholder value should stop calling themselves Christians. Please, may we make a law about that? Will you please stop calling yourselves Christians, if you believe in shareholder value? You've got to choose. one of the two.

But, we need a general package, a general philosophy, stated clearly: policy on health care. Again, this has to come out of some kind of majority in the Senate. Because we have to have a statement of what the intention is, and then fight to get the laws adopted.

And I agree with you on your concern on this, I fully agree with you. But I think what we need is a strategic approach to the question: We need to overturn the concept of shareholder value. We can do it in the Senate. We can do it in the Congress. But we have to declare our intention to do so. Once we've declared open season on these kinds of things, then they become vulnerable. If we sit back and complain about them, they'll go on. You have to declare open season on bad things, and then people will mobilize to get rid of them.

Question 5: Should Bush Be Impeached?

Freeman: Lyn, we have a bunch more questions from the Senate, but I'm going to move to another segment of the population, and that is the questions that are coming in from labor leaders. We can come back to the Senate.

This is a question that was submitted by Scott Pulliam, who is the president of the IBEW in Louisville, Kentucky. He says: "Mr. LaRouche, since the emergence of the Downing Street memo, it seems that more and more online political action sites are jumping on the bandwagon, demanding inquiries and hearings. Even more surprising, though, it seems that, now, some mainstream elected officials, including some Democrats, are joining the chorus. Do you think it's likely that we will see an effort in Congress to impeach this Administration for its high crimes? And do you think that that is a useful thing to pursue?"

LAROUCHE: I think that's too narrow. I'm not against it, because—that's not because I have some particular malice against poor George W. Bush. I mean, I think the guy's a wreck, and he may need medical attention, or something. But, I don't believe in lynching people.

But I think we should get rid of him, in a very nice way, by retiring him. Retiring him, because he's mentally incompetent. I think he's shown that mental incompetence: A man who says, as President of the United States, in a time that the national credit of the United States is in jeopardy, saying that the U.S. government bonds are worthless, are worthless IOUs, that man is obviously mentally ill. And I think that mental illness is sufficient cause to remove him from office. The only problem about removing George from office is that, you've got to get rid of Cheney, too! Because Cheney is a sociopath, a killer! And you can't have that guy in the White House.

So therefore, I think what we need is a policy, stating what the problem is. It's not just the policy of an individual.

I don't think a single issue works. I don't think there is a single-issue victory in warfare. There's no place for single issues in politics. You have to have an issue of principle. And you do what you do on the basis of a statement of principle, which is adequate to cover the situation you're dealing with, and maybe some other ones as well. And win people to the principle.

Look, in the final analysis, we, the people, are the government. We delegate our power, as a people, to our government. We don't have total control of it, because we have people who came before us, who have a trust in this. We have people coming after us. We can not jeopardize them, simply because of our passions and will. But we are, as much as anything, we are government. Therefore, we have to have a principled response, to our problems and our opportunities.

What I think in this case is, we have to have a coalition that stands up, and tells the truth about the condition of our elected and associated government. We have to mobilize public opinion, of our citizens, to think about this, to participate: We've got to draw people into government. You know, what's happened to the citizen, the lower 80%, over the past period since 1971-72—especially since 1980-81—the American citizen of the lower 80% of family-income brackets, does not believe that he's really a citizen. He believes he's somebody who was given the right to beg and nag, and threaten, if he doesn't get his way. And it's usually on a single issue. "I'm going to go out and I'm going to burn down City Hall, if I don't get my wages on time." Single-issue stuff. Instead of having a conception of government, of what are the principles of government.

And what we need, are laws and principles which provide a structure, within which we can function: like the law of the general welfare. General welfare is a principle of law. And we have to make sure we are vigilant in enforcing the principle of the general welfare. We don't need some collection of this law and that law, single-issue. We don't need that.

So, what I think on this thing: Yes, we do need to put a merciful disposition, to get this President out of office. He's a danger to the environment. Resolve to get Cheney away with him, too. And I think we can find some kindly way to do that without abusing him.

But, what we need is some alternative. What's your alternative? You go to Canada to replace him? Anyone? Or, do you have a group of people who express the concern that we have a problem with this President? With his mental capabilities?

We should have raised it in the election campaign—people backed off from doing that. They came close to it, Kerry came close a couple of times, and Edwards did a couple of times. But they never stuck to it!

This man has got mental problems. He shouldn't be President, because he's got mental problems. He's not capable of doing the job. Under the intent of our Constitution, he shouldn't be President, because he's mentally incapable of the job! Do you want a six-year-old child flying a large airplane? There's nothing against the child, he's just not capable of doing that job (though I think he'd probably do a better job than George Bush would do).

So, I think that's the answer. We do have to have a policy on this. We do have to have an expression of opinion from leading people, who say, that's the case. I will say it any day; I have often said it. I will say it again. People like to have me say it, because that means they don't have to say it. They don't want to take the risk of incurring the displeasure of the President of the United States or his admirers, such as Karl Rove.

Question 6: How Do We Mobilize the Population?

Freeman: Another question from labor. This is from Mark Sweazy, who is a UAW president from Columbus, Ohio.

He says, "Lyn, thank you for your sole leadership in this current domestic automobile crisis. There's little doubt in my mind that your involvement may lead to the benefit of millions of Americans.

"Now, understanding the apparent denial of the current global financial crisis, by both people and government, my question to you is, what do you think it will take from us to mobilize the government to intervene and get our economy back on its feet? Is there anything that local governments can do, that has an effect on the Federal level? Do you think that things like the recent resolutions that came out of the Detroit and Cleveland City Councils help at all? If not, then what would you recommend?"

LAROUCHE: No, I think they do help. There's no question, no doubt of that. These kinds of resolutions, as they come from more localities, help.

Look, we're going into what is already for many politicians in the United States, an election campaign. Next year's election campaign is already on. And they're looking at the temperature. And what they're going to do today, is going to think about making a record which will pertain to the electoral possibilities of next year.

If you've got people who are responsible people, like what happened in Wayne County, what happened in Detroit City Council, what happened in similar institutions, already, around the country, these things are extremely useful. What we want to do is build up a landslide of such resolutions—because they're right: Because, people out there know they're facing this situation. They know they need help. And getting their city council, or some relevant institution, or trade-union organization, to make such a resolution—just pile it on! This has always worked in American politics, to great advantage. Pile it on! Just don't try to assume that that's going to work by itself. It's going to work indirectly by—this is a way of mobilizing an assertion of the sense of self-interest of the American people, case by case, to say, "Boy! There are a lot of us out here, who have this same concern. And we're willing to fight for this concern quite seriously." To a politician, that's like throwing meat to sharks. They grab for that stuff.

So, it's a very powerful weapon. One should not expect direct results necessarily from it, though you would hope for that. But we can expect effective indirect results.

Above all other things: What we have to worry about is not only a demoralization of our politicians, but a demoralization of our people. Our people, generally, in the United States, are feeling that they're about at the limit of what they can take, in terms of worsening conditions. The main thing we have to be concerned about, in that respect, is, we must not allow our people to be demoralized. Because, if they become demoralized, our situation as a nation is hopeless. Therefore, we have to encourage them to express their interest, and find themselves in solidarity with many other citizens, sometimes the neighbor they didn't like before, on these kinds of issues.

So mobilizing people around such things, is, among other things, it's building up their morale, and defending their morale, by means which are very effective politically.

Question 7: Is There a Fallback Option?

Freeman: Next question is from Rep. Perry Clark, from the state of Kentucky.

He says, "Mr. LaRouche, if we don't successfully act in time to avert an uncontrolled collapse, my question is, does the U.S. have a fallback position? The fact is that even a 40% adjustment in the value of the dollar would actually be sufficient to wipe out about 80% of my constituents within 30 to 90 days. They would be destitute, and this would especially affect retirees. What's the official policy for this kind of thing? I fear that it's nothing. What should we have as a policy? Or should we just try to avert the thing from happening, in the first place?"

LAROUCHE: The problem is what I've addressed all along, Perry: Is that, as long as the politicians think that the citizens are not taking the issue seriously, the politicians will always go with the bankers, in general. That's the way it works. Money, money, money, money. Our system has become worse and worse, as more and more political reforms have occurred. Because, the more the reforms, the greater the corruption. Because it always steers things, in the name of democracy and so forth, in exactly the wrong direction: to regulate. In other words, it moves towards regulation, to use your ability to get money for a political campaign, to become regulated, to come under pressure of regulatory agencies and so forth.

Now, there's some cases where this should be done. But this is getting silly right now, at this point.

So, the politicians will generally go with the money, if they don't feel—. Because they say, "Well, I'm a good guy. The government needs me. The people need me. Therefore, people should vote for me. And I've got to get the money to get myself elected. Wait till I get in, and I'll do the right thing." But then, you know, the minute you get into office, if you're a member of the Congress, the House of Representatives, you've got to start campaigning for re-election the minute you step into office, the first day you're sworn in and get into office! So, the cycle goes on and on and on.

The only remedy for this, is to get people mobilized in such a degree, that the mobilization will determine the likely vote in the next election. It's the best cure. See, the problem is, that we have—you see the clubhouses in the Democratic Party. The Democratic Party used to be a party of clubhouses, the Roosevelt Democratic Party, in particular. And the clubhouses had some power. The clubhouses could turn out the vote. They were the ones who worked every citizen, every block—they worked them. That could turn out the vote.

Now what happened, under Nixon and beyond, we stopped dealing with the people. The Democratic clubhouses generally became empty or closed down. And a paid-for vote, paid-for campaign, replaces the action of leading, active citizens in turning out the vote. There was a time, when you could have the political club turn out enough of a vote, to scare the pants off a politician. That's no longer the case. That's been less and less the case, over the recent decades.

So, the problem we have to keep coming back to is, what we need is mobilization of the people in their own defense. And the first thing, I think as I said also—really again, so I won't go into great length again—we've got to tell them the truth! Don't tell the itty-bitty truth. You've got to tell them the big truth! Well, they say, they're not ready for that. When the devil are they going to be ready for it?! The system is about to come down any time now. Don't you think it's about time to tell them the truth, before they get killed? Don't they have the right to know what's killing them, before they die? Therefore, we better start—

The problem is—and you know, Perry, exactly what I'm talking about: We've seen this on the hustings. People quietly, privately, will tell you what they think. And then you go to a public meeting and there's nobody there. Eh? It's the gutlessness of our people! And sometimes, they're gutless because they're not scared enough to stop being gutless! If they really get scared, and know that what they're afraid of is true—they can't deny it—then they're going to say, something has to be done about this! And they're going to be concerned about getting the right answer on that question.

We're so wishy-washy, that's our problem. And our people are so wishy-washy. They put up with all kinds of horrors! They never really complain! They complain about what's being done to them, but they don't complain about who's doing it! This is the problem.

I think the time for my style of politics is really here, right now. To say it loud and clear, and don't care. Say it! The truth is more important than anybody's feelings.

Question 8: An Election Strategy for 2006

Freeman: Lyn'll like this question. This is a question from someone here in Washington, Lyn, who you know well.

He says, "Mr. LaRouche, now that you've scared the crap out of everybody, I'd be interested in whether you think we should actually be working on a 2006 strategy? It's my business, of course, to do that. But it seems like it's an excellent way, and maybe the only way, to actually mobilize people to deliver a swift kick, so that we can get some of these policies acted on."

LAROUCHE: I agree with you totally. I think that we should have, in the D.C. area, in particular, as the national center, we should have some serious Democratic Party, and also outreach to the other side of the fence, the Republicans, the good ones—you'll find a good one here and there—we should actually be engaging in the politics of 2006, on the streets, now. The issues, now, are the ones which I referred to here today. Do we have the guts to take the truth about the present situation out to the hustings? Do we have a bunch of politicians, who will stand up and say, they want to hear this discussion? So the people have a reference point, among people they see as having power, who are responding on these issues. So we can get some people to start turning out and getting hot about the issues.

Yeah, you know, some people are talking about getting money now for the campaign! Well, I suppose that's fine. I see that's often needed. I've had some experience with that myself.

But: The key thing is, have you got the people, not the money? If you've got the people, you can win the election. And we are not, as a nation, we are not, politically, seriously, going after the people. My youth are going to the people. People working with me, are going to the people. I know other people around the country, are going to the people. You see it in these resolutions like Wayne County and Detroit City Council, and so forth. They're going to the people.

We have to get organization out there going to the people. In two directions: We need affirmation of support for the issue from a concert of leading politicians. We need, as much as possible, bipartisan support, because the party structure is changing in the country today. You're not going to have the same Republican Party you had before. Some people are going to go in the other direction, some people are going to join the human race and still be Republicans. And we have to have that kind of cooperation, that kind of dialogue, among rivals—but a commonality in the dialogue.

We have to carry that to the street, now. We have to bypass a national leading press which refuses—because it is controlled by financiers—refuses to face the issues. We can not sit back and complain about the press. You can complain about the press by denouncing it, because it doesn't do its job, it doesn't tell the truth; because it's controlled by financier and related kinds of considerations.

But that doesn't excuse us from telling the truth. And if we think about it, we have enough power to bypass the press. We have the ability to bypass the press, and get these issues out now, among the people, and don't wait for permission from the Washington Post to discuss something.

Question 9: The Hedge-Fund Crisis

Freeman: Lyn, we have two questions from two separate individuals at the Economic Policy Institute, here in Washington.

The first one is on the hedge funds. It says, "Mr. LaRouche, if you're in Germany, you know that the other day, Chancellor Schröder indicated that he would seek some uniform standard of transparency and regulation of these hedge funds at the G-8 meeting. It seemed to us to be a very moderate proposal, one that perhaps did not go far enough. I'm sure that you're also familiar with Secretary of the Treasury Snow's response. He really freaked out over this. And clearly, for him, any talk of regulation represented fighting words. In fact, it was very similar to some of the recent utterings that we've heard from Alan Greenspan, defending both the derivatives market and the hedge funds attached to it, as a very important part of the American investment community.

"However, not everybody seems to feel that way. Is it time that we actually took some action directly to bring these funds into line, or is it too late for that? Should we just let it go, and turn our attention to what are other equally pressing matters?"

LAROUCHE: This is a matter of a choice of rhetoric, actually. It's a question of how we put it. Can we put it more effectively or less effectively?—Snow jobs aside. Look, the hedge-fund crisis is, as we know—and I'm sure the questioner knows this—is extremely serious. It is the latest phase of crisis of the entire financial derivatives swindle, which has been going on since the aftermath of 1987, the 1987 stock-market crash. We've reached the point where the entire international financial system might disintegrate because of this.

Now, there's an interesting factor in this thing, which was admitted in some of the dialogue on this. It was—remember the Black-Scholes formula, which came to light in 1998, in the case of the LTCM collapse, the GKO bond collapses? This was the first occasion where President Clinton publicly spoke about reorganizing, or redesigning, the international monetary system. This thing has now reached the point that the whole system can blow out as a result. But, on top of this, what came out is the fact that these guys, these hedge funds, or most of them, are allegedly using the same mathematical formula, which caused the collapse of one of them.

Now, this is a reflection of what happened with LTCM in August and September of 1998. You have a system, a completely out-of-control gambling system, a side-bet system, the hedge funds, which in collusion with bankers—who are put in jeopardy by this operation, by being involved with the hedge funds—the whole blasted international monetary financial system is on the verge of blowing out, at a time that it's already overripe to blow out! And the trigger apparently, is a coincidence in the way of discounting the hedge funds, because some of them, if not all of them, use the same mathematical formula—which is insane! The very idea of that kind of formula is itself insane. But somebody, who was taken in by their flunking a course in mathematics, suddenly decided this is a great game, and they played it accordingly. Putting the entire international system's organization in jeopardy by allowing such people to exert such control over the financial system, as these hedge funds did in this case, where they got caught by the GM crisis, shows that we need regulation.

Now, what we've proposed, of course, was taxation, immediate taxation—we've proposed this before. I thought the Tobin tax was rather silly in some respects, but things like the Tobin tax could be useful, if applied to this area. Because what we need, first of all, in government and in other institutions, we need to have some track of what's happening to money. And if you have the entire financial system being manipulated by a handful of people or a handful of groups, which by this kind of mechanism are affecting the entire financial structure and threatening the whole thing with collapse, I think about that time, you should say, the Federal government, through responsible agencies, should have some source of information, to let them know that this is going on. So, the purpose of having a tax on financial derivatives, is to keep track of these disorderly things, which are now threatening to blow out the whole system. We need it! We need it right now! And we need a tax on it right now, so that we can probably—when we have to clean up the remains after these things go under.

Remember, we're at a point—July 1 is the official date, where this round of hedge funds now comes to account. Now, at that point, these hedge funds can get out, technically, if they can still get out, safely, on July 1. Now, the word is, that some banks are going to try to agree on saving some hedge funds, and letting the others go, as I indicated in my remarks earlier today.

But the whole system depends upon that. When you take the relationship with the hedges, against the mortgage portfolio situation in banks, in the United Kingdom and the United States; you look at the mortgage portfolio situation in the state of Pennsylvania, in the state of Virginia, in the state of Maryland, in California, and so forth, we have a danger of a blowout, and the entire system can go like a forest fire, where in a few hours, you could have the forest fire started; and in a week, you could have the entire international financial system go under. When you consider the ratio of the financial derivatives factor in international finance; and how bankrupt, already, the mortgage portfolio system is; how bankrupt the banks are: This whole world economy could go down.

Therefore, I think we need something much more drastic. What has happened of course, and Snow—Snow doesn't know what he's doing. Snow's a weak incompetent—should never have been there in the first place. He certainly hasn't got the nerve to handle anything, and he certainly is being scared to death, probably by Cheney or something like that on this thing. Greenspan is, shall we say, past his prime. He's about to go anyway. And he's beginning to flake out, in a sense, as we say.

So, Snow is obviously deployed in hysteria, to try to intimidate people into saying nothing. What Schröder said was absolutely—you know, I was surprised to hear him say it; I was pleasantly surprised to hear him say that. It was a very intelligent thing to say. He didn't commit himself to anything in particular, but indicated that he was aware of the problem. And, it is a problem which immediately affects the German and European banks. They are immediately affected by this. German banks could go under. Other banks could go under. Of course, he should be concerned about it. And the fact that he's saying it, and Snow is not, is important.

More people should—we should act on this now. But, the problem; again, it comes back to: If we don't get the facts about this out to the American people, how are you going to do anything about it?! If you let the people believe that this could not blow out—"Don't tell me the house is on fire, I don't want to scare the children. Don't call the firemen, because he'll ring that bell, and the children will know that something is wrong, and they'll get scared." Don't tell the people what's going on.

My sense of politics—you tell the people what's going on, especially if it is a hard truth to tell. But, then, tell them what you are willing to do about it.

Question 10: Can We Save the Auto Industry?

Freeman: Lyn, this is a question from Rep. Juanita Walton of Missouri. She says: "Mr. LaRouche, what do you foresee happening? I don't want to be a pessimist, but what do you foresee happening, if the government doesn't step in to save the auto industry on time? If these plants do actually shut down, is there a way back?"

LAROUCHE: No. There is not really a way back. Is there a way back from losing a war? Well, a number of times, in history, that's happened. Countries have lost a war, and they come back. Like Germany came back, after getting rid of Hitler. But, I'm not at that point yet. I don't prepare to surrender. I think that the point is, we have to win this war. Though we have to know it's a war, as I said before. We have to win.

And, the way we have to win is, we have to have a war plan, which—I have tried to outline what we have to do. I find that what we get from people who are on the machine-tool end, especially in the auto industry—unions and others, trade-union people and others—they're very useful, because, what they—.

See, most people aren't machine-tool specialists. But, you look at the automobile industry and similar industries, and you find that a lot of people are employed in plants, which depend upon the role of the machine-tool specialist, who is a small fraction of the total employment force. But, the ability to produce a quality product, and even a new one every year, depends upon these guys who are the machine-tool specialists. This is one step next to science, in terms of the progress of industry. This is how we won World War II: with machine-tool specialists. And back into the 1970s we were still using machine tools, which were produced under the Roosevelt plan, where the government produced the machine tools and then leased them out to war manufacturers and so forth, and we got that system going for some time.

These machine-tool people are crucial. They are next to science. They are the drivers of technological progress. They are the source of the profitability of production, as well as utility. Therefore, the machine-tool specialist is the person who ensures the possibility of continued employment of a lot of people.

You look out across the country, as I'm sure Juanita does, and you look at communities, in which the spill-overs of this kind of activity determine the welfare of entire communities, or determine enough of the welfare of the entire community, that the entire community depends upon it. If they go down, the community goes down in chain-reaction fashion.

So the vital interests of the people of the United States, particularly when you look at these states like Pennsylvania; you look at western and upper New York State, Michigan, Ohio, Indiana, Illinois, so forth—you look at these states: If you take this factor out of these states, which have already lost tremendously in the last 20 years, what do you have? "Look Ma, no economy."

So, the people who are the machine-tool experts, are the ones who are actually ensuring our ability to provide the employment for the rest of the labor force in that industry, because they are the ones who can get on the floor and, within the course of the year, define a completely new product! And, the fact that they can define this new product, has meant, heretofore, the ability of the industry to keep producing automobiles, and employing the people that produce them. And sustaining the communities which depend upon the people who are employed in those industries, or the related industries.

So, we can not accept a defeat in this area. We have to go at the whole picture. I mean this whole picture, like, take your state: water systems, water transport. A water transport system has a life of 25-30 years, before it needs major repair, like river systems. We've got that problem. Now, we've been in this system for over 30 years, almost 35 years, we've been in a system of a breakdown of the infrastructure of the United States. Systems that were essential, like water systems, transportation systems, other systems, hospitals, so forth. These things that we had, are now wearing out. They've come to the end of their physical life, where they have to be renewed.

We need a mass transit system. We can not use superhighways as parking lots forever. We need a mass transit system, not only for passengers, but for freight. We need modern mass transit systems.

We are running out of power. Power stations are coming to the end of their useful physical life. They have to be replaced. We probably will need in the order of magnitude of 500-1,000 new power stations in the immediate future ahead.

Industries, like the auto industry, can produce essential elements of construction of these kinds of things, like water management systems, power systems, and so forth; mass transportation systems. So, we have the work to be done, by the auto workers—not just producing autos. And these same people who work in the auto industry, are people who will go together with the machine-tool specialist, to the new kinds of things that open up, like locomotives, building our mass transit system, fast mass transit. They will be producing these things, instead of automobiles. They will be producing large elements for rebuilding the river systems, instead of automobiles.

And, we've just got to get it out. I think we are doing a good job in that area. I think that the trade unions and others who are speaking up on the auto crisis are doing a useful job.

But, I don't propose to talk about being defeated. I feel like a commander in warfare, who says we've got to win this war. And, when you talk about this issue, I say, "This is a part of the war we must win."

Question 11: The Home Mortgage Crisis

Freeman: Lyn, I've got three more questions I'm going to ask you to answer. One is specific, one is general, and one is a question from the LaRouche Youth Movement.

The more particular question comes form the Senate in the United States. It says: "Mr. LaRouche, there is no real precedent in the United States for the regulation and management of home mortgage financing, and very importantly, of refinancing. Programs like the FmHA and others, were designed for a different purpose, mainly to allow young families without sufficient capital or established credit, to engage in home ownership. But the fact is that right now, if you look at the American real estate market, we're looking at a catastrophe that's waiting to happen. It seems to me that we have a responsibility to find some way to preempt it.

"Some members of the Senate are talking about regulating the industry. But the fact is, that even regulation of future lending, will do little to address the problem that we have already allowed to be created. Greenspan's babbling about frothing versus some other thing aside, the fact is that if this real estate bubble pops, we're going to have to deal with, not only a possible chain reaction of bank failures, but we're going to be looking at the total ruin of countless American families. How do we address this?

"I'm not talking about what we do in terms of legislation for the future. I'm talking about how do we deal with the problem that already exists."

LAROUCHE: Well, it's obvious to me it's going to happen. I can see it in Northern Virginia. It's clear. We have Loudoun County, which is going to be a center of this catastrophe, because it's been one of the areas that has been the most heavily built, with the least infrastructure, built up around this operation; as other parts of the whole area.

It's going to happen. The collapse is inevitable. Therefore, what do we do to prevent the collapse from becoming mortal? Rather than merely painful? Obviously, the thing is, you are going to have to have people who are working and living in houses, continue to work and live generally in those same houses.

Now, how you sort the thing out financially is, shall we say, a third question down the line. The first question is, you can not have a social crisis created by what is now looming as—.

Look, you've got a situation where you've got these $600,000-$1-million shacks; they're really not worth that. This was done on the basis of a speculative boom. And, a lot of it, of course, involves this area of second homes, where somebody has bought a home of questionable conditions, to try to make money on it, the capital gain, through the renting out of it, or something of that sort.

This catastrophe is going to happen. It's going to happen; it's just a question of when, and when is soon. Therefore, what do you do? Well, we can't have social chaos. We can not have social disorder. Those people are going to stay in those same houses, in general, for the time being. We're going to find some way to sort this thing out, which is equitable.

And, we're going to have to do it anyway, because the banks, which are ultimately involved in this, are going to threaten to go belly up. So, the banker is also in trouble anyway. And, the fact that these mortgages are not redeemable at their present price, is a fact of the matter. We are going to have to put the thing into order. And, it's going to take a long time to sort the thing out financially.

What we need is the ability to freeze the situation, to continue the normal functioning of life in the meantime, and sort it all out later. But, in the process of sorting it out, we have to make sure that essential institutions, including the functioning of essential financial institutions—which are also our savings institutions, and so forth, as well as being lending institutions—that these institutions continue to function, under a strategic doctrine.

We've had this kind of emergency earlier. We haven't had this particular form of this kind of emergency, but in principle, we've had this before. And we are going to have to deal with it. The principle of the general welfare is preeminent: We must protect the people. And, we must protect them in a just way. Shareholder value is not a primary consideration. If somebody invested, even in issuing a mortgage, as a gamble—they gambled. If they gambled on somebody's ability to pay a certain amount for a place to live—they gambled. The person who took a place to live, was not gambling. They needed a place to live. So therefore, the general welfare comes first.

Maintenance of good order in the general welfare, is the primary concern. Government must intervene, with this sense of law, to protect good order, and to postpone what can not be solved today. And we have to have good order on all sides. We provide protection to the person, to the householder; we provide protection to the banking institution, to continue that function; we provide protection to others, who are performing an essential function in the community, if they become financially embarrassed: Because it's in our interest to do so.

And, we can all agree that it is in our interest to do so. You think of the consequences. Do you want Joe thrown out in the dump? Do you want to close down a bank which you depend upon for a certain function, even though it is bankrupt? No. You are going to intervene, to say, "Hold it, boys. Let's freeze a few things here, for the time being. Let's keep good order. Let's get this economy going again, and then we will sort it out."

Question 12: The Mission of the Youth Movement

Freeman: Lyn, I had more than one remaining question that I was going to ask you, but we're running out of time (and also, I'm being bombarded with questions). So, for people, especially for institutions and for journalists who submitted questions who have not yet been answered, I will forward those questions to Mr. LaRouche, and I'm sure that he will get to them in good time.

Lyn, I have one final question that I think is an important one, and it was submitted in different forms, by different members of the LaRouche Youth Movement from around the world. The question is: "Lyn, I'm sure you know, that right now, every member of the Youth Movement inside and outside of the United States, is listening to this webcast. So, it's probably a really good opportunity for you to give us instructions all at once for the next few weeks.

"My question is this: For those of us who are campaigning outside of the United States, what's the most important thing for us to communicate to people we speak to, especially to young people? My second question is really the same question for those of us who are here, in the center of this war.

"Otherwise I just wanted to thank you for your remarks today."

So, this is it, Lyn, you can give us all marching orders at once.

LAROUCHE: It's like something which is tantamount to fighting a war. Our commitments must be to define that war, and to define winning it. We might lose the war, but we can not accept losing the war. We can not concede the war in advance. We must fight as far as we can, to prevent the evil which is about to descend upon this planet.

You have to use the authority of a youth movement, of this type that we have, to do it. You see, many people have already, mentally, dropped out of society. There are many ways of dropping out of society and still wandering around inside it. And many have dropped out. Many could come back, if they see some reason for optimism.

We have to start, first of all, by stating what the war is about, as I've said here today. Why are we doing what we are doing? Well, guess what our age is? We are 18 to 25 years of age, generally. What is that age group? Well, that's the age group of people who go to war, fight wars, isn't it?

And, what's the war we are fighting? Well, we have defined that: We are trying to save civilization. Why would you want to save civilization? Well, look, some of you guys may be old geezers who don't care about the future. We've got 40 to 60 years of life before us, presumably. And, what we are looking at now is, not a good life, and looking at Hell. It's getting worse and worse, for all of us. But, we are going to live it. We're not even sure we are going to have nations any more, under globalization. We're not sure that human conditions are going to exist any more. And, that's what we face, for the next 40 to 60 years of life! That's why we are fighting! As people have fought before. As they fought in World War II, for example: Because the prospect of losing was unacceptable. It was not a question of winning a competition, not a rivalry. It was a question of civilization.

And therefore, we have to approach things that way. We have a number of actions. See, Germany—outside the United States—-Germany is probably the most crucial country in the world, strategically, right now, which is being plunged, probably, into a new election campaign. That is not yet settled, but it is quite likely. And, the way Germany goes, will determine the way Europe goes, as a whole. And the way Europe goes, is going to determine the way that, largely, Eurasia goes. Russia, for example; China; India. They may not admit it, but the fact is that they depend on them.

They all depend upon the role of the U.S. dollar, because the breakdown of the U.S. dollar system would be a catastrophe for every part of the world.

So, Germany is key in that sense. The United States and Germany are most key in terms of this policy. Because, if we have the right policy in the United States, and you have the right policy at issue in Germany, you probably have a fair chance of winning the right policy issue for the world, because of the peculiar importance of these countries and their respective positions—the United States, most importantly.

We also have a lot of other countries: Mexico, which needs leadership, is going into an election crisis—not just an election, but an election crisis. You have the situation in Ecuador, Peru, in Bolivia, in Argentina, in Colombia; a different kind of situation in Venezuela. You have the situation in Indonesia; the situation in the Philippines, a crisis situation there; the situation in Myanmar. Other parts of the world. And it all depends upon what we in the United States do. And it depends in a secondary degree, on secondary nations of power, such as Germany, which is more important for its influence than it is for its actual power.

So, in these situations, we have to function like a people at war, like a generation at war—at war to defend civilization, and for no other purpose. No other purpose is worth fighting wars any more. And, we have to, as I said before today, we have to define ourselves, not in terms of money, profit, etc., etc.

We have to think about what the meaning of human life is. We have to represent the standpoint of human life, and what it means, above any other issue. Life is what we do, because we have creative powers, to cause the world to become better for those who come after us. And we can live and die happily, if we know, that in living, we were allowed to participate in doing things that made the future better for humanity. We can feel joy in the fact that it was important that we lived.

And, we have to fight for that. We have to fight for the right of people in every part of the world. But, first of all, in the United States, we have to fight for the right of people, to know that they have the opportunity of living a life that is important to future generations of humanity. That's what we are fighting for, against this false value of such things as shareholder value.

[Standing ovation]

Freeman: Lyn, thank you very much. And also, please convey to Helga, from those of us here in the United States, our congratulations, and let her know that we'll do everything we can from here to see to it that her campaign for Chancellor of the Federal Republic of Germany, is a successful one.