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EIR TALKS WITH LYNDON LaROUCHE
Interviewer: Mel Klenetsky
MEL KLENETSKY: Welcome to ``{Executive Intelligence
Review'}s Talks With Lyndon LaRouche.''
World Trade Center Bombing:
Terrorism Has Come to the United States
Mr. LaRouche, before we get to President Clinton's
fiscal package, I want to bring up the World Trade Center
explosion. Has the specter of terrorism reached the United
States?
MR. LAROUCHE: Yes, it has, in two ways.
First of all, there is very little doubt that this is
a terrorist incident, and for some of the listeners who
may not know this, I am and have been in the past an
expert in this area, and have usually been right when the
FBI, for example, has been wrong, back during the 1970s
and early 1980s.
This has all the qualifications, to any expert, of a
terrorist incident. It is directed against the psychology
of the peeople of the United States. It is correlated as a
terrorist incident with developments in the Balkans, and
it is correlated with such manifestations as Lord Owen's
recent blast against the United States government for Mr.
Clinton's indications that he might do something creative
in respect to the relief of the victims of Serbian
aggression and terror in the Balkans.
What is not clear, is exactly who did it. It could be
either the Serbians themselves, or it could be someone
{exploiting} this conflict to introduce terrorism in the
United States.
Let me just explain.
When terrorism was run in Germany and Italy in
particular, taking the period of especially 1977-1978,
which is the high point of my experience, when I had some
successes relative to official agencies at that time, the
terrorism was actually run, though in part with agencies
in East Germany and Czechoslovakia, usually through NATO
and often by certain Israeli assets who were running the
terrorism in the name of left-wing operations, as in the
case of the Moro kidnapping/assassination in Italy, but
were run under a NATO policy called ``strategy of
tension.''
What is going on now, in the manner in which this
thing was done, the choice of target--the nature of the
operation, the circumstances, the pre-calculable effect
upon the U.S. population and political process--this is a
strategy-of-tension operation against the population and
government of the United States.
And so it says this past weekend in the London Sunday
{Telegraph} in Great Britain, which gloats over this
terrorist incident, as terrorism finally coming to the
United States, the United States is getting its
come-uppance. {This is a strategy-of-tension operation.}
Q: You mentioned an earlier strategy of tension in
the 1970s. What was the purpose of this NATO strategy of
tension then, and what is the purpose of the NATO strategy
of tension today?
MR. LAROUCHE: In the middle of the 1960s and
thereafter, and particularly at the point that Henry
Kissinger was stuck by the Establishment into a key
position in the Nixon administration, an attempt to change
the global political process was unleashed. And this meant
the destruction of the institutions of the sovereign
nation-state, bringing to an end the emphasis on
technological progress, breaking off the larger remnants
of the policy of development of European countries, for
example, for development of the developing nations, and
that sort of thing. And also against technological
progress in Europe and in the United States.
These were the purposes of the strategy of tension.
It was an attempt to do social engineering and
psychological engineering of strata of the population,
particularly governing strata, to terrify the ruling
strata of Italy and Germany and other countries, into
submission to these new policies.
The example of that is the case of the kidnapping and
assassination of former Italian prime minister Aldo Moro
on the initiative of repeated threats by Henry Kissinger
against Aldo Moro, because Kissinger and Kissinger's
British masters did not like Moro's policy for Italy. Moro
was threatening to make an arrangement with the base and
other circles of the Communist Party [of Italy] in order
to eliminate the postwar arrangement under which the
Christian Democratic governments were destabilized by
small parties, groups like Ugo LaMalfa, Giorgio LaMalfa's
father, and things like that. NATO and the United States
and Britain did not want Italy to get that kind of
stability of government and therefore they told Moro to
cut it out, and when he didn't, they killed him.
[commercial break]
19th-Century Terrorism: Britain's Geopolitical
Strategy and the New Strategy of Tension Today
Q: We have been discussing the World Trade Center
explosions and the source of terrorism back in the 1970s
and currently.
Mr. LaRouche, in terms of the source of this
terrorism, can we reiterate what the basic premises and
purposes of this kind of NATO strategy of tension, as you
call it are?
MR. LAROUCHE: Go back to the nineteenth century.
People think that terrorism is something that was invented
in the 1960s and 1970s. It was not. We are very familiar
with the experience also inside the United States back in
the nineteenth century, in which terrorism was of the
following form.
Terrorism had hit the United States. It came from a
circle which was very close to Britain's Lord Palmerston.
Palmerston, by the way, of course, was the chief figure
associated with Britain's Opium Wars against China, that
is, cramming dope down China's throat. Also, he was very
close to an asset of his, Giuseppe Mazzini.
Giuseppe Mazzini was the head of a Freemasonic
organization called Young Europe. He was also (which is
less known), the head of an American organization, called
``Young America,'' an American Freemasonic organization,
whose head, in 1859, became Albert Pike, who was later a
Confederate general who ran terrorist operations against
the United States from Canada and the Confederacy in the
Western borders of the United States.
For example, Pike was responsible for the massacre of
about 300 citizens, mostly women, children, and old men,
in Mankato, Minnesota, during the period of the Civil War.
That was an act of terrorism very much like what the Serbs
have been running in Bosnia and Croatia today under the
direction of Pike.
For his terrorism, Pike was actually indicted, in
effect, according to the manner of the time, by the
Confederate Army as a war criminal, then by the United
States for treason.
The assassination of Lincoln was a terrorist
operation which involved the friends of Pike and of the
Washington, D.C., head of the Confederate intelligence
service and a leading member of the B'nai B'rith at the
time, Simon Wolf. Simon Wolf was also involved in the
creation of the second wave of the Ku Klux Klan in 1915.
The way that President Theodore Roosevelt became
President, is that admirers of President Roosevelt around
the Henry Street Settlement House, deployed a terrorist
against then-President William McKinley, which caused
Teddy Roosevelt to become President.
Once you understand the roots of terrorism in Europe
and the United States around the Mazzinian Freemasonic
network, then you understand more quickly exactly how this
stuff was put together today. I'll just point out one
thing about this, when you say going back to the
nineteenth century.
I was born in 1922. During the 1920s, I knew one of
my maternal grandfathers. His father, or his generation
before him, my great-great-grandfather, who was a common
dinner-table figure for me in the 1920s, when I was a
child and later when I was an adolescent, was a
great-great-grandfather who was born in 1809, the same
year as Abraham Lincoln.
From my own experience, and from anyone else who
thinks similarly on these things, family traditions and
connections span 3, 4, and 5 generations; and that is the
way it is with terrorism in Europe.
If you want to understand terrorism in Europe, how it
is structured, you have to look at these Mazzinian and
related types of organizations, such as the Black Hand
society of Serbia, which go back to the beginning of the
nineteenth century, particularly to the middle of the
nineteenth century.
Q: Currently, there is a political destabilization
taking place in Italy, which is affecting all political
parties and threatens to transform the entire political
scene in Italy. Many people in the United States may not
know about it, but it has tremendous implications for
politics in Italy. You mentioned Mazzini, you mentioned
Aldo Moro; what are we looking at, in terms of the current
situation in Italy?
MR. LAROUCHE: The first thing the American people
have to understand, is that what is popularly believed by
most Americans, who think they are literate, who read
newspapers, follow television reports and so forth and so
on rather than read books; what most of them believe is
absolutely nonsense, from the standpoint of reality.
Because that is what they have been indoctrinated to
believe.
Beginning in the 1880s, Britain had a policy called
geopolitics. Geopolitics was simply the notion that if
France, Germany, and Russia and other states cooperated
economically to develop Eurasia, that the economic
development of Eurasia and the political effects of that,
would mean that the British Empire could not remain the
dominant force in the world. Therefore, the British
developed policies to destroy the Eurasian heartland by
setting France, Germany, Austro-Hungary, and Russia at
each other's throats, together with what was left of
Turkey at that time.
That is the geopolitical character of the situation,
which continues to the present day. There are people in
New York, for example, in the financial community, close
to London, who have shared that.
We have had two world wars in this century over the
issue of geopolitics--that is, over the fear that France
would cooperate with Germany and Russia to develop rail
networks and things of that sort, which would mean this
threat to Britain's empire. With the election of a
Confederate--that is, spiritually a Confederate, and a
sponsor of the refounding of the Ku Klux Klan in 1915, who
was President at the time, Woodroow Wilson, the United
States was nudged into a commitment to support Britain in
a war in Europe.
Then the Second World War was caused a little more
indirectly but the same way, when the von Schleicher
government of 1933, proposed a recovery program for
Germany, which actually did work, as far as it went. The
U.S. and British interests supported Hitler, put Hitler
into power, to overthrow von Schleicher. This was done,
for example, together with some leading Social Democrats
in Germany.
They continued to support Hitler through Munich in
1938; and only when Hitler launched his {Kristallnacht,}
his open atrocities against the Jews in Germany, did the
Western powers decide that it was time to get rid of
Hitler.
As a result of that, we had two world wars in this
century: one starting with the Balkans as a result of this
geopolitical situation. That is the way to understand the
Balkans and the destabilization of Italy today.
Italy and the Balkan region are considered by
geopoliticians the Southern Flank of Central Europe--i.e.,
Germany, so forth. If Germany is destabilized, then
cooperation among France, Russia, Germany, and other
countries, is impossible. A conflict has been generated.
What they are doing in addition, and coincident with the
Balkan destabilization with the Serbian forces under
Milosevic (who are nothing but assets of British interests
and interests allied to the British, such as Eagleburger
or Brent Scowcroft under Bush, who are Kissinger allies
who actually started this war or helped to start it for
the British); while they did the Balkan destabilization,
they also tried to break Italy.
What they are doing is using a law which was imposed
by Anglo-American postwar influence, the so-called
election and party law in Italy, which forced the Italian
parties essentially to be bribed as a way of conducting
election campaigns.
They are using the history of this ongoing,
under-the-table funding of political parties, which was
the system set up by the United States and Britain as a
way of scandalizing all of the political parties. Of
course, it did corrupt them somewhat, but nonetheless they
started it, in order to split Italy into five parts and
set these five parts of Italy potentially against each
other's throats. That is what is going on there.
President Clinton:
``Slick Willie'' or Trying to Do Good?
Q: You mentioned earlier that President Clinton's
plan for the Balkans is somewhat different than Lord
Owen's plan. This news service has been involved in many,
many different interviews with Croatian and Bosnian
patriots who have claimed and asserted that James Baker
III and Lord Owen are responsible for the conflict
currently taking place in the Balkans. How does Mr.
Clinton's current policy of airdrops conflict with Lord
Owen?
MR. LAROUCHE: Let me say something very plainly about
President Clinton. President Clinton has got to look at
himself in a mirror some day very soon, if he wants to
become successful as a President. He has to say, ``Willie,
you've been `Slick Willie' too long. You're now President.
You are not the Governor of Arkansas any more. You've got
to become President Clinton, not `Slick Willie' from
Arkansas.''
That is, often President Clinton, as Governor Clinton
and as President to date, seems to have more of a
political weathervane functioning up there on top of his
head, than a conscience. That is, he goes with the
political winds and considers the smart thing to do
politically, and says, well, if you are in power, and you
have the power, then you have the power to do some good.
But the problem is that the political weathervane
says, well, to get power and keep power you have to have
this thing mixed, and you just don't get around to doing
good or doing it for very long. Bill is going to have to
look at himself in that way and say, ``It is a tough way
to go, Bill, but if you want to do something good for this
country or the world, you are going to have to stop being
`Slick Willie.' And you are going to have to good, firm
positions--moral positions-- on the basis of conscience
and stick to them.''
Bill Clinton had a moral, shall we say, impulse
toward the Balkans situation. At least that is what he put
forward. Then, under pressure from Britain and New York
financial circles and others, he backed down and he
supported the Owen-Vance plan critically, not fully, but
critically. In order to retain some semblance of a
conscience-guided idea to assist the Bosnian victims of
this Serbian fascist aggression, he decided on this
airdrop business. He was going to give an armed escort and
he was told he couldn't do that, so he didn't do that. It
is an unarmed escort.
So there you see an impulse in the right direction--a
humanitarian impulse, which is commendable in itself--but
it is so diluted and so ineffective that it does not
really address the situation. Therefore, while it might do
some good for some desperately hungry Bosnian here or
there in East Bosnia, in the long run it will not solve,
or contribute to solving the fundamental problem which has
to be addressed.
Genocide In the Balkans:
``The Ultimate Continuation of U.S. Policy in Vietnam''
Q: We are seeing a new type of warfare, perhaps.
Maybe it is not new, maybe it is old: this ``ethnic
cleansing'' approach of the Serbians. You have received in
Rochester several journalists from Croatia, and they have
given you reports on this.
How do you characterize this form of warfare?
MR. LAROUCHE: This is an extension of what [former
Secretary of Defense Robert] McNamara and Kissinger and
similar people did in Vietnam. This is an extension of
what Oliver North, the Marine, and his sidekick, Donny
Moore, of ``Kidnappers, Inc.,'' did in Vietnam. In
Operation Phoenix, people went in and cleaned out
villages. I know some of the people who did it. I am not
talking about news reports. I knew Admiral Payton
Magruder, now deceased, who was working under Bill Colby
to get a thousand-a-day body count, under Phoenix. And
Magruder, who was a naval officer from a distinguished
family of service to the United States over many
generations, became a drunk and died as a result of
drunkenness and alcoholism brought on largely by this
experience, this disgust every day, with this body count.
I have known other people who were involved in this body
count business who were in the Special Forces and things
like that, officers who were stuck with this thing.
At a later stage, they had the kind of operation
which Donny Moore as a U.S. Special Marshal and Deputy
Sheriff planned to do to me in 1986, which is called a
spike team operation. Go into a village, pinpoint some
targets, people who are influential in that village, and
sneak up one night and kill them. Or drag them off and
torture them to death--for pleasure as well as for
political effect. That is the kind of mentality.
You have people like Karadjic, who is notorious
there, a bunch of psychiatrists, who were originally based
around Croatia, who are part of the old Yugoslav Federal
Army, guerrilla warfare/psychological warfare division and
counterintelligence section. These people were trained by
Tavistock [Institute], they were trained by the friends of
Hannah Arendt, people like Martin Heidegger, her lover,
and they simply came up with this kind of terror, which I
can explain a little bit more.
[commercial break]
Q: We were just discussing ethnic cleansing and you
brought up the similarities between the Serbian policy and
Operation Phoenix. Can you please develop that a little
bit more?
MR. LAROUCHE: Well, I said something, and I had
better clarify it, so that some listener does not think
that I might be exaggerating or off the wall or something.
In October 6-7, 1986, the U.S. government, under
pressure from Moscow to commit itself to my imprisonment,
launched a 400-plus man armed raid against my associates
in Leesburg, Virginia.
Under the cover of that raid, according to his own
bragging and corroborating information, Don Moore, who had
been a U.S. Special Marshal in operations against me, and
who was still, and who was also a Deputy Sheriff in
Loudoun County, was part of the team which was committed
to killing me, really assassinating me under that cover.
Recently, there were tapes from the summer of 1992,
in which Don Moore was bragging (unwittingly, however),
into FBI tape recordings. And Don Moore bragged about what
he was going to do to me [on Oct. 6-7, 1986]. He was
coming in with a small team, a spike team, as he described
it, to take out the guards around the place where I was
located, and to move in and to personally put a couple of
slugs into me--to kill me.
That was part of the operation which, from the
paperwork we have from recent discovery or the past couple
of years' discovery, the government had to talk the
sheriff's department and Mary Sue Terry, who was then
Attorney General of the Commonwealth of Virginia, out of
doing this operation. But Moore and company were
determined to go ahead with it anyway, under some pretext.
There were some people on the Federal side, who were also
obviously involved in that.
Moore was operating, all this time, as an enemy of
mine, as a friend of his buddy, Ollie North, and Ollie
North says he was part of the operations against me
because of our exposure of his dope-running, his
drug-running, into the United States through a special
operation which was centered in Room 2C840 in the Pentagon
and down in the Kennedy Center at Fort Bragg. So this
operation was continued, of that type. It's an example of
this kind of terrorist operation.
Now back to the Yugoslav situation.
The reason for this rape operation against the
Islamic population, the women and children--little boys,
too--of Bosnia by Karadjic, a psychiatrist, and his
killers, is that in that particular culture, if a woman is
raped, she is disowned by her family. This perverted
Freudian psychiatrist, Karadjic, trained by the friends of
Hannah Arendt and by people in the United States, this
swine, has used this operation to demoralize and discredit
the families of the population of Bosnia. Cutting off the
heads of children--babies--in front of their mothers, then
raping the mother. This is typical, which many
eyewitnesses, including official eyewitnesses, official
agencies, or NGOs on the scene have recorded.
This is a hideous operation. But this is the
{ultimate continuation} of what we did in Vietnam, and a
continuation of the kind of terrorism which was done with
NATO consent and then conveniently blamed on the Soviets
in every case back in the 1970s and early 1980s.
``The American People Have a Right to Know
What the Scottish Rite of Freemasons Is''
Q: Just one point of clarification: You mentioned
that there were tapes of this discussion by Don Moore.
Where were these tapes revealed? Also I would like to
bring in another point at this point, which is the recent
attack against you and your efforts to bring down the
statue of Albert Pike by the Supreme Commander of the
Scottish Rite Freemasons in Washington, D.C., [C. Fred]
Kleinknecht.
MR. LAROUCHE: The tapes in the Donny Moore case:
Moore was part of a group including the Cult Awareness
Network organization, according to his own and Galen
Kelly's and other testimony (or rather, statements on
tape), to kidnap and torture and brainwash a friend of
mine, Lewis du Pont Smith.
They tried to solicit two police officers into
cooperation--Donny Moore did this. On the basis of that,
the two police officers went to the FBI and said, these
guys are planning a kidnapping, which, as most people
should know, is against the law. A very serious crime.
One of the officers agreed to carry tape, to get
evidence on the kidnapping. As evidence was developed,
then the FBI got, through the Washington and Philadelphia
offices, telephone surveillance of the phone of Donny
Moore and of the father of Lewis du Pont Smith, E. Newbold
Smith.
There were 60 hours of consensual tape, which finally
landed in the possession of the Federal court proceedings
in Alexandria, Virginia. We secured the copies of the
original tapes and the transcripts, which we corrected by
listening to the tapes from that Federal Court after the
conclusion of the trial in Alexandria. That is where we
got this particular information.
This Kleinknecht operation is, in a sense, related.
As a part of my campaign, together with my
vice-presidential candidate, Rev. James Bevel, who was an
associate of Martin Luther King back in those days, we ran
a targeting of the founder of the Ku Klux Klan's statue,
which is based on Labor Department territory in
Washington, D.C. Pike is the only Confederate military
figure who is so honored. He was the founder of the Ku
Klux Klan, he committed acts of terrorism and war crimes
against citizens of the United States in Minnesota, Iowa,
and in Arkansas during the Civil War, was wanted by the
Confederacy for war crimes, was going to be tried for war
crimes, and fled to Canada to escape a Confederate trial
for war crimes. And this guy's statue is plunked
there--the founder of the Ku Klux Klan--in Washington,
D.C., on Federal government property, maintained at
government expense, and looking right into the face of
largest concentration of African-American citizens in the
United States. We thought that was a pretty disgusting
thing, and someone ought to remove it.
Well, we just moved to have it removed; and all kinds
of fuss hit, first of all, from the Freemasons, who had
put the thing up, the Southern Jurisdiction of the
Scottish Rite, which is the Confederacy, it was the
Confederacy. The Confederacy was not a group of Southern
states; the Confederacy was the Southern Jurisdiction of
the Scottish Rite of Freemasonry.
So, the Southern Jurisdiction, which is responsible
for putting that statue up there in 1901, used its brother
organization, another Confederate-founded organization,
which was part of the intelligence service for the
Confederacy, the B'nai B'rith, but used specifically the
Anti-Defamation League office of B'nai B'rith, and said
they will get involved in this, and they will fight
LaRouche on the statue issue, to help defend the statue.
But the ADL could not handle the job. The ADL is
trying to campaign around the country, that it is the big
fighter against the Ku Klux Klan, and here we have the ADL
out there {defending} the Ku Klux Klan. Well, the ADL was
getting into a lot of trouble with that kind of
assignment.
So most recently, the Supreme Commander of the
Scottish Rite, C. Fred Kleinknecht, wrote a letter with an
accompanying report addressed to all officials of the
Scottish Rite throughout the United States urging them to
use the enclosed material for a campaign against me, to
save the statue of General Pike. It is out in the open.
Pike is probably the most evil man in U.S. history. He was
a Satanist by his own writings, including those which are
in the library of the Scottish Rite in the Washington,
D.C., area.
He corresponded with Mazzini--a collection of letters
which is published now. He shows himself to have been an
agent of the British Crown, i.e., Lord Palmerston,
together with Mazzini, in trying to destroy half the
world. He shows himself to be a racist, a traitor, every
imaginable kind of scoundrel, and he is also treated by
Kleinknecht and so forth as the spiritual leader or
paragon to this day, of the Southern Jurisdiction.
In fact, in the 16th Street headquarters, the Temple
of the Scottish Rite, in Washington, there are two people
who are honored by what is the pagan equivalent of what
would be called a chapel in a Christian church. One of
them is Pike--this scoundrel! The other one is the man
recently known to the American public as ``Gay'' Edgar
Hoover, the former head of the FBI.
So I simply say: The American people have a right to
know what Pike was, and what it is that this fellow, C.
Fred Kleinknecht, thinks it is that he must defend, that
as spiritual values, he must defend one of the greatest
abominations and scoundrels, Satanist, ever to slither
across the landscape of the United States.
Q: Most of the American population think of the
Freemasons just as a simple club, that a bunch of people
get together and socialize. It seems that you are
describing them in much different terms. What are some of
the thing that they are involved in?
MR. LAROUCHE: The local Freemasonic association often
appears to be what it does most of the time. It is just a
``good ol' boy'' association, which engages in certain
charities and has some secret handshakes and other kinds
of conspiratorial paraphernalia. They are people who, by
being together, can be the big frogs in a small puddle in
their local community. It is good for business, it is good
for the profession. It gets your wife into the right
social settings, it might make her happy if you are a
Babbit and so forth. That sort of thing.
But at the top, it is quite different. At the top,
the local Freemason has no conception of what he is part
of, and even thirty-second degree Masons I know really
odn't know what is going on.
If you go back in history, however, it is rather
transparent. The Scottish Rite of Freemasonry was
established in England in the 1640s by a fellow called
Elias Ashmole. It was a homosexual cult, actually, of
so-called self-styled Rosicrucians. It centered around
Francis Bacon, his lover and secretary Thomas Hobbes, John
Locke, and people like that.
So this thing was called the Scottish Rite, because
the King of England, who was part of the same circle of
these funny people, was Scottish. He was a descendant, in
fact, of Robert Bruce, the Bruce dynasty: the Bruces, the
Elgins, and the Stuarts. So they called it the Scottish
Rite.
Then one must remember that Bruce came to power in
Scotland as a King with the backing of a group of
[Knights] Templars, who were fleeing from France, where
they were wanted for Satanist practices. Thus we have the
Templar Order within the Scottish Rite, with all this
mumbo-jumbo, what was a Rosicrucian cult which was founded
in the late sixteenth century and became influential for a
while until it disappeared down the maw of Freemasonry in
the seventeenth century.
This has been used over the years by the British
Crown, which owns it, as a channel of influence.
In the case of the United States, [George] Washington
and [Benjamin] Franklin, of course, were Freemasons. They
were not really part of this Scottish Rite operation,
though, of course, the Scottish Rite has claimed them
opportunistically. They were on the other side.
The Scottish Rite, both the Northern and Southern
Jurisdiction, were products of a group which were called
the ``stay-behind Tories'' during the American Revolution.
That is, they were sympathetic to Britain. They wore the
green uniform, the Tory uniform, were fighting with the
British against the American patriots during the
Revolutionary War.
Because of a feature, an agreement in the 1783 Treaty
of Paris which officially ended the Revolutionary War and
recognized our independence, we were stuck with these
characters. And they formed this form of Freemasonry and
they became the slave traders, the drug pushers of the
1790s and later, the friends of Palmerston, they became
the treasonous Hartford Convention of 1814. They were the
scoundrels like Aaron Burr, Andy Jackson, Presidents
Pierce and Buchanan and Van Buren, that sort of thing.
They became the scoundrels who subverted the United States
on the interests of Britain, and who were responsible for
creating, in the interests of Britain, particularly in the
direction of Lord Palmerston, an effort to divide the
United States among slaveholding, abolitionist, and other
states, to destroy the United States as a force and
essentially to place it under British control again.
While on the bottom level they are sort of nice, good
fellows, you would be happy to shake their hands as long
as you don't get the secret handshake; as neighbors, they
are generally pretty clean, they behave themselves, they
are respectable, and all that sort of thing; but at the
top, this is a device for controlling an influential
section of people all over the United States to the
advantage of the British Imperial Crown.
Pres. Clinton's Economic Package:
Unless He Takes on the Fed,
He Will Make the Problem Worse
Q: This is ``{Executive Intelligence Review'}s Talks
With Lyndon LaRouche.'' If listeners wish to write to Mr.
LaRouche and ask him questions, you can write to ``{EIR}
Talks with LaRouche,'' P.O. Box 17390, Washington, D.C.,
20041-0390.
Mr. LaRouche, what about President Clinton's economic
policy package? Budget cuts, a stimulus package. They are
now saying that budget cuts have to come first. Where is
this going to get Mr. Clinton?
MR. LAROUCHE: It is going to get him no place.
This is not going to work. He has compromised--
There was a certain viable element within the initial
Clinton package, which was the job-creating and
tax-incentive policy. It was not quite the right thing, it
was certainly not adequate, it was only a
toe-in-the-water, it was not jumping in to doing what we
have to do, but it was a step in that direction.
But now, he has pretty much sacrificed it most of the
way, under the pressure of a crew typified by the Ross
Perot/Tsongas group and that sort. And by the New York
bondholders and financial interests.
So at present, Clinton is simply setting himself up
for disaster, and he has no chance of being re-elected
President, unless he changes his course radically on
precisely this point. He has to do exactly what I
proposed, or something which is very close to that, in
effect. Otherwise he is not going to get re-elected; as a
matter of fact, at the present rate, by the middle of
1994, he will be one of the most unpopular sitting
presidents we have ever had--{unless} he makes the
necessary changes.
But this package cannot work. He has to take on the
Fed [the Federal Reserve], he has to take on the
debt-creating mechanism of the Fed.
You cannot attack the debt, you cannot attack the
deficits, unless you attack the {cause} of the debt and
the cause of the deficits. The cause of the debt, the
cause of the deficits, are the policies of the Federal
Reserve System--essentially. If you do not take that on,
if you are not going to change that, you are going to make
the problem worse and not cure it.
Q: Briefly, what is the main problem at this point
with Federal Reserve policy?
MR. LAROUCHE: Two things. The exemplification of how
the United States was ruined, is the Volcker policy, which
was launched in October 1979 under [President] Carter,
which Carter fully supported at that time, so Democrats
have to remember that, that Carter started this current
depression. It started before him, but he was the one who
set it in motion.
With the high-interest rate policy, of up to 18
percent and so forth, under Volcker, U.S. farms and
industries were ruined. The savings banks were ruined, the
S&Ls were ruined by Volcker, by the Federal Reserve
system.
Essentially it is a system of generating the monetary
suppply, the credit supply of the United States, by going
into hock to the Fed, which makes up the money out of thin
air, and then the Fed turns around and the banks loan us
some of that Fed money, debt-created money, and loan it to
the Federal government at a profit of four-and-a-half,
say, to eight percent or seven and a half percent.
[commercial break]
Q: Mr. LaRouche, we were just discussing the problems
with the Federal Reserve policy. How does this compare
with your policy?
MR. LAROUCHE: We need to get the United States out of
the present spiralling depression, which is going to
become much worse. There never was a recovery, by the way,
as most people know who are following the layoff reports
from major corporations and the bankruptcy of local
businesses. What we need is about between $600 billion to
$1 trillion a year of new credit injection into the U.S.
economy in order to build up employment and business to
the effect of increasing the tax-revenue base, without any
net increase in the tax rates, that is, per-dollar in
income.
That can be done by going to the Constitution,
shutting down the Federal Reserve's creation of money in
order to prevent inflation, and issuing new money by a
bill which is passed by the Congress, which authorizes the
Secretary of the Treasury to print money.
This money is not spent by the Federal government
directly; it is {loaned} by the Federal government through
a national bank, to other banks, and to large state
organizations or certain Federal authorities, like the
T[ennessee] V[alley] Authority back in the 1930s, which
are projects to build infrastructure like rail and other
kinds of projects, which then turn around and give out
bids to General Motors or Boeing and other companies,
which will supply some of the materials we require to
build railroads and so forth.
This money will be used to fund the credit to create
these specific wealth-creating jobs. Not for real estate
speculation and not to increase Wall Street speculation of
any kind, but simply for that purpose.
We will loan, properly at about 2 percent for
ten-year loans, that would be about the basic rate we
would charge. For small firms, we would loan through local
banks, which would help to revive the banking industry,
and permit local banks to get back on their feet and to
get back in the business of lending to business, which
they are supposed to be doing.
This works just fine; there is no inflationary danger
as long as you are loaning to the right kinds of things,
loaning to the things which increase productivity.
Obviously, you are not creating inflation when you
increase productivity.
But if you go the other way, what happens?
The Fed presently loans money on a discount basis at
about three percent to preferred borrowers. What it does,
is to issue a check to these borrowers--an electronic
check or other form of check--and the check is processed
in the usual manner for collection back to the Fed. The
Fed prints money and issues it to the banking system.
This money: where does it come from? It is made up
out of thin air. It is a complete fiction, for which they
charge up to three percent to preferred borrowers. These
preferred borrowers are afraid of investing in the economy
unless they get very high interest rates, as many credit
card borrowers know; or they prefer to invest in Federal
government bonds, which are secured, which are more highly
negotiable.
So they will buy bonds at four and a half to, say,
seven and a half percent, depending upon maturities, which
increases the Federal debt.
The problem today is, that you cannot get any money
into the economy, except by that kind of Federal Reserve
debt-creating mechanism--which means that, as long as you
do that, that what the Federal government can do is very
limited. You really cannot get the economy moving, because
every buck you put into the system, tends to cause
galloping inflation. It does not cause much benefit to the
economy,.
So that is Mr. Clinton's Sword of Damocles or
whatever hanging over him. He has to go my way on credit
creation, which is the American way, the way the
Constitution prescribes; or, if he continues with the
Federal Reserve system, which is what he is doing so far,
his entire package will be the biggest failure in history.
Q: Thank you very much, Mr. LaRouche, we will return
next week with ``{EIR} Talks With Lyndon LaRouche.''
