- Chapter 8 -
- LaRouche's Program for 6 Million New Jobs -
By now, it is almost accepted wisdom that the United
States economy has been in a sharp decline since 1973.
Wages and living standards have gone down, debt in both
the public and private sectors has skyrocketed, and the
productive sector of the economy has shrunk to a
pitiful shadow of our country's former greatness.
Lyndon LaRouche is the only presidential candidate who
forecast that this would happen, if the policy of usury
and post-industrialism adopted in the 1960s were not
changed.
LaRouche's approach has been consistent. While
others have demanded austerity and budget cuts, he has
insisted that the economy will be put back on track
only if 1) the fiat money policies of the Federal
Reserve are replaced by those of sound national banking
with gold-reserve backing at low interest rates; and 2)
credit is applied to creating millions of jobs in the
productive sector of the economy, including industry,
agriculture, transportation, and other infrastructure.
The fundamental problem with the economy is that
it has subordinated people's welfare, to the demands of
the bankers. As a result, real production has been
replaced by the post-industrial service economy. The
source of the problem, LaRouche has insisted over and
over again, is that the portion of the work force
employed in productive jobs has declined from 50% in
1940 to less than 20% today.
- A Third National Bank -
In 1976, when he first ran for President, LaRouche
proposed the Emergency Employment Act, which called for
the Congress to declare an economic emergency, put the
government through bankruptcy reorganization, and put
the country back to work rebuilding itself and the
world. He combined this program with the demand to
replace the Federal Reserve with a Third National Bank
of the United States, which would invest preferentially
in infrastructure and high-technology development.
Many Americans are programmed to respond
negatively to the idea of a national bank. But
Alexander Hamilton, our first Treasury Secretary and
founder of the American System of economics, conceived
of it as a way to ensure that we became an independent
nation, with credit available for necessary
manufacturing and infrastructure. Together with a
policy of selective tariffs and taxation which promotes
investment and penalizes speculation, such a national
bank is an essential protection for private industry
and agriculture.
By contrast, Gerry Ford called for continuing the
austerity program of the Nixon administration. The
Democrats, led by Jimmy Carter, were even more
aggressive in demanding ``conservation'' and energy
cutbacks, which led to both a domestic and
international economic disaster. This led to the
Federal Reserve Bank taking drastic measures in the
fall of 1979, by hiking interest rates up over 20%.
On October 16, 1979 Democratic presidential
candidate LaRouche said: ``I herewith submit a demand
for the prompt impeachment of recently appointed
Federal Reserve Chairman Paul A. Volcker.... As one of
the world's leading economists, I have caused my staff
to conduct a computer-based analysis of the near-term
consequences of Volcker's measures. Those results,
coinciding with the estimates of other analysts
reporting independently, indicate that the measures
already enacted by Volcker will cause a 15% recession
in the U.S. economy, probably putting the United States
into a recession twice as severe as that of 1974.
``There are two immediate measures which would
ameliorate the present crisis. First, U.S. gold
reserves must be valued at an adjusted current world
market value, a value to be negotiated with both the
European Monetary System member-nations and the OPEC
`petrodollars' holders. This would stabilize the value
of the dollar and take the worst pressures off dollar
liquidity. Second, the Federal Reserve must immediately
implement the kind of selective credit-flow controls
which Senator Sarbanes proposed.''
The Volcker measures went ahead and the projected
plunge in production did occur. The collapse in
production which LaRouche projected occurred. To
compensate, the Reagan-Bush administration launched the
most massive binge of speculation and ``creative''
financing ever seen, through a process of deregulation,
leveraged buyouts, debt rollovers, and real estate
``development.'' And all of this with money borrowed at
Volcker's usurious interest rates.
- The Debt Bubble -
That is one reason why the federal expenditures
for interest on the debt have gone sky high
({Figure 1}), and we have no economic growth to
show for it. That's one of the basic reasons for the
explosion in debt in all areas of the U.S. economy--to
over $21 trillion today ({Figure 2 }and{
Figure 3}).
LaRouche addressed the problem again in his 1984
presidential campaign. On February 4, 1984, in an
ABC-TV broadcast, LaRouche said: ``I propose
specifically this. That we `federalize' our Federal
Reserve System according to Article 1, Sections 8 and 9
of our federal Constitution. We shall take away from
the Fed its power to print money as it chooses ... we
shall prevent the Fed from continuing to operate its
favorite game, that inflationary `Keynesian
multiplier.' [Then,] to supply an adequate amount of
credit to our private banks, to get the economy going
again, the Congress must authorize an initial issue of
about $500 billions of gold-reserve currency notes....
These notes must be loaned at discount rates between 2%
and 4%, for the kinds of loans that I shall indicate to
you--manufacturing, and capital improvements in basic
economic infrastructure. The purpose is to put 5
million or more of our unemployed back to work fairly
quickly, and to get our farms and factories moving
again.''
{What did the White House and the Democratic
Party leadership say?} They {agreed} on the
``Gramm-Rudman'' strategy, that cutting the budget
deficit took priority over stimulating the economy or
anything else. {What do they say now?} After
three years of deep cuts and soaring budget deficits
({Figure 4)}, they admit that their strategy
was a failure, and a straitjacket against dealing with
the depression, as LaRouche said it would be in 1987.
As a result of the Federal Reserve's policy of
fostering banking deregulation and speculation, we saw
the collapse of the savings and loan industry, some of
the largest commercial bank failures in modern history,
and a scandalous series of leveraged buyouts followed
by forced bankruptcies, after the companies could not
pay for the debt they incurred.
In his 1988 campaign, LaRouche addressed the
question of the Federal Reserve again. As he wrote in
{A Program for America} when he launched his
campaign:
``There are two fundamental shifts which must be
made in order to bring the United States into an actual
economic recovery, in contrast to the deepening
depression which administration public-relations men
call `the recovery' today. First and foremost, the U.S.
government must take back its sovereign authority over
the creation of credit. This means either the
elimination of the Federal Reserve Bank, or a drastic
reform of that institution, which puts the authority
for control of credit and the currency back in the
hands of Congress, where it constitutionally belongs.''
Every other national candidate has avoided this
issue, arguing that the federal budget must be cut, or
that lending should be extended through the current
banking system, especially at consumer credit rates of
16 to 22%. This will simply make the crisis worse,
because credit will not be directed into the vital
wealth-producing areas of the economy.
After the debt crisis had strangled corporations
and governmental bodies to near-death, President Bush
began to demand that the Federal Reserve lower interest
rates. But, by then it was too late for such
lowerings--which have brought rates down to dramatic
lows--to have any appreciable effect in bringing the
economy out of depression.
- Six Million Back to Work -
In December 1991, candidate LaRouche reiterated
what has to be done to reverse the depression:
``My recovery program depends on the initial
action of federalizing, nationalizing, the Federal
Reserve System. That is, to take away its status as a
quasi-independent corporation controlled by bankers,
and to make it an institution of the U.S. government,
the kind of bank that the United States Bank
represented under President George Washington.
``This bank would be a means, not for emitting
currency, but for putting federal currency, legal
tender, out as loans at very low interest rates to get
the economy moving.
``We are talking about loans on the order of
magnitude of over $300 billion a year for public works,
and a comparable amount of lending into the private
sector for investment primarily in employment in
high-tech and engineering types of activity.
``We are talking about 3 million people in the
public sector, working for federal, state, and local
infrastructure projects, such as railway projects,
water system projects, power system projects....
``We are talking about, on the other side, another
3 million people at least, employed as a result of
vendor agreements, which are made with spinoffs of
these public projects.
``So we are talking about an increase in
employment of about 6 million people within a year.''
The interest rates on such loans would be between
2% and 4%. How would the money be paid back? Through
increased tax revenues as a result of the productive
economic activity that would be generated! The creation
of skilled jobs and the construction of infrastructure
to support the retooling and reindustrialization of our
economy, is the only way of increasing a tax base
ravaged by debt creation and declines in employment.
If we're going to get out of this depression,
we're going to need a flow of credit from a national
bank. LaRouche has proposed it since 1976--and people
are paying for not having listened. In the 1992
election, American citizens have one more chance.
----
John Covici
[email protected]
