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Home >> Opinion
UPDATED: 14:53, November 22, 2005
"Global financial crisis is coming": Interview (I)
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Photo:File photo shows Lyndon H. LaRouche, Jr. is making a speech in October, 2005, in Washington, US.
File photo shows Lyndon H. LaRouche, Jr. is making a speech in October, 2005, in Washington, US.
Lyndon H. LaRouche, Jr. is an American political activist and founder of various political organizations in the United States and elsewhere. He is perhaps best known for being a "perennial candidate" for U.S. Presidency, having set a minor record for most consecutive attempts at the office by running eight times; Harold Stassen ran for President nine times, but not consecutively. LaRouche has run for the Democratic nomination for President in every election year since 1980, including in 1992 while he was in prison. Yet he and his "LaRouche movement" have gained only limited electoral support, although he has received some support in Democratic presidential primaries.

Although he has no formal qualifications, LaRouche has written extensively on economic, scientific, political, and cultural topics. Critics consider him to be a conspiracy theorist and political attention-seeker. He is frequently described as an extremist, cult leader, a communist, a fascist, and an anti-Semite, all of which he denies. LaRouche is regarded by his followers as a brilliant individual who for political reasons has been unfairly persecuted.

In 1988 LaRouche was sentenced to fifteen years imprisonment for conspiracy, mail fraud, and tax code violations. He continued his political activities from behind bars. He was released in 1994 on parole after having served five years.

LaRouche lists his formal position as a director and contributing editor of the Executive Intelligence Review News Service, a core part of the LaRouche movement.

Recently Yong Tang, People's Daily Online Washington-based staff writer, has conducted an exclusive interview with LaRouche at his home in Virginia.

Yong Tang: Someone said that you are a good fortune-teller?

LaRouche: I'm a good forecaster.

Yong Tang: Yes, a good forecaster for the world economy, and you have made nine forecasts of major trends in the U.S. economy, of which eight forecasts have been fulfilled, and the ninth is in the process of being confirmed. How can you make correct forecasts?

LaRouche: It's a matter of science. What we teach as economics, what people tend to believe in universities around the world is nonsense. And the other factor is, when people forecast, they forecast what they wish, not what could be. That's the problem. First of all, they're incompetent. Their incompetence is increased by the fact that they are wishful. Also, they are small-minded. The typical American today is very small-minded. He thinks only of what he can experience in the next immediate future. He thinks about being rich. He thinks about this or that. He doesn't think about his grandchildren or the world he is creating after him. We used to think about our grandchildren. We used to think two or three generations ahead. We don't do that anymore. So they don't think about building the future. So therefore they're waving what they want to forecast, they're like gamblers. They want to forecast victory at the gambling tables. That's their mentality.

Corporate business is a gambling table. It is not an enterprise. It is not a business with a purpose. In the old days, somebody would have a business. The business would have a speciality. Their purpose was to be successful at that business and to have the business survive for the coming generations. But with the corporation, you have people who invest in a stock for one or two days. There is no real long-term commitment to doing something. There is a short-term commitment to becoming rich, but not a short-term commitment to building the future. They're always looking for a short-term get-rich, they're always looking for ME, not for what they do for the country. Therefore, forecasting is based on these kinds of ideas. But the world doesn't work that way.

Yong Tang: So far have you made any wrong predictions?

LaRouche: No, because I understand world economy. And I understand what mistakes are. My forecasts have involved the mistakes that are made by the incumbent authorities. I've simply not forecast much. Really I've forecast what the results of their mistakes will be, and their mistakes were obvious to me and the consequences of their mistakes are obvious to me.

Yong Tang: Someone said you successfully forecasted the collapse of the Soviet Union in 1988.

LaRouche: Actually I forecasted that in 1983.

Yong Tang: In 1983? How did you forecast that?

LaRouche: I was involved within a back-channel function with President Reagan. I had had this idea about how to get out of this ballistic missile problem, to work our way out by a new policy of defense. And I thought that with the Brezhnev period, it was possible that if the United States made a certain offer, the Soviet Union might accept it. And that is, instead of having nuclear missiles barrage we could have a system under which we would cooperate to develop systems that would be able to prevent nuclear barrage attacks. If we cooperate, we will share the technology and use the technology for other purposes rather than military as well. I thought the Soviet Union had an economic crisis internally, an economic crisis that was building.

Yong Tang: How did you know that?

LaRouche: Because the Soviet economy in the military was very successful, because they used science. But the Soviet economy in the civilian sector was terrible because they didn't use science. The typical case in the Soviet Union was the fact that you bring in a new machine tool but they wouldn't use it. They want the old machine tool. So there was this opposition to technological progress. And the Soviet bureaucracy in industry was very stupid. They were very bureaucratic.

If the Soviet Union could stimulate the economic development to break the failure of the private sector, it could have developed quite successfully based on using science for the economy in the way they were using it for the military. And if USSR and USA cooperated, we could do that. We could bring nations together by cooperation about this idea, a technology-driver to improve the economy of all nations by technology, making technology available. Then we could bring about peace on the basis of the interest in common technology. So I was engaged in this. President Reagan was interested in my idea. So I became then a back-channel with the Soviet Government under President Reagan. I was just a private individual, but I was working both ways. I would meet with the Soviet representatives, I would meet with the U.S. representatives, and we would talk. It was exploratory, just to see whether agreement was possible.

So in 1982 and 1983, I had this discussion with the Soviet Government officials. And one day they came in and said, ��Andropov says no.�� This was in February of 1983. I said, ``You've got to change that. If they continue with the present military policy, the Soviet system will collapse for economic reasons within five years. Then the next month Reagan made the speech that made the offer. I told the Soviet Government officials if Reagan makes the speech and makes the offer and you reject, Soviet collapse is what will happen. Reagan made the offer publicly and the Soviet rejected it. Andropov didn't even negotiate. Soviet officials tried to talk to him. They said, ��talk with Reagan. He made an offer. Talk with him.'' ``Nyet!'' And they knew better. OK, I won't make any more suggestions. And that was it. And so that's how it happened. The facts were clear to anyone who looked at the situation. And Soviet collapse did happen then.

Yong Tang: Your most recent forecast is that the global financial situation is on the verge of collapse?

LaRouche: It's already happening. Because the whole system has been insane since 1971-72. We had the Bretton Woods system which was built by American President Roosevelt. It was a fixed-exchange rate system with a gold denomination, a reserve system. Despite the attempt to sabotage the system, it worked. It was the basis for the recovery of the United States and Europe in the post-war period. And they destroyed it.

Yong Tang: In the 1970s?

LaRouche: First, in 1964 America started the war in Indo-China. That was the first mistake. The United States began to move in the wrong direction economically in 1964-65. By 1967 it was obvious we had made a turning point in technology. In 1971-72 with the Nixon decision on the monetary system, we entered a new monetary system which was a failure from the beginning. Now what happened is that because of our long-term capital investment in infrastructure and other things, we had a lot of technology, a lot of economic power built into the U.S. economy.

But today We Americans have been exhausted. Our infrastructure has not been replaced. We have not replaced our power stations. Our railroad system is dead. Our economy is dead, in whole parts. Our people don't have the skills they had 20 or 30 years ago. They've lost it. So we are disintegrating. Europe is disintegrating. We are a lost nation. We are a failure. Europe is a failure, in general. So the world economy has failed. We have a tremendous amount of financial debt that we can never pay.

Yong Tang: You mean��

LaRouche: Outstanding financial credits.

Yong Tang: You mean current account deficit?

LaRouche: More than that. The world economy is about 50 trillion dollars a year in debt. We have hundreds of trillions of dollars of debt. We can never pay this debt. Because of the inflation of the debt, especially since 1987 the build-up of the financial derivatives speculation is so great. First of all, physically we are breaking down. We are at a point where to maintain our economy physically.

We would have to make large-scale investments. We have to replace the infrastructure. We are losing our water systems. We're losing our power systems. We're losing our transportation systems. We're losing our health-care systems. All these physical things on which the prosperity of the economy had depended are now worn out. They're gone. And we have tremendous debts. Our rate of production is collapsing. And therefore we are at a point where the system is going through a systemic collapse. This is the biggest collapse in modern history, it is now occurring. And the idiots just deny it. They just deny it. If you admit you would have a problem then��

Yong Tang: It sounds too horrible.

LaRouche: It's collective insanity, mass insanity. It's cultural insanity. It's how whole empires disappear. You say, this is a powerful empire and suddenly it collapses. How could this powerful empire collapse? It didn't collapse because of external reasons, it collapsed because of internal reasons. And that's what's happening now with the United States and Europe. It's the internal characteristics of the problem which are the cause of the collapse, not something external. Human beings naturally tend to be creative. If you have a good system, they will work, they will make improvements, they will survive. BUT if they adopt an idea which is a bad idea,they can destroy themselves, as ancient Greece did, as Rome destroyed itself. So you have a self-destructive policy. We have an insane policy. We are destroying ourselves. Europe is destroying itself.

And the problem is that the countries of Asia which are in a sense beginning to move up in a certain way, are caught in a world which is destroying itself. China, as I say, doesn't really have the independent economic development it requires. It has development which it has brought into China. Which is useful. But it is not entirely China development. It's foreign development coming into China. Foreign technology coming into China. But what about the generation of technology within China by China? The country must have its own independent development.

Yes, bringing in outside development is good. Yes, you do that. You'd be foolish not to. But you must develop your own internal development-at least for the long term. And the problem is that the situation with India and China and the countries of Southeast Asia, they could not develop on their own if Europe and the United States collapse.

Yong Tang: So that means the whole world economic system would collapse?

LaRouche: The whole world would go into collapse. For example, to what degree does China's existence economically depend upon export now? What happens if the U.S. market collapses?

Yong Tang: It's just unimaginable!

LaRouche: China is holding a vast amount of dollars. These dollars could collapse by 50% very quickly. Japan also has a vast amount of dollars. These dollars could be worthless, in the sense that you can't do anything with them. South Korea would encounter a similar problem. All of Southeast Asia has similar problems. Not in the same magnitude, but the same thing. The Philippines problem, Southeast Asia problems. Indonesia, a terrible crisis. India could also be affected.

Yong Tang: Does that mean almost all countries will be involved in this global financial crisis?

LaRouche: Yes. It's bigger than the crisis of the 1930s.

Yong Tang: That would be the biggest crisis in history?

LaRouche: Yea. Exactly.

Yong Tang: So what would happen then?

LaRouche: I will try to prevent it. Little me is trying to prevent it. This little poor man is sitting out here trying to prevent it.

Yong Tang: If that crisis does happen, what would happen? A Third World War?

LaRouche: War. Chaos. All things become possible, when chaos occurs. Look at the fall of empires. The only model is to look at what happens when an empire falls. You have it in Chinese history. China went through various periods of crisis and collapse. But this is worse. What you hope for is that the sense of the crisis will cause people to think and change what they're doing in time. If we change our ways, we can survive.

Yong Tang: So you're making a proposal to set up a New Bretton Woods System in order to prevent that crisis from happening?

LaRouche: If governments take responsibility, if governments have the will to take responsibility and subordinate money to government will, we will survive. As you know in China, we can survive.

Yong Tang: Can you explain in detail about the New Bretton Woods?

LaRouche: Well, what Roosevelt did is this. Roosevelt was an American. And when people think about U.S. economy, they think really about the British economy, not the U.S. economy. Now what we are operating in the United States is largely the British model. The economics that is taught in our universities is the British model. It's not the American model. So that's where the problem lies.

Now, in the American model, our policy is that money has no intrinsic value. Money is given value properly by government, and the government protects that currency by managing, managing prices and so forth, to prevent the currency from becoming crazy. Now, the basis for development is capital. You need long-term investment, you build a power plant, like the Three Gorges Dam, it's a long-term investment. It's going to take many years to get the value out of the Three Gorges Dam, but it's essential. So a tremendous amount of investment goes into Three Gorges. Now you have to write on thirty year, fifty year investment before you have to start replenishing it, rebuilding it. So therefore you have to have investment.

But what happens if your prices go wild, go up and down? Then you can't make long-term investments. Just the rate of borrowing costs, if borrowing costs fluctuate wildly, you can't make long-term investment. Because long-term investment is generally 2 percent interest per year, maybe 3 percent. But if the prices fluctuate, then the interest rates go up, borrowing costs go up. If the borrowing costs go up, if the currency fluctuates in value, then international cooperation and development end.

So therefore you must have a financial system which has a fixed exchange rate over the long term. The borrowing costs among countries must be cheap. There must be guarantees to prevent the system from going wild. Then you could do it. We could get out of any mess by sufficient long-term investment in things that countries need. Long-term projects. Which means that we employ enough people so that we are producing more than we are consuming. We should make long-term investments in infrastructure. And we would survive just fine. Whenever we did that in the United States, we did well. Roosevelt rebuilt the U.S. economy. Hitler would have ruled the world if Roosevelt had not been American President. Roosevelt saved the U.S. economy. And without Roosevelt, Hitler would have been dictator of the world. So it was the right thing to do, because we could do so much that we had the power which enabled the victory over the Nazis during World War II.

As a matter of fact, we should go back to the American system, away from the British system. So my proposal is essentially what Franklin Roosevelt did at the end of the Second World War. At that time the United States was the only country that had a stable currency. We use the U.S. dollar in the Bretton Woods system to set up a fixed exchange system for the world. And under this fixed exchange rate system in the first twenty years after the Second World War, there was a great rebuilding of Europe and other parts of the world with economic growth during that period.

Then, starting from London, the British faction and their friends in the United States began to destroy the American system with the first Harold Wilson government in 1964-65. So we destroyed the Bretton Woods System, which Nixon did in 1971-72. And when that happened, we went crazy. And all of our economic problems came out of this change from 1964-65, the change of the monetary system from the Bretton Woods system of Roosevelt to this floating exchange rate system. It wasn't done all at once. It was done officially in 1971-72 but actually the motion for the change came in 1964-65 with the Harold Wilson government.

By Yong Tang, People's Daily Online Washington-based Staff Writer

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