Tuesday, August 5, 2008

The Fraud of 'Free Trade'

This article by LaRouche appears in the August 8, 2008 issue of Executive Intelligence Review. What follows is the introduction -- the entire article is available at the link below, as a pdf document.

Mike Billington

The Fraud of 'Free Trade'

by Lyndon H. LaRouche, Jr.

July 10, 2008

[PDF version of this article]

The following report is prompted by the immediacy of the extremely acute phase of international financial crises now looming for the interval of the U.S.A. national parties' Presidential nominating conventions. It also has the more durable relevance of being an urgently needed introduction to the little known rudiments of a competent economic science. It serves, thus, as a much needed re-education of those putatively leading economists, internationally, whose influence on policy-shaping of both governments and international private and public institutions had failed so miserably over the 1971-2008 interval, up to this present moment.

Therefore, out of regard for the two-fold, respectively immediate and long-term missions outlined by the these prefatory remarks, the report now begins as follows.

Fannie May Not!

The steep collapse, since about November 2007 of the Fannie Mae and Freddie Mac, which had been institutions ever massively looted under former Federal Reserve Chairman Alan Greenspan, must be viewed in its present relationship to the currently disastrous outcome of the former British Prime Minister Margaret Thatcher's dictating of the famous Maastricht Treaty. That was the treaty dictated by her and her side-kick, France's President Mitterrand. It was dictated to post-Soviet Europe of both her wittingly culpable and simply deceived victims in both the British Isles and continental Europe as a whole, still today.

When the impact of the combination of those developments, since the early 1990s, is taken into account, it is of globally crucial significance for the world as a whole, that most among the relevant leading figures of the U.S. Congress have, so far, stubbornly, and stupidly refused to enact my Homeowners and Bank Protection Act (HBPA) of 2007, when the worst of the recent, relevant general financial developments, and the present suffering among our citizens would have been prevented by the measures which I had proposed then.

So, since the policies which former Federal Reserve Chairman Alan Greenspan dragged in, in the fashion of the proverbial cat, measures which he introduced to dominate the post-October 1987 monetary systems on both sides of the Atlantic Ocean, and beyond, the world monetary-financial system's present crisis must now be considered in the light of the combined effects of, on the one side of the Atlantic, Greenspan's virtual child-abuse of U.S. Fannie Mae and Freddie Mac in the U.S.A., and, on the other side, of the related effects of the Maastricht Treaty in undermining the economies of Europe. The effect of the trans-Atlantic interaction between the two aspects of the ongoing crisis which this combination produced, became the presently new, vastly worst phase of this same crash erupting this July. This crash has now reached a point of crisis which threatens us with a disastrous world financial situation, both politically and otherwise, perhaps during a time between now and about the time of the completion of both the U.S. Democratic and Republican parties' Presidential nominating conventions.

Greenspan's virtually sexual misuse of Fannie Mae and Freddie Mac, when combined with the systemic monetary implications of the Maastricht Treaty, as the latter's practice has presently evolved since its inception, functions today as a major component of the monetary-financial basis on top of which much of the monetary-financial structure of both sides of the Atlantic depends.

The two systems, that of the Federal Reserve System under Greenspan and Bernanke, on the one hand, and that of the European Maastricht-ordered structures, on the other, are not parallel, but interdependent processes. They, combined, represent, thus, to a very large degree, the common underbelly of the trans-Atlantic core of the presently crumbling world monetary-financial system as a whole. A collapse of either of those two would be more or less sufficient, potentially, under presently gravely stressed, hyper-inflationary trends, to blow the entire world monetary-financial system apart, chain-reaction style, and that even during the early future.

The task of all sane and responsible institutions, is to protect the future of the world's nations and their people, by subjecting the present world monetary-financial system to suitable forms of radical reform; but, these must be, reforms consistent in principle with the characteristics of that pre-1968 world monetary-financial system crafted by the intention of U.S. President Franklin D. Roosevelt. Measures, including some which might appear to some as highly original, are available, and could do that job.
The Challenge, in Brief

It must be recalled, that, under the chaotic international state of monetary-financial and physical-economic conditions produced by the U.S. Nixon Administration's wrecking of the Bretton Woods system, what became both Greenspan's Fannie Mae and Freddy Mac, on the one hand, and Europe's Maastricht system, on the other, were intended to bring about what defenders of David Rockefeller's Trilateral Commission termed "controlled disintegration of the economy," back during the 1970s.

Thus, President Nixon's wrecking of the Bretton Woods fixed-exchange-rate system, when combined with the British-Saudi orchestration of the 1970s petroleum hoax,[1] had wrecked the pre-existing U.S. monetary-financial system as a system.

Thus, the rising role of the British-Saudi operations, now centered in BAE, in that 1973 oil-price hoax, is a role which began to unfold under the changed direction in unfolding of world conditions launched by the radical measures of the U.S. Nixon, Ford, and Carter administrations, a role which has transformed the world to the effect of changing the post-World War II world system, from one dominated by the U.S.A.'s role under Bretton Woods, to the present state of affairs, in which even most of the internal financial affairs, and even the financing of the attempted nomination of U.S. Presidential candidates for the November 2008 elections, are controlled, more and more tyrannically, by operations directed from the imperial London of such wretches as the former Prime Minister Tony Blair whose lies gave us the present crisis spreading throughout Southwest Asia.

Thus, during the course of the successive U.S. Nixon, Ford, and Carter administrations, both the U.S. physical economy and those of Europe were deliberately wrecked, to the combined effect, internationally, such that, the trans-Atlantic economy is, therefore, to be considered now in terms of the hard realities of physical economy, rather than the present, customary sort of monetary-financial mumbo-jumbo. So, our U.S.A. has taken on, more and more, the characteristics of a semi-colony of the current form of the British (or, should we not say, "Brutish") empire. When long-term physical-capital factors are taken into account, we must recognize that the physical economies of that trans-Atlantic community have been in a general, net physical decline (on long-term account) over the entire interval, since approximately 1967-68, to present date.[2]

At a more recent time, 1989-1991, immediately following the successive collapse of the Comecon and Soviet economies (which I had repeatedly forecast, since 1983, to occur at about that time), the already ongoing destruction of physical economy of the U.S.A., per capita and per square kilometer, was also imposed upon all continental Europe.[3]

So, the time came, when most of the remnants of a sound form of physically productive economy were being systematically ruined, increasingly, not only within the U.S.A., but the trans-Atlantic community as a whole. During the interval of the post-Soviet 1990s, competent national-banking polices of the trans-Atlantic community were wrecked, and replaced by lunatic arrangements. Since the expansion of monetary-financial aggregates was no longer premised on physical net growth of the economy, per capita and per square kilometer, the expansion of the supply of money-capital for the economy was steered, chiefly, by increasingly fraudulent, speculative means, and by the 1990s looting of the territory of the former Soviet Union and Comecon.

The pillars on which this fraudulent uttering of monetary-financial debt-assets, depended, were, for the U.S.A., Alan Greenspan's looting of the credit attributable to Fannie Mae and Freddie Mac, and, for Europe, the political role of the inherently, and intentionally ruinous Maastricht agreements used for the looting and wrecking the real nation-state economies of Europe. The effects of this have been global, as this result is shown clearly today.

What has now happened, as a result of those policies, especially since October 1987 in the U.S.A., and for Europe as a whole, from about 1991, on, is that particular mass of what is now intrinsically hyper-inflationary, fictitious credit, hanging upon the pivot of Fannie Mae /Freddie Mac in the U.S.A., as this feature of the U.S. economy is paralleled by European developments around the credit-system shaped by the Maastricht agreements. Both are now in the process of crashing. The two processes are tightly interactive. Such were the Pillars of the House which were crafted initially by such hands as those of Alan Greenspan and Margaret Thatcher, the house now crumbling.

With the presently accelerating collapse of the Greenspan bubble of fictitious credit, and of the related elements of the Maastricht system, the foundations of the present world monetary-financial system are now crumbling before the stunned gaze, like that of rabbits frozen with fear, of the credulous.
What Happened To Cause This?

Thus, the characteristic insanity of the period of history since the January 1989 accession of U.S. President George H.W. Bush (1989-1993), has marked more obvious, subsequent phases of downshift in not only that portion of the world's economy represented by the trans-Atlantic community; but, it has also reflected a decline in the net per-capita physical output of the world as a whole.

As in the cases of production of virgin iron and steel, globalization has shifted the average net physical output of the world as a whole downward, in per-capita and per-square-kilometer terms, through aid of such prominent means as so-called "out-sourcing." Once the mask of galloping inflation is ripped away, and physical values considered instead, this recent trend in the world's physical economy, outsourcing, has had the effect, thus far, of a systematically lowering of the physical productivity, per capita and per square kilometer, of the world as a whole. It has done this, by destroying more physical productive and related capital in North America and Europe, than has been built up, in net effect, in the prevalent, largely labor-intensive exploitation of the targeted areas of relatively lower standard of living among the vast majority of the world, per capita, of those nations whose cheap labor has been targeted for investment by the "run-away" investor interest, an interest which is dominated increasingly by what Germany's victims have recently labeled the "locust" financier interests.

As I shall emphasize within the following chapters of this report, the crucial incompetence of all monetarist doctrine, as contrasted with the successful practice of the Hamiltonian American System of political-economy, is shown in contrast with what is typified by Franklin Roosevelt's revival of a U.S. economy which had been wrecked by both of his immediate predecessors, Coolidge and Hoover. The contrast is expressed as that between the American System, which measures economic performance in physical, technology-driven, increasingly capital-intensive modes of rising productivity of labor and capital, against the monetarist's view of economy as a matter of the prices of products and services, even where nominal, monetary profit is increased through policies which actually lower the physical quality of productivity, per capita and per square kilometer, throughout the system.

Why should the ruling financier interests of nations such as the U.S.A. and those of Europe, do such stupid things as that to themselves? The answer to that question should suggest to us the case of some deeply neurotic and superstitious boob, placing his footsteps along the concrete slabs of the sidewalk according to the compelling old wives' superstition of "step on the crack, break your mother's back!" It is not that "boob" who makes the decision, but, rather, his master, the legendary "Booboisie" who trained him to behave that way.

Why, therefore, did we not send relevant officials, such as Alan Greenspan, or his most misfortunate successor, to suitable psychiatric care, rather than ruin our economies by employing them? Ah! But there is a reason for this:

The relevant, financially powerful, and usually predatory employers of that sort of economist, like the World Wildlife Fund's Prince Philip and his virtual lackey, former U.S. Vice-President Al Gore, would prefer to lower the standard of life-expectancy among the population of the planet, as Prince Philip has said, from the presently estimated range of six-and-a-half billions souls, to no more than a total of two.

No wonder, then, that the British empire, with its George Soros who once served under the Nazi system of Adolf Eichmann, is currently on a campaign of genocide against so much of Africa!
The Historical Implications

If we discount the special case of the period, A.D. 1492-1648, within which a modern Europe was dominated by recurring religious warfare, the presently onrushing, global hyper-inflationary spiral, is readily seen as the first actual breakdown-crisis in modern world history. (There have been what are fairly classed as "dark ages" during both ancient and medieval, extended, earlier forms of civilizations.) Do not make the potentially fatal mistake of denying the fact, that this presently accelerating financial crisis is a general, planetary breakdown-crisis of the present world "free trade" mode of monetary-financial systems.

There is, in fact, no way in which the present, 1971-2008, world monetary system will not soon just simply cease to exist; unless we will replace it with a system which reflects the methods of President Franklin Roosevelt, that while it remains possible to do so. A precious year has already been wasted by the foolishness of our political authorities, when I had already warned them, a year ago, of the consequences which they are now suffering. Otherwise, the planet as a whole will be plunged into a new dark age. The continuity of civilization now requires that the present, floating-exchange-rate monetary-financial system of that interval, must be replaced, by employing measures which begin with the three categorical, remedial steps which I have already specified in locations published earlier.[4]

These are measures of reorganization in bankruptcy, which are intended, by design, to preserve the continuing regular functioning of a certain core of the present monetary aggregate, as negotiable expressions of physical values essential to the continuation of an orderly life among the general population in its local and regional communities. We must place the emphasis on this point, rescuing that portion of the economy from the otherwise inevitable breakdown-collapse of the present world monetary-financial system as a whole.

It is essentially the physical economy, not nominal, monetary values, which we could, and must save. (I explain the technological implications of that distinction within the course of the following report.) The present world, floating-exchange-rate, free-trade system, not only could not be saved as a system; to attempt to do so now, would be implicitly fatal to civilization. We must cease denying that what we are experiencing is not a mere "recession," but is already a breakdown-crisis of that system as a system. We must abandon the deluded effort of attempting to justify the existence of that now global-"free trade" system, that "floating-exchange-rate, free-trade" system which has destroyed the U.S. economy (for example) systemically, during the 1971-2008 interval to date.

Time for civilization is now running out fast, unless we take certain uniquely specified, protective actions, that very soon.
The Academic Form of the Disease

There have been two leading factors of ideological influence which have caused U.S. and European policies generally to be shifted from the relatively sane notions of economic goals of U.S. public policy during the 1945-1964 interval, to the increasing factor of lunacy in choice of social goals of economic practice, on both sides of the Atlantic, since March 1, 1968.

First: One of the most significant among the intellectual obstacles which we must overcome now, is encountered among what are regarded as relevant governmental and academic authorities. It is found in the foolish belief in the wrong-headed assumption, that the choice is, broadly speaking, between the ideological polarities of "free market" versus "Marxist-like" thinking. This foolish belief in a "free market," has excluded any serious consideration of the principles on which the U.S. republic was founded, those principles which enabled President Franklin Roosevelt to bring about the seemingly miraculous recovery of the U.S.A. from the pits of the Hoover depression, to emerge during World War II as the greatest economic power the world had ever known before that time.

The present choice is between returning to the principles which President Franklin Roosevelt's administration employed, and submitting to the continuation of those policies which are still, presently, leading toward a general, physical breakdown of the world economy as a whole.

The threat now, as the common crisis of the U.S. economy and the failed European Maastricht system, which threatens the world at this instant, is not a mere "depression," but what is called a "general breakdown-crisis." German social-democrats of the pre-1914 period virtually threw up their hands in despair over the subject of finding a useful definition of a "breakdown-crisis;" so, a similar confusion prevails today, when so-called "Marxist" ("socialist") and "free-trade" ("capitalist") systems today would be equally prone to incompetent measures, such as those taken by the U.S. Presidency and Congress since August 1, 2007, which, as we have often seen during recent months, could only accelerate and worsen the presently on-rushing general collapse.

So, once more, as within the course of my earlier "The Economics Debate About Russia,"[5] our analysis and proposals must expose, and reject those simplistic, mythical elements of the so-called "Marx- versus-Capitalism" legend. That has been a legend which has been a chief cause of the diversion of attention from the real nature of the issues which the present world crisis of the 1971-2008 interval-to-date poses to us all now. This time, we must do as I do in the following chapters of this report. We must carry the discussion further, to examine the subject of "The Myth of Money" itself.

The first relatively simple fact of the matter to be considered, is, as I have stressed in that referenced, earlier, report, is that Karl Marx was an avowed dupe of the plagiarist and hoaxster Adam Smith, as Marx himself insisted repeatedly,[6] and, was, thus, in several congruent ways, in the matter of economics dogma, an ideological "capitalist" in the tradition of Lord Shelburne's Haileybury School of British imperialism. The American System of political-economy of such paragons as Alexander Hamilton, Mathew Carey, and U.S. Presidents Abraham Lincoln and Franklin D. Roosevelt, is, historically, the only actually sensible notion of the economic practice of modern statecraft in currency today.

It was on this account, that Nikita Khrushchev's links to the toxic Bertrand Russell's World Parliamentarians for World Government, turned out later to have brought about the choice of direction which led into the self-inflicted doom of the Soviet Union's economics and strategic practice. It was the continuation of this influence of Bertrand Russell on Soviet thinking about economic strategy, which led into that trap of the Laxenberg, Austria nest of wildly reductionist Cambridge Systems Analysis, from which today's Russia has yet to fully free itself intellectually. It is urgent that the world of today learn that lesson while it is still barely possible to turn back to the alternative of the American System of political-economy as the ecumenical association of a world system of sovereign nation-state republics today.

Second: As a result of the kind of post-1945 changes in cultural goals of policy, changes embedded in what produced the virtually synarchist hard core of the "white collar" Baby Boomer generation born between 1945 and 1958, a massive counter-cultural program was unleashed which resulted in the frankly fascist, neo-malthusianism characteristic of a large segment of the "white collar" generation operating within the ranks of what became notorious as the neo-malthusian, wild-in-the-streets "Sixty-Eighters."

The present, outright hoax of "Global Warming," is an expression of the degree to which the wildest sorts of pseudo-scientific superstition have been spread among even the ranks of many who represent themselves dubiously as certifiably scientists, or even among our leading statesmen.

The arguments presented on behalf of the so-called "Global Warming" cause, are not scientific by any credible, historical standard of science, and partake more of the character of religious dogma than anything else, although certainly not those of either Christian or Jewish religion, if the standard of Biblical Genesis 1 were consulted. While we must be tolerant respecting religious belief, insofar as its advocacies are not morally criminal, neither criminal intent nor mere toleration could actually justify such lunacies as "globalization" in the practice of law by leading forces of nations. Those favoring radical Malthusianism and/or drug addiction, fall into a similar category of candidacy for urgently needed moral restraints respecting their influence on public policy, restraints demanded by natural law.

However, the issues are in no respect merely moot. The general welfare of all humanity is at issue. The clearest expression of the political intent by the political promoters of the current mass-cult of so-called "environmentalism," is that provided by the mouth of the British Empire's current consort, Prince Philip, utterings broadcast under the auspices of his World Wildlife Fund. Prince Philip proposes a rapid reduction of the world's population from over six-and-a-half billions human individuals, presently, to two billions, or, perhaps, less. On this account he, and his accomplice and former U.S. Vice-President Al Gore, propose actions which would, if allowed, actually bring about the rapid reduction in the human species which the Prince has repeatedly presented as his genocidal goal, his World Wildlife Fund proposal for a genocide which vastly dwarfs even the kindred crimes by the Nazi regime and its accomplices during the relevant 1933-1945 interval.

However, the kindred population policies of Prince Philip and Adolf Hitler's regimes are not novelties in the millennia-long practice of black arts. The policies which they advocate, are traced, in effects of practice, as in the tradition of European civilization as such, from the fictional character of the Olympian Zeus of Classical dramatist Aeschylus' Prometheus Bound. In fact, what is called "malthusianism" or "neo-malthusianism," is a characteristic feature of all known empires, since those of ancient Southwest Asia and the Roman and Byzantine empires, as under the imperial form of medieval alliance of the Venetian financier-oligarchy with the House of Anjou, and under the frank malthusianism of the imperialist British Haileybury School of Jeremy Bentham et al.

The "dumbing-down," by combination of law and custom, of the large mass of the population, by prohibiting their knowledge of the practice of the "fire" of scientific creativity, is the characteristic feature of empires as we have actually known them in history, including the British empire. In brief, keep the mass of the population intellectually "barefoot and stupid," by aid of various means for "culling the herd," when the mass of the ordinary folk is viewed as having become unpleasantly numerous, as according to the opinions of such as neo-malthusians as Prince Philip and Al Gore today.

Thus, in that tradition of the Olympian Zeus depicted by Aeschylus' Prometheus Bound, the elimination of science, either by crushing it, or, as a Procrustean trick, or, by fraud, such as modern suppression, still today, of the fact of the root-discoveries of the actual founder of modern physical science, Johannes Kepler. That still persisting, British academic fraud, which alleges that black magic specialist Isaac Newton had discovered what he and his handlers fraudulently plagiarized so very badly from the work of Kepler, is to be recognized as an outcome of the intent to suppress knowledge of "fire" by the mythical Olympian Zeus.[7]

The fact is, that the possibility of even maintaining the present scale of human population, let alone permitting it to increase, requires, absolutely, the role of physical-scientific progress in overcoming the threat of exhaustion of presently available sources of materials needed even to maintain the present standard of living. To prevent scientific progress, as by suppressing the development of nuclear-fission power, is already the practice of genocide.

Keep religious dogmas, especially extremely kooky ones, such as "Global Warming," out of politics. Next to actual thermonuclear warfare, "environmentalism," as the case for it is stated by the followers of Prince Philip, is presently the greatest of all Nazi-like threats to humanity generally, today.

That much said to situate the relevance of the subject of physical economy itself, now turn to that subject itself.

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