Subject: Re: Bo Gritz and Friendly Fascists

From: [email-masked] (Steve Crocker)
Date: 20 Sep 92 09:40:39 GMT

[email-masked] writes:

<attributions deleted>

>[Steve Crocker writes]

>> The Fed has been a favorite target of conspiracy theorists over the
>> years precisely because it wields great power, does so in ways the
>> average person does not understand, is not democratically accountable,
>> and the silence on these matters in the mainstream media has been 
>> deafening. That many of these theories may shade off into nonsense >> around the edges should not detract from their valid insights.
>> 

>>>        I personally suspect we need to go further and abolish the Fed
>>>which appears to be a serious problem in our bankrupt economy and return
>>>to the economic thinking of Jefferson and Madison (Jefferson liquidated
>>>the Second Bank of the United States, the Fed of his day).  If Gritz
>>>is in favor of doing that, it's a point in his favor as far as I am
>>>concerned.
> 

>> Well, I have to disagree here. I like the ideas of Lyndon LaRouche, 
>> who proposes not to abolish the central bank, but to use its great
>> power for good rather than evil. Whether this would be done by taking
>> over the existing Fed, or abolishing it and replacing it with some
>> other form of central bank is a tactical question. The central issue
>> is not whether to have a central bank, but what policies it should 
>> follow. LaRouche proposes to cause the central bank to issue massive
>> amounts of new credit, at low interest rates (I think 2-4 %) and
>> target that credit preferentially toward investment in infrastructure,
>> high technology energy development, high tech capital goods, and a 
>> series of "great projects" in areas such as water resource development,
>> transportation infrastructure, etc. In fact, here is the proposal in 
>> his own words, excerpted from his TV broadcast of 3/08/92.
>> 
>> <excerpted from a post on alt.activism by [email-masked]
>> (John Covici) >
>> 

>        [specific program deleted; please see previous thread]
>
>        The FED is perhaps "The Conspiracy" of the century.  Consider
>the problem of having the Fed around at even low interest rates.
>Remember the IRS started out with a program to tax only a few of
>the very wealthy in our society and if the FED is in place it can
>always grow like cancer.  But consider even the low 2 - 4% interest
>rate suggested.  A magic one ounce sphere of gold that grew at less
>than 3% a year would be larger than the earth in 2000 years.  The
>Dutch made a bum deal when they purchased Manhattan Island for $24
>worth of beads when they might have invested the same money at 6%
>interest and had more to show for it today--350 years later.

Well, I don't think there's NECESSARILY a problem with the exponential
growth inherent in interest. It depends on what the money is invested 
in. If you invest in PAPER (new debt to roll over old debt, other more
exotic instruments, etc.) then there is a serious problem. The interest
creates an exponentially expanding CLAIM on wealth which is not matched
by a corresponding PRODUCTION of wealth. In such a situation, the attempt
to preserve the perogatives of creditors inevitably leads to a financial
crisis. 

Typically, the attempt to resolve the crisis is through increasingly brutal 
austerity measures, culminating, in the case of Nazi Germany, with the 
practice of using slave labor on various labor intensive projects on some 
incredibly low calories per day of food which could not long support life. 
This is precisely what LaRouche has identified as the economic 
underpinnings of fascism. 

On the other hand, if investment is targeted toward areas which either
produce wealth individually, or enhance the ability of the system as
a whole to produce wealth (i.e. infrastructure, etc.), then this problem
does not arise. Real wealth increases exponentially and is available
to satisfy the claims of the creditors. 

But how do we get there from here? We are presently in a fairly advanced 
stage of the financial crisis. Is there an alternative to fascist 
austerity? LaRouche has come up with some rather ingenious monetary 
reorganization schemes in the past, drawing heavily on Alexander
Hamilton's policy of monetizing the debt of the early republic. I
don't understand all the technical details, but the concept as I 
understand it is that you do something like putting the whole economy 
through a bankruptcy reorganization. (He has proposed to do this on
an international scale as well, as regards third world debt, etc.)
This involves, in part, issuing new credit in the form of low-interest
gold-denominated bonds (i.e. the face value of the bond is pegged to 
the price of gold). These bonds would be used both to buy up the old
debt as a part of a general debt reorganization as well as for investment
in making the various debtor economies productive. 

A lot of what this would amount to in practice would be a massive 
investment in the industrialization of the third world, which would
enable these countries to become "creditworthy" in a very different 
sense than that envisioned by IMF mandated austerity "reforms". The
U.S economy would benefit from the jobs created by exporting capital
goods abroad. In a pamphlet I once wrote on this aspect of the program,
I referred to it as "exporting the twentieth century". 

The bonds mentioned above would be issued by the central banks 
controlled by the various sovereign nations involved, NOT by 
supra-nationally controlled bogus "National Banks" such as today's Fed.

>        Speaking at the dedication of a new federal hydroelectric dam
>project, Thomas Edison remarked that those who turned a shovel and
>actually built the dam received far less for their efforts than the
>bankers who financed the project.  He implied that the government
>could simply have issued the money to pay for the project.  Such an
>issue could then be 'retired' by some set-aside tariff or perhaps
>even revenue resulting from the dam itself.  This has been done
>quite successfully in societies before.  The danger of course is
>government temptation to print copious quantities of money but 
>something quite similar is happening now and safeguards could be
>established.  The interest rate is 0%. Unelected international bankers
>are stripped of their power that is so often comingled with many
>conflicts of interest at variance with the best interests of the
>population.  Power is returned to Congress where it is supposed to
>be under our Constitution that specifically gives the responsibility
>to coin money to Congress and which, technically, it has never
>surrendered although it has delegated it out to the Federal Reserve
>which is *not* a government institution but is in effect a private
>organization.

Well, at the lower levels at least, private banking performs a 
useful function in channelling necessary credit to local businesses,
and they should certainly be entitled to see some return. At the
level of the Fed, LaRouche certainly doesn't propose to let it
continue as the private instrument of the international banking
community, but woiuld put it under the control of democratically
elected representatives (I'm not sure what specific institutional
arrangements he proposes.) As to why he would retain some degree
of interest, I'm not sure, but I suspect it is involved in creating
a smooth interface with today's practices of investment for return, 
which cannot be expected to simply vanish.

>        Therefore, why have a Federal Reserve at all unless it is
>reduced to its proper role as a clerical agency to handle such a
>process.  A 'Put America back to work' type of program such as the
>would suggested to rebuild the national infrastructure could readily
>be funded under a scheme.  The "Power" of which you speak would be
>there; but it would be concentrated in the legislative branch where
>it belongs instead of in private hands with a tie-in to the executive
>branch.  A lot of our problem today is that Congress has lost too
>much of its power.  [Now if our Congressmen could only learn to
>balance their checkbooks].

I think LaRouche's program is probably close in substance to what you
are proposing, except that central banks would continue to function
recognizably as banks. However he definitely would want to see them 
as accountable to and under control of their respective national 
governments.

Although I am fuzzy on the technical details, the one thing I know
for sure is that LaRouche wants to put the power to issue currency 
back into the hands of sovereign nations. This, in my view, is a 
major reason why he is in prison today,

-Steve

---

From: [email-masked]
Date: 20 Sep 92 09:39:21 CST

> to preserve the perogatives of creditors inevitably leads to a financial

The problem can be [oversimplified] looked at this way:  A bank, private
or national, creates money when it makes a loan.  The value of the loan
then becomes an asset for the bank.  But the interest to repay the loan
is not created.  We are not playing a zero-sum game.  Somebody loses
when the bankers (with premeditation on an international basis) call the
notes every fifty years.  Stated another way, if I had the only ten dollars
in the world and loaned it to you at ten percent interest, where are you
going to get the dollar for interest repayment?  Kondratieff, a Soviet
economist sent to Siberia by Stalin for entertaining capitalistic ideas,
noted the 50/60 year cycle which is called the Kondratieff Long Wave.
But what drives this long wave if it is not the accumulation of debt
through interest buildup.  What is it that drives inflation but this
same force (presumptive??), and not Milton Friedman's definition that
inflation is caused by too much money chasing too few goods.  There is
more money around than ever.  But who has it?  The trickle down has
stopped.  Something can be done about this at a Federal level although
regulation of private banking is another matter and a pandora's I
had just as soon not open in this discussion. 

One more note:  A plot of the federal debt shows an interesting exponential
and supports the idea of the impossibility of repaying this debt with
anything akin to current monetary policy.

> reorganization 
schemes in the past, drawing heavily on Alexander
> in making the various debtor economies productive. 

Aha. Mention of Alexander Hamilton.  Parts of this discussion are as 
old as the Republic itself.  Hamilton supporters wanted a central bank
and their thinking was opposed by Jefferson, Madison and later Jackson.
Jackson, in his farewell address to Congress warned of the perils of
central banking.  Wilson would have done well to have listened.

You mention that you feel LaRouche was sent to prison for his ideas on
monetary policy. [Forgive me for accidentally editing out your precise
statement].  I don't doubt this at all.  Not many things are as 
important to politicians as monetary policy and he was proposing drastic
changes [and improvements].  Although perhaps he stood little chance of
ever being elected to high office he was serving an educational purpose
in letting the public know that something was seriously wrong...irregardless
of the accuracy or error of his ideas on specific issues.  I suspect
as more information is made available on the ethics of those who have been
running the government is made available, he will be cast more in a
martyr role than as a villain.

[significant text deleted; see thread]