#1 ·
The Inevitable Hyperinflationary Explosion
January 22, 2008
LaRouche Warns of Imminent Hyperinflationary Blowout
The frantic efforts currently being deployed to rescue the financial system—typified by the Federal Reserve’s panicked three-quarter percentage point interest rate cut and the stimulus plans put forth by Bush and Paulson—are not merely destined to fail; they are certain to backfire spectacularly and very soon, warns economist Lyndon LaRouche. The financial system has already effectively collapsed, and any attempt to resuscitate trillions of dollars in worthless financial paper is not only futile but will lead to the total destruction of any nation foolish enough to attempt it, LaRouche asserted.
The global financial system, and the United States in particular, is entering a period comparable to that of Weimar Germany in the autumn of 1923, though the current crisis is unfolding on a far more massive scale. While the devastation wrought by uncontrolled hyperinflation in Weimar Germany was largely confined to its own borders, today's crisis is global in scope. No national system will emerge unscathed from its consequences, and some nations may not even survive the year, he warned.
Under the crushing weight of the Treaty of Versailles signed at the close of World War I, Germany was hit with war reparations so immense that the nation was rendered incapable of basic functioning. In a desperate bid to meet these obligations, Germany began printing money, attempting to cover both its indemnity payments and domestic economic needs at the cost of completely annihilating the value of its currency. This monetary stimulation escalated to such unprecedented heights that it birthed a new term, "hyperinflation," to distinguish its soul-crushing horror from mere inflation.
As the German economy began its death spiral, the government sought a remedy through the continuous printing of money as a stimulant, causing the value of the Reichsmark to plummet. Between 1913 and 1915, the exchange rate stood at 4 Reichsmarks to the dollar, sliding to 6 to 1 in 1917 and 1918. The situation deteriorated sharply thereafter, falling from 20 to 1 against the dollar in 1919, to 63 to 1 in 1920, and 105 to 1 in 1921. Then, the floor fell away entirely, skyrocketing to 1,866 to 1 in 1922 and reaching a staggering 535 billion to 1 in 1923. During this same window, according to the German Bureau of Statistics, the cost-of-living index surged from 100 in 1913 to 1,019 in 1920, and finally to a mind-boggling 657 billion by November 23, 1923.
The world is now approaching a similar state of hyperinflationary disintegration due to analogous circumstances. The actions taken by the Federal Reserve, the European Central Bank, and other central banks and governments—their stubborn determination to breathe life back into this decaying financial system and their blind refusal to face reality—is essentially the writing of a new classical tragedy. Driven by fear, these modern-day Hamlets choose to destroy everything they hold dear rather than shake their faith in a failed monetary policy.
The nations of Europe, constrained by the Maastricht treaties, have effectively surrendered their ability to respond to this crisis, leaving the United States to shoulder the powers and responsibilities mandated by its Constitution to lead the rescue of both itself and the entire world. Rather than continuing these absurd attempts to stimulate a corpse, the United States government must exercise its sovereign authority and place its own financial system into a controlled bankruptcy, thereby setting a vital precedent and creating the necessary conditions for other nations to follow suit. The crucial first step would be the legislative adoption of LaRouche's proposal, the 'Homeowners and Bank Protection Act,' which would establish the essential firewalls needed to protect public interests and critical economic infrastructure, ensuring the economy keeps running while damages are sorted out based on importance and legitimacy.
Real, serious hyperinflation begins
January 22, 2008 (LPAC)
Following a review of the week's developments, Lyndon LaRouche has announced the launch of a new educational campaign. This initiative will focus on a single, central theme: hyperinflation.
The historical blueprint for our current predicament was drafted just under five generations ago in pre-war Germany. Hemmed in by French and British armies, the German government found itself coerced by the crushing demands of the Treaty of Versailles, forced to pay reparations that were mathematically designed to be impossible to settle. It was a brutal ultimatum: pay up, or face annihilation.
Today, we in the United States find ourselves staring down an almost identical set of circumstances. However, this time there is no foreign invading force demanding the settlement of impossible financial debts to drive the dollar into hyperinflation. Instead, we are grappling with an internal adversary that has been woven into the very moral fabric of our nation over the last forty years—a profound moral decay that has allowed citizens to tolerate predatory financial pyramid schemes, the largest of which, mortgages and their derivatives, is now collapsing.
There remains one crucial historical distinction between these two instances of hyperinflation. We possess the American dollar. We carry the responsibility to overhaul our own cultural habits, to exercise the sovereign power granted by our federal Constitution, and to place the American dollar into a state of bankruptcy reorganization. We stand as the only nation on Earth endowed with such unique agency.
Some might ask, "Well, where is our Hitler?" Open your eyes, people! Between Bloomberg and Arnie "my father was a Nazi" Schwarzenegger, we are seeing our own Hitlerian potential manifest. A brand of corporatism reminiscent of Mussolini is knocking at our door, alongside draconian measures that feel hauntingly familiar.
So, when you consider the utter fools pushing these so-called "economic stimulus packages," I ask you to pause and reflect: Is a march toward a firing squad really the kind of stimulation I’m looking for?
www.larouchepub.com
January 22, 2008
LaRouche Warns of Imminent Hyperinflationary Blowout
The frantic efforts currently being deployed to rescue the financial system—typified by the Federal Reserve’s panicked three-quarter percentage point interest rate cut and the stimulus plans put forth by Bush and Paulson—are not merely destined to fail; they are certain to backfire spectacularly and very soon, warns economist Lyndon LaRouche. The financial system has already effectively collapsed, and any attempt to resuscitate trillions of dollars in worthless financial paper is not only futile but will lead to the total destruction of any nation foolish enough to attempt it, LaRouche asserted.
The global financial system, and the United States in particular, is entering a period comparable to that of Weimar Germany in the autumn of 1923, though the current crisis is unfolding on a far more massive scale. While the devastation wrought by uncontrolled hyperinflation in Weimar Germany was largely confined to its own borders, today's crisis is global in scope. No national system will emerge unscathed from its consequences, and some nations may not even survive the year, he warned.
Under the crushing weight of the Treaty of Versailles signed at the close of World War I, Germany was hit with war reparations so immense that the nation was rendered incapable of basic functioning. In a desperate bid to meet these obligations, Germany began printing money, attempting to cover both its indemnity payments and domestic economic needs at the cost of completely annihilating the value of its currency. This monetary stimulation escalated to such unprecedented heights that it birthed a new term, "hyperinflation," to distinguish its soul-crushing horror from mere inflation.
As the German economy began its death spiral, the government sought a remedy through the continuous printing of money as a stimulant, causing the value of the Reichsmark to plummet. Between 1913 and 1915, the exchange rate stood at 4 Reichsmarks to the dollar, sliding to 6 to 1 in 1917 and 1918. The situation deteriorated sharply thereafter, falling from 20 to 1 against the dollar in 1919, to 63 to 1 in 1920, and 105 to 1 in 1921. Then, the floor fell away entirely, skyrocketing to 1,866 to 1 in 1922 and reaching a staggering 535 billion to 1 in 1923. During this same window, according to the German Bureau of Statistics, the cost-of-living index surged from 100 in 1913 to 1,019 in 1920, and finally to a mind-boggling 657 billion by November 23, 1923.
The world is now approaching a similar state of hyperinflationary disintegration due to analogous circumstances. The actions taken by the Federal Reserve, the European Central Bank, and other central banks and governments—their stubborn determination to breathe life back into this decaying financial system and their blind refusal to face reality—is essentially the writing of a new classical tragedy. Driven by fear, these modern-day Hamlets choose to destroy everything they hold dear rather than shake their faith in a failed monetary policy.
The nations of Europe, constrained by the Maastricht treaties, have effectively surrendered their ability to respond to this crisis, leaving the United States to shoulder the powers and responsibilities mandated by its Constitution to lead the rescue of both itself and the entire world. Rather than continuing these absurd attempts to stimulate a corpse, the United States government must exercise its sovereign authority and place its own financial system into a controlled bankruptcy, thereby setting a vital precedent and creating the necessary conditions for other nations to follow suit. The crucial first step would be the legislative adoption of LaRouche's proposal, the 'Homeowners and Bank Protection Act,' which would establish the essential firewalls needed to protect public interests and critical economic infrastructure, ensuring the economy keeps running while damages are sorted out based on importance and legitimacy.
Real, serious hyperinflation begins
January 22, 2008 (LPAC)
Following a review of the week's developments, Lyndon LaRouche has announced the launch of a new educational campaign. This initiative will focus on a single, central theme: hyperinflation.
The historical blueprint for our current predicament was drafted just under five generations ago in pre-war Germany. Hemmed in by French and British armies, the German government found itself coerced by the crushing demands of the Treaty of Versailles, forced to pay reparations that were mathematically designed to be impossible to settle. It was a brutal ultimatum: pay up, or face annihilation.
Today, we in the United States find ourselves staring down an almost identical set of circumstances. However, this time there is no foreign invading force demanding the settlement of impossible financial debts to drive the dollar into hyperinflation. Instead, we are grappling with an internal adversary that has been woven into the very moral fabric of our nation over the last forty years—a profound moral decay that has allowed citizens to tolerate predatory financial pyramid schemes, the largest of which, mortgages and their derivatives, is now collapsing.
There remains one crucial historical distinction between these two instances of hyperinflation. We possess the American dollar. We carry the responsibility to overhaul our own cultural habits, to exercise the sovereign power granted by our federal Constitution, and to place the American dollar into a state of bankruptcy reorganization. We stand as the only nation on Earth endowed with such unique agency.
Some might ask, "Well, where is our Hitler?" Open your eyes, people! Between Bloomberg and Arnie "my father was a Nazi" Schwarzenegger, we are seeing our own Hitlerian potential manifest. A brand of corporatism reminiscent of Mussolini is knocking at our door, alongside draconian measures that feel hauntingly familiar.
So, when you consider the utter fools pushing these so-called "economic stimulus packages," I ask you to pause and reflect: Is a march toward a firing squad really the kind of stimulation I’m looking for?
www.larouchepub.com