July 14, 2008 (LPAC)--Despite the third largest bank failure in the U.S. occurring just days ago with the run on Indy-Mac Bancorp Inc., press reports today claim that the emergency bailout of the totally insolvent Freddie Mac and Fannie Mae has “calmed the markets.” Addressing this insanity on Saturday, July 12 and reiterating the only actual solution for the accelerating collapse of the global financial system, Lyndon LaRouche said the following:

They’re going to the Treasury, essentially, by way of the Federal Reserve System. The Federal Reserve System and the Treasury combined, will do something to flood--a hyperinflationary flood of support into collapsing institutions--which is the way they're going now.

I proposed regulation. I laid down the three steps required. That will work. Without that, the United States is finished. And we're on a short fuse. Not an eventual collapse, we're on a very short fuse. We may not make to the next election. That's how bad it is.

We're on a very short fuse: We have the policy. We have the approach, it will work: It's the only damned thing that will work! Either we win and get this through, or you can kiss the United States goodbye. And that's on a short term, that's not long term.

None of this will work! They have no way to solve their problem. The system is dead! The patient is dying. We're on a death-watch, by the bedside of the patient. The patient is the U.S. economy: You're sitting by the bedside, while the patient is dying. And it's on a short term--you don't know when, but it's soon. This patient is dead. It's just a matter of days, or hours, or weeks, or whatever. There is no way that "they," so-called, will find a solution to this; “they" will not.

I've already defined the only possible solution. Nothing else will work. Everything else is a waste of time. This system is dead: It's the walking dead. It's finished! Either you put in a new system, and there's only one way to do it, or the United States and the system are dead! And the whole world goes down with it!

You're looking at a crisis of civilization. You're looking at the threatened end of civilization, in the near term. Not ten years from now, not five years from now: right now. When is "right now"? I don't know; nobody can tell. Things don't work that way. But you're on the short fuse. There just is no latitude, there's no place to go! There's nothing in the system? What do you do? You pump money into this thing? You'll get hyperinflation!

The difference between now and 1923 Germany, as that, you guys should all know well by now, that Germany in 1923 was encased, in the conditions imposed upon it. And therefore, it had no legroom for maneuvering, absolutely encased. Squeezed, cracked, like an egg. Now, you have a system which is more open, with more countries involved. Therefore it is not as tightly encased as 1923 Germany. But otherwise, the problem is analogous: The problem is the same, overall. The difference is that, then, in '23 Germany, Germany was under military conditions imposed upon it. It could do nothing! And so, it just went down in '23. And therefore, they had a social change as a result of the collapse of the Mark.

Here, the same kind of process is imposed, but we're not encased in the same way. We're becoming approximately encased. But now, we're self-encased, because everything we do goes in the direction of hyperinflation. And when you get to the hyperinflation of this type, that's the end of the system! And this monetary-financial system is ended; now! It's doomed! Nothing can save this system.

What I'm proposing, is that you put in a new system, a credit system instead of a monetary system, on the basis of the Roosevelt model. That will work. Russia, China, India, and other countries will cooperate, under the right stimulus. They will do that. That's the solution. Without that, nothing is going to work. And it will not work without the United States doing it. The United States must be the cooperating factor in this: We must not have Obama as President. We must not have McCain as President. We must not have any of this nonsense! Otherwise, the United States is finished. Forget it: It's a waste of time.

You're in that time. This is not--trying to figure out how the game is going to play, and who might lose. No! This is zero-sum game. There is no alternative.

We have specified the alternative, that's the only alternative! Nothing else will work.

You simply tear up the system! And take a part of it, you say, "This part of the system we keep. We keep the businesses going, keep the homes going, keep the essential functions of government going, and start to grow. The rest of it? Put it to one side. We're not going to pay it. Never! We'll write it off: Bankruptcy! Write it off!"

And see, this thing has no limit to it: Because, if you take 3-5%--now you're talking about 4-7%, if you take an amount of money, that you take as debt; you say, "Let's call this amount of money, 5-7% of something" which doesn't exist. But by taking a debt, and creating a debt, which somebody has promised to pay that debt, which is currently 5-7% of the fictitious amount you're generating, you have generated an implicitly escalating hyperinflation! We have a hyperinflation of unknown dimensions, where somebody takes, "I owe this money," or "I get somebody else to owe this money; therefore, I issue a note, based on something like 20-15 times as much of that particular, current annual obligation. So I simply multiply it, by taking and inverting the interest rate, take a certain amount of debt which I'm taking, I say, "You owe me this amount. Okay, and I'll owe you this amount" and so forth; each turn around, and you capitalize that debt, based on the fact that you're going to get an annual payment, presumably, an annual payment which is equivalent to the interest charge, or something like that. Therefore, now you capitalize something at 16-17, 20%--20 times as large, based on whatever the ratio is, you're using.

So now, everybody who does this, you now are pyramiding an infinite amount of debt! As so-called assets! "Somebody owes me this. You have agreed to owe me this." That's how this thing works. So now, if you take a 5% factor 20 times; okay, I capitalize something 20 times what you now owe me as a current account. But, this is the capitalization! You take a fraction of a current annual rate of obligation; you take a multiplier factor, which is the yield to capital ratio. Every time you get an obligation, in the equivalent of an interest, you create the corresponding 100% as a capital asset. Now, the system says it has capital valuation corresponding to all this paper, which you're generating at a mad rate. This is hyperinflation. This is what happened in Germany in 1923. Only a different way, but it's the same thing.

The system is finished: There is no endgame! There is no way that "they" are going to solve a problem. They're going to solve nothing! The system is doomed, and if they continue this way, the country's doomed, and civilization is doomed. And probably doomed this year or next. How d'ya like that? Nice, clear-headed little solution. It's nuts! But why is it nuts? Because the people are nuts.

Lunatic people, these are lunatics! This is lunacy! I mean, the guy belongs in the booby hatch, y'know? The comfort station, the booby hatch, where they can get out there and invent their systems in confinement, and the outside world doesn't have to know anything about it. They just say, "Well, I'm a multi-trillionaire. We did some trading back in our little institution here--none of us had any money, but I'm suddenly a multi-trillionaire!"

So, don't have any illusion in the corner of your mind that "they" must have some alternative solution in their pocket. They don't. More and more people recognize, that they don't have anything, there is no solution; there is no end to this thing. There's no happy ending anywhere, for anyone in this one. Either change the system, or go to Hell, and it's on a short fuse.

BACKGROUND:

July 22, 2007 - The Homeowners and Bank Protection Act

March 17, 2008 - Doom Has Struck! Three Steps To Survival

July 1, 2008 - LaRouche Proposes Emergency Stop-Gap Measures To Prevent Financial Chaos