What's At Stake?
The 1999 repeal of the original “Glass-Steagall Act” of 1933 was perhaps the single greatest criminal act committed against the economic welfare of the American people in the 20th Century. Despite all claims to the contrary, the repeal of Glass-Steagall laid the groundwork for the creation of a monstrous derivatives bubble which burst during the financial crisis of 2007-2008. Following that crash, the first act of Congress should have been to correct their folly by restoring Glass-Steagall, thus eliminating the massive bubble of gambling values and erecting a firewall between the uncontrolled speculation on Wall Street and the livelihood of the American people — precisely as Franklin Roosevelt did in 1933 when the Glass-Steagall Act was first enshrined into law. Instead, under the threats and intimidation of the largest financial institutions, Congress passed an unprecedented bailout of the Wall Street banks, on the backs of an already destitute American population. Over the subsequent eight years, our people have suffered the mounting effects of this fraud, to the point that our nation now faces another financial blowout of far-greater magnitude than even that of 2007-2008. The only means of avoiding such a fate is the immediate restoration of Glass-Steagall today as the necessary first step to a full FDR-style recovery program, as has been spelled out in detail by LaRouchePAC.
Glass-Steagall put properly, is not a federal regulation aimed at restraining the criminal temptations of an otherwise happy-go-lucky Wall Street. Glass-Steagall’s aim is to “throw the money changers out of the temple of our civilization”, once again, as President Franklin D. Roosevelt had the courage to do. It is not an adjustment within an otherwise operable system. Glass-Steagall is a revolution in national policy, a Declaration of Independence against an oppressive regime.
Glass-Steagall will not regulate Wall Street, but destroy it, once and for all. America does not need Wall Street for its economy to grow any more than a tumor would be helpful to the growth of a man. The American Credit System, long advocated by Lyndon LaRouche, is the historical beacon with which to rally the nation’s hopes and pains. The cult of Wall Street – the system of finance characterized by increased rates of gambling, stealing, and fraud, has, once again, nearly destroyed the United States and therefore itself. Like a cancer, it must kill you in order for it to stay alive.
Just How Bad is it?
Estimates are that the current magnitude of outstanding derivatives claims accumulated as a product of speculative financial practices, now measures in the hundreds of trillions of dollars, perhaps reaching even to quadrillions. Even when compared to the current nominal global GDP, estimated at around $70 trillion, it becomes immediately apparent that this debt can never be paid. The vast majority of these outstanding claims are of a purely speculative character, with absolutely no connection to legitimate, necessary, productive economic activity. To continue to bail out this vast bubble of gambling obligations on the back of a collapsed and rapidly shrinking real economy, would be to create, rapidly, Weimar-style hyperinflation on a global scale, and an economic crisis of Dark Age proportions.
“The Triple Curve” was first presented by Mr. LaRouche at a conference at the Vatican in 1995. The version seen above is the third in a series, and functions as a heuristic device to describe the generalized collapse function of the world economy since 1971. The only way to stem the further collapse of the system is by using a Glass-Steagall standard to reorganize the transatlantic economy such that the monetary and financial aggregates of the economy conform to an increase in the physical economic input-output of the system, versus a decrease.
Glass-Steagall halts this catastrophe. By restoring the separation between commercial and investment banking, Glass-Steagall divides the obligations in question into two distinct and separate categories: legitimate and illegitimate, the latter being far greater than the former. Immediately, we declare that the government has no responsibility to pay back losses accrued through speculative activity, thus transferring these trillions in liabilities off of the government’s books. We force the megabanks—JP Morgan Chase, Citigroup, Morgan Stanley, etc.—to split themselves in two parts: the so-called “investment arms” on the one side, and plain, old-fashioned commercial banking on the other.
Under the original Glass-Steagall law, only commercial banks receive federal guarantees; “investment houses” do not enjoy such protection. Though their trillions in outstanding “assets” might not be explicitly cancelled or eliminated by law, we will simply declare that these debts are their own, their responsibility, and not the American people’s. Not one penny of bailout goes to pay them off, and, without this artificial protection, these assets will quickly dry up on their own. We as a nation are freed from this cancer, and our commercial banking system is restored to its necessary and indispensable function. This was the stated intention of Franklin Roosevelt’s original 1933 Glass-Steagall Act.
“But, Give Dodd-Frank a Chance!”
Whether your Congressman and Senator know it or not, Wall Street and the City of London’s too-big-to-fail banks have been given the keys to your savings accounts and will steal every penny that you think you own the minute they get into trouble and need another bailout. This is not some wild futuristic nightmare. This has been the reality ever since Congress passed the Dodd-Frank Bill (“The Wall Street Reform and Consumer Protection Act of 2010”) and President Barack Obama signed it into law. This is outright treason!
In May of 2013, LaRouchePAC published the definitive story on the fraud of Obama’s so-called Wall Street reform.
“Bail-in, in its simplest terms, is the inverse policy of what was done under Franklin D. Roosevelt’s Glass-Steagall Act and the 1933 Banking Act generally. Under bail-in the bank survives, the depositors do not.”
“The preceding provisions of law and international agreements have been made in such a way that places the interests of “financial stability” above the interests of the people of the United States and their Government.
The Fight for Glass-Steagall
Since 2008, LaRouchePAC has lead the campaign to reinstate Glass-Steagall. While the Congress was working in bureacratic time, LaRouchePAC was working in crisis time to avert a further meltdown of the nation’s financial system. Because the issue of banking separation is systemic, and affects the livelihood of every citizen, LaRouchePAC brought the urgency of Glass-Steagall not just to Congress, but to everyone, including organized labor, state officials, and government leaders abroad.
LaRouchePAC’s mobilization was so effective, that President Obama, in an interview with Rolling Stone, was forced to come out and state his explicit opposition to its reinstatement. Make no mistake about it, those members of Congress who are fighting for Glass-Steagall are making an explicit break with President Obama and the rest of their colleagues, whose loyalties lie with Wall Street.
The first Glass-Steagall bill to be dropped in the 114th Congress is H.R. 381, co-sponsored by Representatives Marcy Kaptur (D-OH) and Walter Jones (R-NC).
“To repeal certain provisions of the Gramm-Leach-Bliley Act and revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so-called `Glass-Steagall Act’, and for other purposes.”
Today nothing fundamental has changed about the nature of the current financial system, begging the question, not if we are headed for another meltdown, but when?
The reason Congress has not yet voted up and passed Glass-Steagall is not because they fail as individuals to see its urgent necessity, but because they are scared to death for themselves and their careers. As such, they have accommodated themselves to the normalcy of a dying nation, and therefore, are complicit in its destruction, having refused to stick their own necks out.
Throughout the course of our campaign to restore Glass-Steagall, LaRouchePAC has been eye-witness to both the cowardice and the courage of elected officials who have faced immense pressure and intimidation from powerful supranational interests not to pursue their legislative aims.
In the video below, LaRouchePAC Policy Committee member Diane Sare interviews Maine State Representative Andrea Boland, who sponsored a resolution for the restoration of Glass-Steagall at a 2013 National Conference of State Legislatures (NCSL). The battle described here by Rep. Boland typifies the desperation with which international financial interests are defending their own bankruptcy and the looming prospects of a Glass-Steagall separation.
As Americans begin to recognize that solving the current crisis is not going to happen with mere ‘regulations,’ a more profound vision of what is at stake and the kind of leadership required to bring the United States through this mess, is slowly emerging. But is it happening fast enough? A new international financial architecture is quietly being organized, lead by the BRICS nations and their own recognition that a fundamental change in the global financial order must occur if there is going to be peace on the planet today. Current U.S. policy is on a direct collision course with this new global trend, and unless we force through Glass-Steagall, freeing our banking system from the parasitic grip of the current British Empire, these are the confrontations that world wars are made over.
The American people must adopt a strategic view of the world and their role in ushering in a new era for mankind, and that begins with the reinstatement of Glass-Steagall.