A close up of President Lincoln on the US $5 note. Photo: Karolina Grabowska / Pexels.com

A note to readers: this is an old post on the archive website for Promethean PAC. It was written when we were known as LaRouche PAC, before changing our name to Promethean PAC in April 2024. You can find the latest daily news and updates on www.PrometheanAction.com. Additionally, Promethean PAC has a new website at www.PrometheanPAC.com.

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The recent eruption of renewed financial turmoil has been accompanied by a plethora of commentary, most of which, wholly or partially, fails to properly assess the causes, and consequently the future implications of the crisis.

First are the not-so-soothing pronouncements of Treasury Secretary Yellen, Fed Chairman Powell, and other Biden administration officials who solemnly swear that everything is under control, all bank deposits are safe, and the global financial system is stable. This from the same people who told us that inflation was transitory, and that printing trillions of dollars and pumping them into collapsing financial assets and productivity-destroying climate and woke social programs is disinflationary. Almost no one, including the utterers of these preposterous claims, believes them.

Second, is the large group of economists and financial analysts who correctly point out, in great detail with lots of graphs, charts and numbers, that the money-printing and zero-interest rate policy of the last 14 years was, in hindsight, a bad idea, and has created the mother of all bubbles which is now exploding in ways that are impossible to predict. Most of these “experts” ping-pong between suggesting further tightening to bring down inflation by restricting credit to the real economy, and resuming the money-printing, albeit at a slower pace, to stave off a financial collapse. It is quite obvious that neither suggestion is viable. The Fed’s interest-rate increases may have reduced the value of financial instruments, but they have restricted credit to the physical economy, while inflation in the physical economy continues virtually unabated. A reversal might shore up the value of the collapsing financial assets, but will most likely re-ignite inflation.

Then thirdly, are those financial gurus who correctly argue that the effects of globalization, deindustrialization, and self-defeating sanctions against countries and companies that the U.S. might not like, have so weakened the dollar system that a new non-dollar financial order is coming into existence, that will usher in a multi-polar world in which the U.S. will be relegated to a subordinate role in world affairs. Some on the so-called conservative side present this development as a warning to double down on the same self-defeating sanctions and globalization regime that helped bring about the current mess, while more left-leaning types welcome this coming age of America getting its comeuppance. Both views are wrong. While the current trend of non-dollar trade is understandable and necessary as a defensive measure among those countries which rightly don’t trust America’s insane and overtly evil policies of the moment.  Yet, in the view of this author, it does not present a viable alternative to the currently collapsing dollar system.

Lyndon LaRouche frequently pointed out that the seeds of the current unraveling were sown in the aftermath of the death of FDR, when the Truman administration scrapped Roosevelt’s plan to convert America’s newly rebuilt industrial capacity into an engine for physical economic development, both in the U.S. and in the then newly-decolonized developing nations. Instead, the U.S. began to allow its credit-based industrial economy to be converted into a consumer-based one, whose consumption was financed by increasing amounts of debt.

Despite the countervailing impulses typified by the large-scale water and transportation infrastructure projects and the Apollo program of the Eisenhower and Kennedy years, this shift from a credit system to a financialized debt system ultimately led to the unraveling of the post-War global economy, culminating in the collapse of the Bretton Woods system on August 15, 1971, when Nixon took the dollar out of the gold reserve system. This and the ensuing manufactured oil crisis of 1973-74 broke any ties of the dollar to the sovereignty of the United States, turning it into a financial instrument controlled by London and Wall Street.

The accompanying shift away from a scientific and classically-oriented spiritual culture, towards the irrationalism of “limits to growth” environmentalism and cultural degeneracy, fueled the ensuing economic decline.

LaRouche warned at the time that this could only lead to a series of escalating bubbles and busts, each one larger than the last. He was right. As he emphasized over and over again, only a return to a New Bretton Woods gold-reserve fixed exchange-rate system among sovereign nations, accompanied by a large-scale commitment to frontier science based physical-economic development, with a return to scientific and classical culture, could re-establish the required role for the U.S. in the world economy.

It is understandable that in the face of the massive incompetence of America’s ruling elite, that many otherwise well-meaning citizens and intellectuals would cave in to the temptation to accept the inevitability of a collapse of the dollar system, and the rise of a non-dollar multi-polar world. Yet it is not inevitable, and such a development, under conditions of American collapse, will not usher in an age of economic growth and stability.

There is another course of action. Despite the fact that four generations of American policy-makers know nothing except the debt-fueled post-Bretton Woods system, yet the now-exposed hulk that it has created, has awakened a large part of the American people to the fact that something must change. This creates the opportunity for a radical shift in American thinking. Already there is popular clamor for re-shoring industries and restoring American educational standards. The climate-change dogma and “woke” education are now widely discredited. The backfiring of the Ukraine-related and other sanctions has exposed the bankruptcy of such policies. President Trump initiated the Artemis project, and has promised to bring about a quantum leap in American standards of living when he gets back into the White House in 2025. LaRouche PAC’s “Project Prometheus” has elaborated many other areas for frontier science.

But a dramatic change in axioms is needed. As LaRouche repeatedly stressed—often citing Percy Bysshe Shelley—it is in times like these that such dramatic changes have occurred, and can occur: as long as one lives in the optimism which flows from new beginnings and scientific revolutions and does not, for a moment, entertain the pessimism which engenders failure.