Show: The LaRouche Connection

Episode: 0715 Firewall--In Defense of the Nation State.mpg

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Program No. 715
“Firewall: In Defense of the Nation-State”

Early in 2008, Lyndon LaRouche tasked a small team of young associates to create a documentary which would present the true story of what has become widely, but falsely, referred to as “The Sub-prime Mortgage Crisis,” and what to do about it. On February 22, the Lyndon LaRouche Political Action Committee (L-PAC) released 10,000 copies of an 80-minute DVD called “Firewall: In Defense of the Nation-State,” and began distributing them nationally. In this edition of The LaRouche Connection, we present a 60-minute version of “Firewall,” edited for Public Access.

On July 25, 2007, before the crisis burst into the news, Lyndon LaRouche delivered an address in Washington, DC, webcast internationally on the internet, declaring that the post-Franklin Roosevelt global financial and monetary system had ended.

“Firewall” begins with a clip of Mr. LaRouche from that webcast: “There is no possibility of a non-collapse of the present financial system. None. It’s finished now. The present financial system cannot continue to exist under any circumstances, under any presidency, under any leadership, or any leadership of nations. Only a fundamental and sudden change in the world monetary financial system will prevent a general immediate chain reaction type of collapse. At what speed we don’t know, but it will go on and it will be unstoppable. And the longer it goes on before coming to an end, the worse things will get.”

Whereas Mr. LaRouche spoke about the reality of a global collapse, Presidential candidates, elected officials, and respected economists raced to reveal various “stimulus packages,” thus perpetuating the hopeless bailout of an already bankrupt system.

“Firewall” reveals the process by which we have come to such a point in history, and how we might rise to regain America’s proper role in the world, rather than shrinking into littleness, watching the great experiment of our Founding Fathers relegated to the dustbin of history, while the world descends into a new Dark Age.

In the second half of the 19th Century, a new dynamic began to express itself in the political landscape. Previously dominated by a system of empires, typified by the British Empire’s commitment to thriving off the sheer brute labor power of uneducated, enslaved populations, the post-colonial U.S. Republic offered a better vision for the future, typified in the writings of American System economist and adviser to President Lincoln, Henry C. Carey.

Lincoln paid with his life in his triumph over the concerted efforts of the British Empire to break the Union apart, through support of the Confederacy and other subversions. The American System, based upon freeing and fostering the creative capacities of mankind, thrived upon a culture of scientific advancement, and development of basic economic infrastructure. The U.S. became the first continental sovereign nation-state to establish itself on the map, in the entire span of recorded history.

The international consequences of America’s achievement precipitated rapidly. Germany, Japan, and Russia underwent rapid development. Not giving up easily, Britain’s Lord Palmerston drew Russia into an alliance against Germany, and manipulated events which led to World War I, the ultimate aim being the ruin of Germany.

“Firewall” goes through the horrendous terms of the Versailles treaty—a death sentence for Germany. By 1923, with a disintegrated monetary system, Germany had nowhere to turn, save a political solution to the Weimar madness. Appointed as currency commissioner, and then president of the Reichsbank, Hjalmar Schacht catalyzed the further dismantling of Germany as a nation-state. He brought an end to the hyperinflation, alright, but only by means of imposing severe hyper-deflation, securing further reparations payments off the backs of an already starved population. The final remedy to enforced disintegration came when the London and Wall Street merged, in slime-mold fashion, to finance the election of Adolf Hitler. Europe was again pitched into savage austerity and World War.

Today we are witnessing, once again, the threefold process of feeding a ballooning financial bubble, using an expanding money supply, looted from a collapsed physical economy—exactly what was imposed on defeated Germany—represented as a single, collapse function. A shock front develops rapidly, until it reaches a critical point of instability, where the rate of increase in the monetary aggregates surpasses that of the financial aggregates. This singularity marks the transition between two entirely distinct spaces, where the governing processes on the one side no longer apply on the other.

After World War II, Britain launched a project in the U.S. of the same type of fascism as they had established throughout Europe in the prior decade. McCarthyism (better termed “Trumanism,”) turned the U.S. into a virtual police state, creating the conditions later for the rock-drugs-sex existentialist counter-culture, which has dominated the Baby Boomer generation ever since. This time, unlike Germany after WWI, there has been no need for a military to enforce the destruction of American industry. The 68ers had been imbued with a passionate hatred for the human creative capacity, a passion which had only to be steered by the manipulation of popular culture. Science-fiction replaced Science. The cultural willingness to accept the first phase of the triple curve collapse function had been established.

Throughout the course of the 1970s, a series of operations were run with the intention of replacing the U.S. physical economy with a massive parasitical debt bubble. In 1971, a group of financier interests, led by George Schultz and Felix Rohatyn, made the decision to officially decouple the dollar from gold, thus ending the Bretton Woods system of international development, established by President Franklin Roosevelt, ushering in by 1979 what the Council on Foreign Relations termed “controlled disintegration of the U.S. economy.”

Among the major firewalls established by Roosevelt to defend the American people, the Savings and Loan banks – barred from speculative activities in order to ensure the availability of low interest, long terms loans for housing and other needs—were opened to predatory speculation. Remember Mike Milken and “junk bonds?” By the end of the 1980s, the entire U.S. economy was in a state of collapse, culminating in “Black Monday,” in October of 1987.

But an ever-increasing flow of money, looted from the collapsing physical economy, was required to feed the ballooning bubble. Under “globalization,” U.S. trade policy was restructured after the model of the British East India Company. The cost of goods for U.S. consumers, which would otherwise be skyrocketing, was lowered for imports, with the resulting reduction in the caloric intake of the populations of the un-developing world. Derivatives markets spread across the globe.

After the blowout of the Y2K bubble, a critical discontinuity was reached. Banks began appraising housing prices at higher and higher levels, and new housing development took off. By this time, the electricity grid was wrecked, the steel industry shut down, and the auto industry packaged up and shipped out of the country. The average cost of housing began to exceed the average income. With families unable to afford new homes, sales slowed.

“Sub-prime” lending came to the rescue! By offering more and more risky loans to more and more people who could ill afford them, the system managed to keep itself afloat. But not for long. In June 2007, the largest sub–prime lender, Bear Stearns, found its paper no longer being accepted at face value. This triggered a chain reaction, and over 80 mortgage lenders disappeared. The U.S. Treasury and European Central Bank were buffaloed by the City of London into pumping hundreds of billions of dollar into the system by the end of the year, in order to prevent the major banks from going under. Meanwhile, we were being primed for a fascist intervention.

Today, as the world faces a crisis comparable to that of 1923, the political solution proffered by some, including would-be President, billionaire New York City Mayor Michael Bloomberg, and California Governator Arnold Schwarzenegger, is massive cuts in social services, such as health care and pensions. Like feudal barons, financial agencies are assuming control over the nation’s infrastructure, restricting its usage to those rich enough to pay the rising tolls. This time, the apparatus which would be used is termed, misleadingly, a “Public-Private Partnership”—otherwise known as Mussolini-style corporatism.

Once again, as in Weimar Germany, we have reached a point where the solution must be a political one. But this time, the American people and the world now face an opportunity which was never given to Weimar Germany.

Lyndon LaRouche: “Under our Constitution with a President and with the backing of a Congress which supports him in this, the U.S. can act to create a firewall in which we protect mortgages and legitimate, chartered banks. No foreclosures. Keep essential banking functions open. Maintain the communities and the nation as physically functioning entities. The government controls the credit. The government is a sovereign. The government is the only one that is allowed to utter currency. The government must now assert control over its own money that it creates. No other money is allowed to be generated, except by treaty agreements with other nations.”

By treaty arrangements with the world’s three other major powers—China, India, and Russia—it is possible to once again create a fixed-exchange rate system in the world, putting a lid on inflation, and once again issue long term credit, in two tiers, the first for productive activities, such as developing higher and higher technologies, going to a nuclear economy, maglev trains, and all sorts of new raw materials, at 1-2%; and the other for everything else, at a floating rate. We can have a really bright future if we just let this go!

Release Date: May 15, 2008

Episode Short Description: N/A

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