HS 437 FBF - Future Predictions, and Monetary Policy with Harley Schlanger

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It's my pleasure to welcome Harley Schlanger to the show. He is the Western States Bureau chief for the LaRoche PAC. And Lyndon LaRoche is a very colorful and controversial and interesting figure in American politics for many years now. And today we're going to talk about some of the predictions for the future, some of the predictions that have or coming true. Now we're going to talk about central banks, monetary policy, we're going to talk about Hamiltonian economics and the fear and threat of various wars around the world. So I think you'll find this to be a fascinating interview. Harley is coming to us from Innsbruck, Austria today. A beautiful place that I have been to before and just want to welcome him. Harley, how are you?

Hi Jason. Great to be with you.

Yeah, likewise. Well, first of all, Lyndon LaRouche. I mean, I remember my first contact with people from the LaRouche group, the supporters. And I was. I don't know, I just couldn't really get my arms around what he stood for and what you guys are all about. So tell us more.

Well, it's not an uncommon first response because really we operate from a standpoint of an intersection of philosophy, history and science. You might say that we look at economics as physical processes, not purely monetary. And so Mr. Larouche's concern for years has been that the United States, since the assassination of John F. Kennedy, has been moving increasingly into a post industrial society, a deregulated economy, moving away from what Franklin Roosevelt did after the Great Depression to regulate banking, for example, we've been deregulating banking. So Mr. Larouche has had a very consistent record for years standing for the idea of a sovereign nation state, the United States investing internally to develop its infrastructure, its scientific and technological capabilities, and from that standpoint, entering into trade agreements, not free trade, but regular bilateral and multilateral agreements. And his forecasting has been largely the result of the opposite taking place. And Mr. Larouche consistently providing warnings against what happens when you move into a purely monetary policy, especially as we've seen since 1987 when Alan Greenspan came into the Fed.

Now, the distinction there, it's interesting, and I like what you said because you said fundamental things of economics, trade, commodities, things that have intrinsic value, whereas monetary, when you reference monetary, I suppose you're talking about basically the scam, which is the concept of central banking and fractional reserve lending, fractional reserve banking and all of this stuff that is just smoke and mirrors rather than real intrinsic value. Right. Is that what you need? Maybe expand on that a little bit, if you would.

Look, the United States was based on the idea of physical production and the idea that we wanted to have a credit system, which the British disallowed. We had something in the Massachusetts Bay Colony, which was shut down by William of Orange in 1696. And less than 100 years later, we finally made a revolution against it. The idea of our nation has always been physical production is what produces wealth. And that wealth comes from largely improvements in the productivity of labor, which is mostly scientific advance, and an upgrading in the skill level of the people who are producing. Now, to do that, you have to have a constant source of credit. And what we've seen at times, for example, under Alexander Hamilton or Abraham Lincoln's greenback policy, or what John Kennedy started to do with the NASA program and also his treasury, his offering of treasury bills rather than Federal Reserve notes. We've had moments in history where we've gone back to physical production and we've always had incredible wealth production from that. And then what's happened is the financial elite came in and said, oh no, now we need to go with deregulation, we need to make money. And Mr. Larouche is not opposed to anyone making a profit, provided it's a profit that adds something to the society. As opposed to, as you mentioned, these Ponzi schemes, the whole creation of the derivative trading, the mortgage backed securities, all of which came out of the 80s and 90s from Greenspan, the repeal of Glass Steagall in 1999 and so on.

There are so many things, you know, I call derivatives, I call them the thing about the thing.

You know, just a massive thing.

The term itself, the definition of a derivative is something that's derived of something from something of value but has no value in itself.

Sure, sure, yeah, makes sense. So what are some of the predictions that you have made that Lyndon has made that have come true or are in the process of coming true right now? Some of them are rather scary and maybe tie that in with the military industrial complex and the banking complex and let's see how it all interplays together.

Well, let me go to the first one which actually established LaRouche as an internationally known economist from 1969 after the pound crisis, he started warning that there was going to be an attack on the fixed exchange rate system of the Bretton woods agreement, which was the post World War II agreement that Franklin Roosevelt struck. And so on August 15th, 1971 when Nixon took the dollar off gold and did away with fixed exchange rates, we opened up the whole arena in which currency became treated as commodities. We've seen people like George Soros, the interests of the inter alpha banks of London which are tied to the Rothschild interests who have taken this and added layer of layer of debt upon a shrinking physical productive economy. So LaRouche forecast the breakup of Bretton woods which occurred on August 15th, 1971. In the 80s he warned of the effects of Paul Volcker's high interest rate policy, which you may remember was designed to stop inflation but it triggered another move away from physical production. He actually hit the October 1987, his only stock forecast was he forecast at the end of October 1987 there would be a dramatic shift drop in the stock market. And you may remember that was a very dramatic shift. And then during the 90s, he warned repeatedly of what he called a salami recession, a slice by slice drop in physical production. Now at the end of the 90s, when Glass Steagall was repealed in 1999, he warned that this would usher in an era of almost unlimited speculation. He put out warnings in the early part of 2000 as soon as the euro was introduced. He said, this will never function because you cannot have a single currency with economies of such disparity and cultures that are so different now. Perhaps the most recent and powerful forecast was July 25, 2007, before, a year before Lehman collapsed. Just as we were beginning to see the problems with Bear Stearns and the Mortgage backed Securities and Fannie and Freddie. He gave a public international webcast and he said the banking system is going to freeze up and it's going to collapse. And he immediately said that we've got to go back to a reorganization of banking which separates out the financial speculative side from the productive side, the commercial banking side. He said we've got to do that because we have to save the banking system, because we need a banking system. But we don't need to have the federal government or in this case the Federal Reserve defend the speculators, let the speculators take their losses between 2007, 2008. We were campaigning on this idea in 2008 when the bailout started. Mr. Larouche said this is going to increase the rate of physical collapse of the US economy, which is true. You look at the collapse of manufacturing. And he said ultimately it's going to lead to a hyperinflationary blowout that hasn't occurred yet because most of the money is still sitting on the books of banks and corporations.

It hasn't trickled down yet, but it ultimately has to trickle down. And that's when we will see the hyperinflation. Okay, so back up just a moment. I want to just ask you a few things that you said there. That was a long complicated thing. So first of all, Paul Volcker. I always looked at Paul Volcker as the guy who kind of did the right thing, like making us take the hard medicine, swallow that pill to break the back of inflation, you know, something that you would never see Bernanke or Greenspan do, I'm sure. So tell me how he. I think your statement was that he further separated the physical economy from the monetary economy by doing that, by raising rates.

Yeah, because what happened is that corporations began, if you realize two things happened as a result of Volcker. One was Michael Milken and leveraged buyouts that even though credit was jacked up, the interest rates were jacked up to what, 21%, I think the prime rate. What it meant is that in order to make any investments, you had to find higher rates of return. And so why would anyone invest in a steel mill where you might get 4% or 5% rate of profit when Milken was supposedly showing how you could make 30% on junk funds with the move into leverage buyouts.

Oh, on LBOs, okay. But you know, Milken is. I know he's demonized. Well, you guys are demonized too, in many ways. But Milken is also credited with. A lot of people say we wouldn't even have cellular phones or we wouldn't have had them until much later if it wasn't for Milken. And so many industries were faul finance that just would have never had access to financing without his work at Drexel Burnham and the junk bonds. And he was the junk bond king. Right.

Well, but you see, I think, Jason, you know enough about investing to know that at a certain point there was a Ponzi scheme that was set up by Drexel Burnham and all the related banks and savings and loans. Columbia snl, the Keating SNL out of Arizona.

Good old Charles Keating, can't forget him.

There was a. They reached the extreme limit of what you could do with leverage for that system. What was done was that Milken was pulled down and Greenspan went to the cftc, the commodities Future Trade Corporation with Wendy Graham, the wife of Phil Graham was the chairman and said, we're going to totally deregulate commodities. This set in motion the derivatives market where the leverage went higher and higher. That is you needed fewer and fewer real assets to borrow. So what Volcker did, Volcker was right about one thing, which is you had to do something about inflation. But Mr. Larouche's view is the way you deal with inflation is you write off the bad investments over time through bankruptcy reorganization. You have to do that with the banks. You can't let the banks keep these bad assets and keep giving them money to hold them at book value. You've got to go to mark to market at a certain point and instead then you need credit. In fact, what we propose to Volcker is the Federal Reserve has a basis within it where they can do a two tier credit system. High interest rates for speculation and low interest for those areas that will increase production, increase productivity and increase jobs. And so that was Mr. LaRouche's proposal. Then Volcker just went across the board with high interest rates and it squeezed out a lot of medium sized producers where a lot of the new technologies were coming online. To your point that while all these new industries came in, if you look at the net effect of them, we've just had new monopolies that were set up over time as a result of these things. Because the consolidation that supposedly stops the initiatives of smaller companies, at a certain point the bigger companies have the credit and they come in and buy it all up anyway.

Well, that's what really, really scares me. You know, I don't like big government and I don't like the big corporatocracy either. Because I'd say that if I, if I have to be more fearful of one over the other, I'd be more fearful of big government. But the big, the big corporatocracy is very abusive too. I mean, you look at these giant corporations with the scale they have and they just get in bed with the.

That's exactly the point.

Yeah, right.

Because what we have now is the worst of both worlds. We have a government which is not doing what it should do to protect the small guy, the medium producer, the entrepreneur. Instead, the government is bailing out the corporate cartels. That's what the Obama health care plan was, a bailout of the insurance companies and the HMOs and the drug companies. That's what we're seeing in all of these areas. You know those people who say Obama's a socialist? I just say I've never seen a socialist who redistributes wealth to the upper 1%.

Well, it's interesting because it's like a new, it's a new breed of government that we have. It's not pure in any way. He's sort of a fascist.

In his love for the corporatocracy because he's definitely supporting them. But then he also tries to appeal to the little guy. He's like a socio fascist.

Well, that's the rhetoric though.

Yeah, right.

His rhetoric is now increasingly class warfare. We've got to take care of the little guy. But look at what his policies do.

Oh, absolutely. Couldn't agree more.

He's never done anything for the little guy. He's continued what Bush and Cheney were doing with a redistribution to the people who have already proven they don't know how to handle money. Now I'll add one other point to that because you're absolutely right. In the twenties, when Mussolini did this, it was called corporatism. And that was the official academic word for what Hitler called fascism, where the government aided the cartels, including through attacks on labor, attacks on businesses, small businesses and so on. And this is what we're seeing under Obama. This is what we're seeing in Europe with the European Union, the same system, and it doesn't work. You see, ultimately, if you keep bailing out, if you keep increasing the total volume of debt to pay off uncollectible debt, you're never going to do it. There's not enough money to cover the outstanding derivative obligations of the big five banks in the United States. And so if we were your example of Volcker, Volcker was the Dutch uncle who said we got to bite the bullet somewhere. If we had a president who was serious, he would say, okay, the too big to fail banks, you're going to bite the bullet and you're going to eat your losses. We'll keep you open for your depositors, your commercial accounts, but we're not going to protect your derivative obligations. Let them be rewritten over time.

Well, now, here's the thing. I want to add to what you were talking about how the physical economy has been in decline for many years. And it's so true. Now you take what you said about how monetary policy reduces the size of the physical economy and increases the size of the smoke and mirrors economy. And the smoke and mirrors economy takes place mostly on Wall street. The physical economy takes place mostly on Main Street. And here's another part of it. It's even worse than you said because they first started hollowing out the American economy through the monetary angle. But then what came along is you took the environmental angle, you took the regulatory angle, you took the union. And I would have a feeling that your group would support unions. I'm assuming, I don't know. But what's your stance on unions, Just out of curious?

Well, we're in favor of the kind of unions that are technologically progressive and are actually working for the benefit of the industry and the workers. What we've seen with a lot of the unions, especially seiu, some of the service unions and so on, is that they're in bed with the corporatists.

Yeah, it's awesome.

I think you have to distinguish between what is the function of a union. If you go back to Walter Reuther and the United Auto Workers, even though they had huge battles with Henry Ford, ultimately both of them agreed that a happy, productive worker increases the profit of the corporation and the future earnings of the company. So I think in that sense we had a better model coming out of World War II. But to go to the broader point, which I think is really important, look, we've lost whole sections of our manufacturing economy and we may not get them back. And what Mr. Larouche has been proposing is that not only do we do a bankruptcy reorganization of Wall street, but then we go back to what he talks about as a Hamiltonian policy. And this is something we may have to fight about for a couple of minutes to get the idea. But what Hamilton did, we had a huge war debt at the end of the Revolutionary War, and there were some people like Jefferson saying, let's just cancel it or pay it all off at once. Similar to the debate we had around the budget deficit in the last Congress. What Hamilton said is, look, if we don't pay it, we'll never be able to borrow again. However, let's transform the debt into a way of getting credit to produce goods. The two things Hamilton focused on was a national bank that would make credit available to the private banks so you'd have a national currency, but that the banks would then invest in two areas. One was infrastructure, which at the time were canals, roads and ports, which cheapened the overall cost of physical production. And then secondly, manufacture, including manufacturing that fed into the agricultural sector. And Hamilton not only won the fight with George Washington, but we paid off the Revolutionary war debt within 20 years and had a huge jump on the rest of the world with the Industrial Revolution. And so that's what we mean by Hamiltonian economy, that government regulates banking to ensure that credit is available for bankers to decide where it's going to go. The government doesn't tell them where it's going to go, and it doesn't go to government corporations because local bankers do a better job of that than anybody else. But that you make sure cheap credit is available for physical production. And that's how our nation has always advanced.

Well, nowadays, speaking of physical production and nowadays you see all of the money on Wall street, the venture capitalists, it's all attracted to software companies, companies like Facebook and Groupon, and companies that don't. I mean, they're great, but they don't really produce anything.

Jason, as an investor, you know, if you can lower your costs and your only concern is to make a profit, then there are many ways to make a profit which actually harm the real economy. And the question then is, do you have a social conscience when you take out, when you encourage people to invest with you? Or is it like George Soros who's willing to destroy a country like Indonesia to squeeze out a short Term profit in the difference between the peg of the Indonesian rupiah and what it's actually worth. So we've seen people who use investment policy not just to make money but for the purpose, the targeting of physical production. And the idea then that we can use free trade to outsource. And we've reached a point where the United States is in a real deficit when it comes to our physical production. And if we don't reverse it, then we're going to not just see a dollar collapse but we're going to see what's left of the middle class disappearing in the United States.

Well, let me just two more points on that or two more elements on that issue of physical production collapsing. And it's so true. I mean it's just. I'm not a fan of unions. I mean in concept I think they had their, they had their place in history for sure, we needed them. But nowadays, and we don't have to spend the time debating this nowadays, I think they've kind of largely outlived their usefulness. Okay. And you know, we may have some distinctions where we disagree on that, but doesn't matter. It just seems like the unions and the environmentalists have chased business out. It's not just a monetary thing. And the great example of this is the disaster called Detroit, Michigan, an abject disaster of a city. And you look at, I've never understood, you've got big three automakers and they're supposed to compete. They can't merge together. The Federal Trade Commission, the doj, the Justice Department, they would never let the big three automakers merge because they'd say that would be anti competitive. Yet all big three automakers have to buy their labor from the uaw, the United Auto Workers. Tell me that is a restraint of trade. I can't believe they're forcing.

Let me go back to another point which you just made, which I think is important, which is that the unions used to put jobs and production ahead of what I see as a phony environmentalism. Because the so called environmentalism that grew out of the 68er movement, the anti war movement, the idea really that technology is bad, that people are bad and that we have to have fewer people and less technology and get rid of science and put up windmills. This is another aspect of a destruction of productivity. And one of the things LaRouche has insisted upon is nuclear power. But going beyond it to nuclear fusion to matter antimatter reactions. There are certain things being worked on in labs that are astounding but get no funding here's an interesting point. The environmental movement, which, as you're right, it did eventually take over the unions. It was funded by the Rockefeller brothers, it was funded by Soros, by leading Wall street tycoons who basically profit from restricting technological development. So I think what we're looking at, what LaRouche's argument, is that the post Kennedy period has been a period where we threw out everything that we knew from the beginnings of American history about economics. That is, that any change is going to dislocate certain people. But if you're doing the change from the standpoint of future production, of increasing the total wealth of society as a physical product as opposed to a monetary product, then people will adjust and they'll develop. We're not saying we should go back to a buggy whip and carriage days, but you take the idea that anything physical costs too much. And therefore we've got to look for areas where we can make big profits without investment. You end up with casinos and whorehouses.

On the environmental angle, I've always liked the saying green trees have red roots. In other words, rooted in controlling people, controlling businesses, and in communism, basically. And what's interesting about it, it's so hypocritical. All we've done is offshore, our manufacturing, mostly to China. And China's environment is really going down the tubes. There's very little consciousness for environmental issues at all in China, from what I understand. It's just build, build, build, manufacture, sell, sell, sell. And it's as if John F. Kennedy's statement wasn't true. We all breathe the same air. That air doesn't just stay in China. It floats all around the globe. And so all we've done is really worsen the environment by chasing manufacturing businesses offshore. And we've certainly worsened the American economy and lessened the middle class.

You're absolutely right on that. Here's the point on that. Why do we do it? Because it's cheaper to use labor forces that are not educated, are not organized, don't have quality control in the plants. You remember, this initially started with the NAFTA agreement. And Ross Perot was right about that.

Giant, that giant sucking sound. Yeah.

And the point is, at a certain point, China was much cheaper than Mexico. And so Mexico, a lot of people don't realize Mexico actually had a steel industry. They had nascent manufacturing, which they shut down to take advantage of the Free Trade Agreement. And then as soon as they built some of these twin plants like El Paso and Ciudad Juarez, the companies moved to China where they could get Cheaper labor or to Honduras. The point is that what we've lost in this country is an understanding that wealth is physical and physical in the sense that changes in production come from scientific discovery and you cheapen the cost of energy production by increasing the intensity of energy. Just as they had to go from a wood burning or a coal economy to oil, gas, nuclear. We've always made those kinds of discoveries. And now we're basically told, oh, no, we have to go back to wind and solar. Well, we have solar economy. It's plants and vegetables. But it's not very efficient to have companies like Solyndra and these other kinds of scams that the greeny movement has come up with. So it's an extra tax on physical production.

Yeah, it is. It is an extra tax. Look at Solyndra. I'm here in Phoenix, so I'm all too familiar with what's going on with solar. And these companies have just basically stolen money from the American taxpayers, the politicians, namely Obama in this case. It's crony capitalism. It's just ridiculous what has happened.

Jason, you know what these companies end up doing at a certain point? They go over to China to produce the solar cells.

Yeah, I know. It's just unbelievable.

This is what LaRue, if you want to boil down with the LaRouche, is saying. We've gone into an insane economic paradigm largely as a result of the triumph of the radical free market policy of the hardcore Austrian school. The idea that, or Adam Smith, that everything is based on buying cheap and selling deer. We've turned our productive economy into a consumer economy and now we don't produce what we consume anymore. The thing that made the United States grow was that our consumption largely improved as a result of improvements in our productive economy. And now we want to consume the best of everything without producing it. And you can't do that. It's not work.

Would you guys then be in favor of tariffs or how do you keep the manufacturing onshore? Certainly the monetary issues we talked about, the unions, the environmentalists. What do you do today? Do you implement tariffs and protectionism? It sort of seems like this thing. We can't have it both ways. Either we want to go to Costco and Walmart and get all this stuff really cheap. And I've noticed over the years how much, how inexpensive everything has become. It's amazing how cheap it is. Or do we want to have American jobs? How do we have the best of all worlds?

Well, you need to have a tariff policy on certain areas where you must sustain production and I would say, for example, modern steel production. If some country is going to try and send steel here cheaper than we can produce it for the time being until we get better at it, we should put a tariff on it because we've got to have a steel industry. We still need things or build things which need steel. There are certain other areas, certainly. I think we could improve our auto industry. We probably should have done this 15 years ago when we were getting the cheaper cars before the auto industry or maybe 20 years ago before the auto industry went into a real tailspin. But you don't need to protect everything. But there are certain things you do need that are national security. Now, aerospace is another. We may in the very near future lose the few areas we have left that are physical production, where we have benefits like the aerospace sector, and that becomes a national security question.

So do you really mean to say that we shouldn't be buying the boots for our soldiers from China?

Well, you have to. As I said, there are certain things you have to look at, whether it's physically.

I'm being sarcastic, of course, I know you are.

Another area.

I have heard, Harley, that we import the boots for our soldiers in the military from China.

Well, and if those boots are not good, then I would say yes, we should go back to boot manufacturing here. But let me give you an example that may not come to mind. You were talking about things being cheaper. Food is becoming more expensive.

Yes. Why? Trueness. And so is energy. And I love the way you focus on real things, hard goods. Because I think that almost all wealth, real wealth, really all real wealth comes from real estate and resources, the things we all need to food, clothing, shelter, those three vital things, and those are real resources. Food is going through the roof.

Well, and it's because we're destroying US Agriculture. We're turning our corn production into the ethanol fuel, which is ridiculous. There's no reason where there's hunger in the world that you should take a centrally important crop and turn it into fuel production. Now, more importantly, though, the drought is wiping out about a third of our cattle industry in Texas, in New Mexico, in Oklahoma, we're losing the basis of the cheap food that we had in the past. This largely came as a result of, of the shift from the idea of having a food reserve, which every president from fdr, Eisenhower, Kennedy, even Nixon understood the importance of a food reserve. In the 80s, it got turned into the idea of a surplus. We started applying the same Adam Smith free market ideas to food and it became cheaper to buy food from Africa And South America where you don't have the same quality control and in the meantime we're losing the physical production. And agriculture is an important aspect of industry because with agriculture you have machinery, you have advances in fertilizer, all kinds of other things, shipping. So again, these are areas where I think we have to rebuild our domestic production. And if we don't do that, we're going to be in a situation where we're going to be dependent on food from countries which are much more susceptible to diseases of crops, locusts, things like that, and we're going to end up with much poorer quality food.

Well, and I think it even becomes broader than that in that we need to have our food production be in the hands of less of the corporatocracy. And we've got the former head of Monsanto now working in the Obama administration. I think he's the head of agriculture or something like that. And this is just stuff should not be monopolized. We need to have freer, more open markets and less centralization and smaller producers of all goods, of all goods and all purposes.

In the name of competition, they squeeze out competition.

That's exactly what they do.

The corporate cartels in grain, there are five or six of them on Monsanto adm. Archer Daniels Midland, they're just a handful that control global grain supply. And in the meantime, the old farmer cooperatives, these small farms that you used to see throughout the Midwest, they're disappearing.

Well, the FDA is attacking them to some extent. I mean, you know, I've done shows about co op groups and arrests and fines and it's unbelievable how they are just constantly supporting the corporatocracy and constantly attacking through legislation, through all sorts of. From every angle, they're just attacking the small producer of goods and services. It's incredible, it's amazing.

And here's the irony on that. The Republicans who attack Obama for it actually had the same policy that Obama has adopted which is to facilitate the too big to fail in every single area. Because once you take away competent regulation, I'm not talking about regulating the grade of toilet paper that's used in a factory warehouse, OSHA and these other things went way overboard. But regulation of certain key areas of finance, regulation of certain kinds of industrial processes, if you take that away and turn it to the so called free market, then what you're going to get is the corporations that have the most immediate connection to the financial interest are the ones who are going to undersell everyone else, price everyone else out of business and become the Giant corporations. And this is where you see the fraud of the campaign where many of these areas. Obama is going to do more damage to Medicare than the Republicans would. Obama will do more damage to Social Security than the Republicans would if he's reelected. So one of the things, I should have mentioned this up front. We're not going to have any reform in the economy in this country if Obama stays in the White House because Obama is a puppet of these Wall Street, City of London financial interests.

Yeah. Obama's just a George Bush number two. I mean, come on, it's just a new flavor of the same thing.

And the best way to, the only.

Way we'll see any real change is to have a third party. Or maybe Ron Paul, if he's on the Republican ticket. But, you know, I don't know what you think of him.

Well, we need, I think, I think what we need and I'm very happy to participate with you in this discussion because we need to get people to start thinking outside the box and start thinking about what has gone wrong. Because we've had the same Democratic and Republican crowd run by Wall street since ever since Al Gore set up the Democratic Leadership council in the 1980s where the Democrats said, hey, we've got to get some of that Wall street money too. And so we've had two parties that are controlled at the top by these corporate interests. Now, the point I would like to just finally get across is that for people who are interested in these ideas, these are not so difficult to wrap your mind around unless you're stuck in the axioms of either a radical free market or some kind of Keynesian socialist approach. LaRouche is not a Keynesian. He's not a free marketeer. He goes back to what used to be called the American system of economics. It came from Ben Franklin and Hamilton. The most important continuity between the American Revolution and the Civil War was a man named Henry Carey, whose father was the publisher of Ben Franklin. Matthew Carey. Henry Carey was Lincoln's chief economist and he brought his ideas to Germany which were picked up by Bismarck when Bismarck broke with the free trade policy of London and went with the national tariff policy and economic development which made Germany a leading economy in Europe at the end of the 19th century. All these ideas are available on our website. And I'd just like to encourage people, your listeners, to take a look at our website because we have some excellent videos on history, on science, that take up these kinds of philosophical questions. And also if your listeners are interested, I'll give a toll free number in our office in Houston. And if they'd like to hear from me or be in a discussion with me, I'd be happy to get back to them. That number is 800-922-2907. I don't give investment advice, but we're concerned with policy. And if people are interested in what kind of policies will work, it's 800-922-2907.

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Okay. Hey, I hope you've got time because I want to talk to you about a few more things. So do you have time? Sure, go ahead with us a little longer. Okay, so really three more topic areas. One is that we talked only for a couple minutes before we started the formal show today, but you talked about profiting from inflation and how you believe that the policies now, and I agree with you, are very destructive to the dollar and very inflationary. Maybe talk about that for a moment. I want to ask you about some of the criticism of Lyndon Larouche. And then I want, I want to conclude with maybe the military situation and the saber rattling going on with Iran and Syria and the Russia China connection, too. So let's go over those areas if we could.

All right, first of all, on the inflation front, what Mr. LaRouche has been warning for a while is that you can't keep bailing out bad debt without cheapening the value of your currency. And anybody knows that that used to be the ABCs of economic theory, that if you're putting out more money than your physical production, the costs are going to go up in Europe. Now we're beginning to see an inflation in Great Britain in particular, even here in Austria, it's the highest rate of inflation since 1974. And it's starting to scare people now. What's being proposed for the Eurozone, and this is being proposed by Bernanke and Geithner, who have come over to Europe repeatedly to tell Sarkozy, the President of France, and Merkel, the Chancellor of Germany, the only way to save the euro is to go with a hyperinflationary leverage policy and create euro bonds. They're talking about 3 to 5 trillion dollars of money created by central banks for bailout. Now, one of the central banks that's involved in the bailout, but, and I'm sure you know this, maybe your listeners do too, is the Federal Reserve. The Federal Reserve is bailing out European banks and they're not bailing out the countries. It's a lie to say it's a sovereign debt crisis. There is a sovereign debt crisis because some of these countries, like Greece and Italy and Spain, are spending more just as we are than they're producing. But the real crisis is that the bankers have been speculating on the bonds of these countries, and many of these countries are not going to be able to pay off their bonds, no matter how much of a bailout there is. So we're seeing. And also in the United States, there's a huge amount of liquidity on the books of banks and corporations. If that gets into circulation, which may happen at some point, if they have to redeem, sell off some of the derivatives with margin calls or things of that sort, we're going to see a hyperinflation. I don't mean a 5% or 10%. We could see 101,000. In the case of a country like Greece, they'll probably dump the euro before it happens, but they're looking at a situation where no one will be able to afford food. Now, who benefits from that kind of hyperinflation? The banks?

Anybody who owes money. Anybody who owes money, benefits.

And who gets hurt? The saver. The person who's been investing and working on putting together a nest egg for their retirement. Maybe they have $250,000 in an account that could be knocked down to 25,000 or 2500 or nothing.

I mean, 100% inflation means that 250,000 goes to zero in one year. Folks, this is so important for you to understand. Remember that inflation destroys the value of your savings, your stock portfolio, your bonds, the equity in your real estate, although the real estate.

Is a hedge against inflation. But wait, it also destroys the value of your debt. So the problem with these monetary policies we have, Harley, is that they're encouraging people to do the fundamentally wrong thing.

That's exactly the point. Because, look, why did so many people suddenly reach the decision that their house that they had almost paid off at $200,000 is now worth 500,000. So they should refinance so they have some money to play with.

Because they almost intrinsically knew, probably even if they didn't consciously know, they knew on some subconscious level that the debt would become worthless maybe. And so now we've seen it. All of the people that got into debt are getting rewarded. Even inflation hasn't really hit yet because they're getting the bailouts. They're getting to live in their house for free for two or three years. It's counterintuitive.

Well, and the other thing that happened is that they were encouraged by that, by saying, don't worry, this is a real valuation and it will keep going up by people who knew that it could not keep going up.

Yeah. Well, they say they call Goldman Sachs the ultimate bubble machine.

Well, Goldman Sachs and the U.S. federal.

Reserve, they create bubble after bubble after bubble.

Just announced yesterday, 0% interest rate till the end of 2014. Now you and I can't get money at 0%. Who's that going to?

It's going to the insiders so they.

Can keep buying and selling toxic assets.

It really is. Well, folks, unfortunately, I hate to say this, get into long term debt at fixed rates attached to things that have intrinsic real value like commodities. And those commodities are the construction materials that build houses and apartments and provide housing because everybody on earth needs a place to live. So again, it's counterintuitive and it's not totally the right behavior, but it's what you got to do in an environment like we have. I want to have you address two more things before we go. This has been a fascinating discussion, Harley. The first one is the marginalization that goes on in the corporate controlled mainstream or I kind of love what Sarah Palin called it, the lamestream media. They marginalized Roster Perot. He was right. The giant sucking sound absolutely happened. They've been marginalizing you guys for years. And I didn't really know what to think of you before I had this discussion with you for the past 40, 50 minutes or so. But just address some of this criticism, if you would. I look around and I see the Washington Post, the New York Times has described Lyndon LaRoche as a conspiracy theorist, a fascist, an anti Semite, and characterized the movement as a cult. They do this to Ron Paul. They marginalize him.

I was just going to say that. But look what they're doing to Ron Paul in the debates where he gets 89 seconds of airtime while Gingrich and Romney, who are two despicable characters in my book, are getting all the media. Look, there was a man who was an editor of the Washington Post in 1977 and he said, We've got to stop LaRouche. And the way to do it is don't cover what he says, just call them names. Now I don't know if you remember this, but we started winning elections in the mid-1980s. We won two statewide Democratic nominations in Illinois. We won the Harris county, which is Houston, Texas Democratic Party chairman's race in 1988. I got 25% of the vote running for U.S. senator in Texas in 1990 in an election ultimately won by Phil Grant. We were doingwe were winning people over because we were having local reporters and media that were covering us and what we had to say and all of a sudden we were called anti Semites. Now I'm Jewish, I'm not an anti Semite.

You sure about that?

I'm absolutely sure. I'm not a self hating Jew, I can tell you that. Just checking. But the argument was that if you attack the corporations, you're really saying Jewish bankers. And there was a book written about this on LaRouche which took his quotes and whenever he said the International Monetary Fund or the oecd, they said he means Jewish bankers. And instead of just allowing these ideas to be debated and these are important ideas, free trade versus tariffs, a credit policy versus monetary and hyperinflation. These are real issues that determine people's lives. And the decision was made to keep these out of the public discussion. So anyone who brings them up is called a wild conspiracy theorist. Now, I don't like a lot of what Ron Paul says because he is somewhat of an Austrian school economist.

Well, being Jewish, I suppose that you wouldn't like that he doesn't want to support Israel too, right?

Well, actually I don't support the current government of Israel at all.

Oh, okay.

But on the case of Ron Paul, he's absolutely right about the Federal Reserve. And when he brings it up, they say, oh, there's Ron Paul going off on a conspiracy. And then some people go as far as to say, well, that's really his anti Semitism because he's really talking about Jewish bankers. We're not talking about Jewish bankers. We're talking about a policy which is the kind of policy that actually led to Hitler coming to power because it was the hyperinflation in weimar Germany in 1923 which destroyed the physical production of Germany.

Yeah, you know, that's a Very good point. That's what allowed Hitler to rise was inflation.

He created a nationalist fervor and he took a population, a country that was beaten down, it had low self esteem and it had. The reason it had that is because it had massive inflation in the Weimar Republic. That's, that's a very good point.

Sure. And when you look at the historical falsification that goes on, I mean just you brought up the question of Israel and this can take us into the third question you had about the war danger. The Israelis have nuclear weapons. If Iran developed a nuclear weapon and threatened to use it against Israel, Israel could wipe out Iran 20 times over. The Russians had nuclear weapons during the Cold War, so did the Chinese. And we were able to negotiate and live on the same planet. Now there may be some suicidal lunatics in Iran, but right now we're supporting suicide bombers against the Assad regime in Syria. The so called Libyan Al Qaeda, we've moved them to Syria to try to overthrow Assad. Now I'm not a big supporter of Assad, but what we've done, and this is directly connected to the economy. Whenever you have an economic crisis or a crash war very often happens. Why? To take people's minds off their own misery and give them an enemy image. And this is what Bush did with the war on terror. Yeah, we had to do something about the people who hit the World Trade Center. Why didn't we go after the Saudis who funded it? So we instead have been on this course where the United States has been in a permanent war if you think about it, since 2001. And this is the old British imperial strategy of having those countries that might oppose them tied up in wars. What Mr. Larouche is warning is that it's not really Iran's alleged nuclear weapons program, which today was admitted again that the IAEA report shows that Iran. There's no evidence Iran is building nuclear weapons. The level of uranium enrichment is far below what would be needed. And this comes from Israeli think tanks. So why are we so hepped up right now on provoking Iran to close the Strait of Hormuz that will drive oil prices double. This is classic geopolitics run by a financial elite that don't want you to look at what is the real national interest of the United States right now. And so I think the war danger has two aspects. One, it's a distraction, but secondly it's a way to try and force Russia and China to accept the regime of the globalists and to not go on their own course. Where even though they have problems, as you pointed out, China has environmental problems, Russia has a problem generally generating credit internally. But these are countries that are trying to build their physical economies. And if we went to cooperate with them based on American national interests of manufacturing and so on, we have the potential to help them build high speed rail, the Bering Strait tunnel, develop the Arctic, the Siberian resources that are incredibly rich in potential. But the Russians are never going to get to them. So there's a whole different option to war and free trade policy and hyperinflation and that's what Mr. Larouche is largely focused on.

So why is it that we seem to want to pick fights with all of these countries? I know you mentioned the British strategy of just tying them up in war, but what is the connection with Russia and China and Iran and Syria? You know, can you clarify that? I mean, you alluded to it. Sure. Give us a little bit more on that.

Sure, that's a very useful question. Look, the Russians have come out of a pretty rough period. If you look at what happened after the collapse of the Soviet Union, you had this guy Gorbachev who basically said Russia should get fully engaged in the post industrial economy. And this is what was happening under Yeltsin where the United States was sending over economists and by the way, many of them were trained by Larry Summers at Harvard. Economists were basically looting Russia, putting KGB guys in charge of their raw materials and running a scam operation. And Putin came in and said, we're going to develop the Russian economy and it's not an easy thing to do because they don't have enough people, but they do have science. Now the Chinese have refused to open up their banking system because they don't want to have a fractional reserve system that will benefit a small group of bankers when they need to create 20 million jobs a year to accommodate their workforce. Because they're on the verge of real social chaos in China.

Yeah, the leaders of China are, oddly enough, people. People call them a communist country and I guess they are in several ways. But you know, in some ways, but oddly enough, the leaders of China are very, very fearful of social unrest. They're very fearful of people not having jobs. That is something that really runs their thinking and their policy.

And so look what they're doing. They're going with the space program similar to what we had under John Kennedy. They're building high speed rail, they're building canals, they're doing FDR style infrastructure because they know that those will create jobs in the present that will produce wealth for the future. And so when Geithner comes and says you should upvalue your currency, you should have reforms that allow Chase Manhattan bank to operate within China, the Chinese response is polite, but they basically say, get the hell out of here, we don't want to. And so you have forming a kind of Trans Pacific orientation, which includes Russia, it includes China, it includes to some extent India. Brazil was interested in this for a while, the so called BRIC option. And Iran was part of this, partly because Iran has oil. But Iran's idea was they know they're going to run out of oil and they want nuclear power for the future, so they brought the Russians in. Now the question is, at what point do the globalists run up against governments that can't be easily toppled, like Gaddafi or even Saddam Hussein? When I say that Saddam wasn't easily toppled, we lost a lot of Americans in that. And for what? Iraq is more chaotic now than it was before. It's on the verge of a religious civil war. So we want to do that with Iran and Syria also. And so what LaRouche is saying is that the targeting of Iran and Syria is seen by the Russians and the Chinese as the targeting of them. And Jason, I don't know if you saw what Obama did on his trip to Asia not too long ago, but he was there rattling sabers against the Chinese. And the Chinese know that the last thing they want is a war with the United States. And of course I would say most Americans don't really want a war with China.

No, that would not be a good no.

So what I would argue is that as the transatlantic financial system is collapsing, the elite who still control it through Brussels, through Wall street, through the City of London, would prefer to have wars for the same reason that the British were hoping that World War I would destroy both Germany and Russia as a threat. And they also, for the same reason, hoped that Hitler would go against the Soviet Union first to destroy each other. That's the traditional British geopolitical doctrine.

Is that really the concept of the enemy of your enemy is your friend?

Well, the better way to put it is what Lord Palmerston, who was the one who encouraged the south to fight the north in the civil war, he said, we have no permanent friends, only permanent interests. So, yeah, it's the same kind of idea. And you can have short term alliances but no principles. And the American system of our founding fathers was based on principle, putting principle above party or private interest. And that's what we've lost in the last 30 years.

You know, it's interesting and terrible at the same time that the whole concept of communism, right, is that communism is, it's billed as something that favors the worker and the little guy. In reality it's something that favors the elite class and the coinacente, the inner circle. And what we have now is just a new version of that with the corporatocracy and the elite bankers. We have this inner circle of high, high and mighty elites, the Wall street elites and the political elites that are in business together or in bed together and they're all billing the stuff they do is a favor to the little guy, but just doesn't work out that way.

No, I mean, what we need in a sense is a new American revolution, Peaceful, but a new American revolution where people go back to the understanding of the principles of physical economy which Benjamin Franklin studied and which Benjamin Franklin brought to his protege Alexander Hamilton. And you know, I think there's a lot of reason to be optimistic because sometimes it takes a profound crisis like a Pearl harbor to wake people up to the different reality that they're facing than what they think. But in this modern era, you know, it's pretty dangerous also to wait until you have such a terrible crisis before people.

Yeah, it sure is. You know, Harley, just one more point on that physical economy concept is I've been talking for a while about how I think one of the threats Americans face is that as the government becomes more and more broke, it just cannot control its spending. We have huge entitlement obligations. I call them the 60 trillion dollar time bomb. Some people call them the 120 trillion dollars dollar time bomb. Who knows the exact number of entitlement obligations that can never be repaid, can never be funded. It's just not possible. But you know, I think one of the next moves we're going to see in this country, that's going to be a big move that's going to hurt a lot of people, is like Argentina. They're going to try and nationalize the retirement plans, the IRAs. And one of the things that I think that the elites like about the smoke and mirrors economy, the fiat economy, the paper economy, it's really not even paper anymore, it's just electronic, is that it's much easier to control and move assets because the assets aren't real after all. They're just assets by the legal system.

And the banking system and.

The physical assets of real estate and resources. Those are hard, harder to move and control and redeed or change the ownership of them. So if people have their retirement plans in IRAs that are largely stock market based rather than self directed IRAs. I think they subject themselves more to this threat of nationalization or a new version of nationalization.

Well, and they're also more afraid of the idea of what we're talking about with reorganization because they think they're going to lose something. What they don't realize is that in a sense, much of what they think they have is already gone and they will lose it. I think this is where the question of actually creating a revolution in the way people think about economy as opposed to money and finance. You look at something like the CNBC where they argue for hours about these basically points of perception. One thing you were just talking about, this question of moving from money to electronics. Ultimately people have to eat. They have to have a place to live. They really do have to have some kind of mission in life. And you can't eat computer chips or paper.

We did an article in my newsletter, the Financial Freedom Report, entitled I can't eat my iPad.

That's right. That's exactly right. So at a certain point, physical economy will assert its real face. And if you don't have enough earth being plowed and enough resources being developed and enough people producing physical wealth, you're going to be subject to war, famine, disease and total chaos.

I think the thing, like you said, there's a lot of reason for optimism, oddly enough in this discussion, which wouldn't seem on its face optimistic. But you know, the reason for optimism is that when you look at the support for a candidate like Ron Paul who is just marginalized by the corporate media, sounds like the same thing has happened to the LaRoche group as well. But people get it. Now you can ask the man on the street about the Federal Reserve and the guy fixing the air conditioner that you walk by who's fixing an air conditioner on some commercial building, he knows about this stuff now.

You know, five years ago they didn't know.

They didn't get it. Yeah.

Five years ago no one knew what Glass Steagall was either.

Now everybody knows. Yeah.

So, you know, we are seeing a change in thinking, but it hasn't gotten to the point yet where people realize how desperate we really are, how far gone we really are. And I hope we can reach people in time to get the positive kinds of changes that we're supporting. And again, I would encourage people to go to larouchepac.com or give me a call at 800-922-2907.

Fantastic. Well, hey, Harley, thank you so much for joining us today. Keep getting the message out there. Appreciate you coming on the show.

Okay, thank you very much.

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