Question: I'm from the Polytechnic Institute [of Mexico]. My questions is: How can we make our opinion about the economic crisis the world is facing more widely known? Because speaking of a situation since 1971, as you have just now, where the United States, as far as I know, put its currency above money in general--that is what I have understood--and in this way has succeeded in buying and handling everything on the basis of dollars, and making its currency the one that grows, and in this way, ruling.

I understand that oil is also being bought in dollars and that in this same way, the other countries have to invest their wealth, their money, in buying dollars, getting rich in a “virtual” way. Well, anyway, that's more or less what I'd like you to expand on, this business of the “virtual” dollar and if it's real.

LaRouche: Look at the problem of European nations, for example, today. It makes clear what the problems of the United States are. Europe, coming out of the Renaissance, particularly after the Treaty of Westphalia, which was, in a sense, the rebirth of European civilization, after the intervention of Cardinal Mazarin, together with his associate Colbert, in the situation of the Thirty Years War and the aftermath. This was the beginning of a European civilization, a European-wide civilization. So, out of that, you had a problem. Europe was so corrupted by various traditional influences, such as the Hapsburgs, and such as the Venetian crowd, as such, that it was impossible, it was thought, during the 17th and 18th Centuries, to create a true republic in Europe, as had been intended by, say, Nicholas of Cusa, Cardinal Nicholas of Cusa, and others in the 15th-Century Renaissance.

So therefore, the leading minds of Europe, concentrated on North America, in particular, for the launching of what would be, presumably, a model, true republic, which could then inspire Europe to copy that model. What happened during the course of the 18th Century, after some influence in that direction from Leibniz to the Mather family, as with Cotton Mather and so forth, is that there was a more strenuous effort to bring the culture of Europe, the best culture of Europe, into play among the circles struggling for independence inside North America, the North American English-speaking colonies. This was basically a relationship between a fellow called Abraham Kästner, a leading scientific figure at the University of Göttingen, in Germany, and Benjamin Franklin, the leader of the independence forces inside the United States, or what became the United States.

On this basis, the United States developed a republic, whose essence is expressed by the Preamble of the U.S. Constitution, which defined three principles--which are rather popular among the patriotic circles of Mexico as well. Number one: that the nation and its people are sovereign. That is, there is no external authority over their administration of their own affairs, among their own people, in their own territory. Secondly, that government is not legitimate, unless that government is efficient in its promotion of the general welfare of all of the population. Third, that the present generations' government is not efficient if it does not promote the general welfare of posterity more than even the living generation.

So, what happened in Europe was this: As a result of the British intervention in the French Revolution, in the form of Philippe Egalité and Jacques Necker, who were both British agents, to create the orchestration of the July 14, 1789 Bastille event, which was a British intelligence operation, which destroyed much of the capability of Bailly and Lafayette to establish a monarchical republic, consistent with American principles, in France. France degenerated through the Jacobin Terror, and through the fascist regime of Napoleon Bonaparte, and thus, Europe was thrown back. There was an effort from various quarters, especially the Prussian Classical effort in Germany, to establish a true republic on the American-style model. That failed at the Treaty of Vienna, in 1814-15.

So as a result, what had happened, was that Venice had taken the Venetian model, which is of a state, a maritime power, with imperial tendencies, based on control by a financier oligarchy--the so-called Venetian Republic--and this model of Venetian Republic was transplanted into the Netherlands, and into England. Over the course of time since, European governments have evolved into what is called the Anglo-Dutch-Liberal model. The Liberal model of this form: First of all, it is based on a monarchical principle left over from Feudalism; that is, the concept of the President or Monarch as head of state. That the government, and much of its detailed executive functions are assigned to a parliament, a parliament which really does not have real control over the future. You have a third institution, which is called an independent central banking system, as opposed to a national banking system, which exerts veto power over the government, and often overthrows governments it doesn't like, through parliamentary crises.

So the general model of society, which is accepted as the “liberal” model of society, or the “democratic” model of society, is this Venetian model, which is based on a government, that is, an executive branch of permanent institutions of government; a parliament, which is easily destabilized by financial and other crises, or by bribing; and then, a central banking system, which is independent, which is actually the agency of financial interests, foreign and domestic.

So this has been the major problem. The United States has suffered from the influence of what is called the American Tory faction, which represents this Anglo-Dutch-Liberal model. This is associated with Wall Street, which is an example of the Anglo-Dutch-Liberal model. The crisis of the world financial system today is the imposition--especially after the death of Roosevelt, and especially after the events of 1971--the imposition of the Anglo-Dutch-Liberal model, as a model of real tyranny. That's what we're struggling against.

Now, what's the issue? The issue of money versus economy. Economy should be understood to mean, primarily, the welfare of the individual member of society, that is, the general welfare, both for the present and the future. And also, the sovereignty of the nation-state, of the republic. This means something that is measured in physical terms: that is, in terms of longevity; in terms of health care; in terms of physical productivity per capita; in terms of capital improvements in the capacity of society, in land reclamations, improvements and so forth--all physical things which can be measured per capita and per square kilometer.

So therefore, the policy of society should be to realize economic objectives which are physical in nature, if we include culture as one of the physical benefits in nature. Therefore, how do we run a money-economy in such a way that we achieve physical benefits? We have to put the money system under control of government. We do that in several ways: We do it by national banking; that no debt can be incurred by a nation's government, except by its consent. In the U.S. Constitution, this means that the Executive Branch can create currency and debt, but it must do so with the consent of the Congress. Among nations, we also add another feature, that governments can enter into treaty agreements affecting trade, and these long-term treaty agreements can be used as credit among nations to promote growth among nations, also, as well as generating credit from with governments.

So what we have to do then, is to realize, as the past 30-odd years should have shown, is where we had a great increase in financial aggregates, and a galloping and accelerating increase in the amount of money emission, or near money emission, accompanied by a decline, especially in the Americas, of per-capita, per-square-kilometer physical production. So therefore, what is needed, as we used to understand, is government must not only regulate its currency, it must regulate the uses of currency, and regulate the financial practice within society, in such a way, that the monetary and financial assets do not run away from the reality of the physical assets. And that's the basic problem in economy.

So therefore, what we did in the postwar period, under Roosevelt, was to launch a Bretton Woods system, which regulated the world economy's relations in such a way as to promote reconstruction in Europe, and expansion of the economy in other places. We see this, for example, in the case of Mexico--that despite all the problems of the U.S.-Mexico relations during the postwar period, the post-Roosevelt period, we see that there is a secular tendency toward improvements, physical improvements in Mexico, which began to be reversed in 1971, but conspicuously from 1982 on. So therefore, the rules, protectionist rules, by which the Mexican government, in international relations, could regulate its internal affairs, were removed. And thus, we have now a predatory financial interest, and predatory monetary interest, have been looting Mexico and the other countries of the Americas.

Our problem now, is to simply recognize these principle differences, and go back in the first approximation, to go back to what did work--that is, the idea of a regulated international monetary system, and monetary forms, and to financial controls, and trade and tariff agreements, which insure that the flow of money produces a result which is in conformity with the intention of society to improve the physical conditions of life.

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