August 9, 2007 (LPAC)--On Friday, July 27, Lyndon LaRouche reported that China was very angry at the U.S. Congress' recent legislation, and was soon going to take very strong actions which would shock the United States. One was H. Con. Res. 136, passed by unanimous voice vote in the House on July 30, which would abrogate the U.S. agreements with China which bar the highest-level Taiwan officials from visiting Washington, D.C. The other was Sen. Max Baucus's (D-Mont) S. 1607, with 13 co-sponsors from both parties, which passed the Senate Finance Committee at about the same time, and will come to the Senate floor after the recess. This is an elaborate bill which would slap penalties on China for the supposed "misalignment" -- undervaluation -- of its currency. Such penalties range from anti-dumping penalties, to opposition to China in the WTO and IMF, all the way up to prohibitive tariffs against all Chinese exports to the U.S.

"Smoot-Hawley! A Smoot-Hawley Tariff!", LaRouche responded.

"Smoot-Hawley. All the mistakes and all the problems of the past are being re-enacted by people who have learned nothing from history,--and know less about economics," he continued.

The threat of retaliation of which LaRouche had warned was not long in coming. Writing in yesterday's Daily Telegraph, journalist Ambrose Evans-Pritchard retails a very specific threat from two high-level Chinese officials: Xia Bin, finance chief at China's Development Research Center, and He Fan, an official at the Chinese Academy of Social Sciences. Both threatened that China might begin to dump some of its more than $900 billion in US bonds, "which might lead to a mass depreciation of the dollar," said Mr. He.

"Many of these Senators are decent guys, I know personally. But this legislation they're supporting is clinically insane," said LaRouche. "To do this kind of stunt in the middle of the worst monetary crisis since the end of the last war. To do that is clinically insane. And I know it's just because of their ignorance of economics, which is pervasive throughout both parties, and throughout government institutions. So they get reckless, because they're ignorant--they're incompetent in economics. This is the greatest sign of incompetence one could imagine.

"If the Chinese dump dollars, there's your upvaluation of the yuan! Take your advisers, and flush them down the toilet! The problem is the declining value of the dollar, which is not caused by China, but by the present President, and Vice President.

"The situation is such a mess, and the Congress and the Executive branch are so totally screwed up, that I'd better be called in to straighten this mess up. It probably won't happen, but then, the consequences of that not happening, will cause something interesting to happen. Like Hell!

"This bill shows the complete lack of a sane conception of economics among leading circles in our legislative branch. They need help! They really don't know what the Hell they're doing!," LaRouche concluded.