October 12, 2008 (LPAC)--Leading economist and American statesman Lyndon LaRouche issued the following assessment of the global financial breakdown crisis on Oct. 11.

Now you're going to the point that the establishment, so-called, has lost confidence in itself. It no longer believes that it has any possible way of controlling this thing, with its present policy. That's already settled. They have not come out of that, in the sense of trying to approximate some scheme that they'll come up with, which they will now adopt as the "new" solution. But you see the trend in that: The idea of the New Bretton Woods is all over the place, with many versions. That's already settled.

But the New Bretton Woods doesn't solve the problem, and the main problem is, people don't understand what the United States is, especially United States' citizens; because they've been so long in the wilderness, they don't remember what life was like when society was human. But society is human, and that will come forth.

So probably, some time within a week to two weeks or so forth, we'll have a fundamental change in the situation, in which we will essentially be on top of the situation: And that's because, they don't have any solution. I do. And none of the others do. You have people who are more sane or less insane than others, who will respond accordingly. But from what I see, nowhere, including Russia, is there a conception, a real conception of what I'm going to do. And that will take a couple of weeks, before that begins to become clear.

But what we're going to do, is simply, we're going to shut down this whole system. How? Well, through bankruptcy. What do you do in bankruptcy? You shut the system down. You put it into receivership. Now, the game now, is to target derivatives, because until you destroy derivatives, you're not going to be able to do any financial reorganization at all. Because the whole system is mortgaged to derivatives, and you're talking about quadrillions.

Remember what these are: Derivatives are nothing but gambling side-bets. They have no relationship to real value, they're only gambling side-bets.

Now, the problem also, is that these side-bets happen to be the characteristic of the system, through the degeneration from the disease called Milkenism, which became Alan Greenspanism. And Alan Greenspan and his British friends made derivatives the dominant, characteristic feature of the entire monetary system.

And worse than that, if you put out a derivative, and you put a price on it, this price now enters into the general profit-rate calculations, for certain categories of things; each have different profit-rate, discount rate. So the discount rate on a derivative, is then reversed and capitalized, as a capital asset, based on a ratio of yield to total value ratio. This is how you get this quadrillion function. So, in other words, there never was anything actually uttered as a value loaned. What there was, was the lending and borrowing, of a small amount which was the yield! And so you took a yield capital ratio, a multiplier factor, and you created this great mass of so-called nominal assets, which had to be in the form of assets, otherwise, they couldn't command a yield, according to the financial system!

Now, what we're going to have to do: You've got to cancel all the derivatives! We cancel them... they don't exist. "You don't exist, go away, derivative... you don't exist!" "You want derivatives, you don't exist, either! You can apply as a poorhouse applicant."

So, if we get rid of the derivatives, then you now have what you can reduce this to a ratio of bullshit, which is another word for derivatives, to something which has real current value. How do you do that? Well, everything goes into bankruptcy. And you have certain things that must be paid, currently, to keep the economy going, will be paid; and things that are not really necessary to keep the economy going, can be frozen for a while, with no yield on it.

The idea that there's an inherent right to profit is bullshit. Profit is supposed to be what you're supposed to earn somehow. So therefore, we simply take households and other things, essential things that must function which are real, and they will continue to function. And we can subsidize that through the United States sovereignty, under the American system.

But the rest of it--haha! Buddy, don't worry about it! It's either canceled, and that's in the quadrillions category; or it is in limbo, where it will remain until somebody comes to haul it off; or a very small amount of this great financial total, which is actually current turnover. So you reduce the economy to a current turnover basis, plus new capital inputs for developing the economy. And that's what we're going to end up doing.

- We Need the American System -

Now, the way we're going to do it, can not be done without the United States, and it can't be done by the United States alone. What you have to do, is, you have to create a fixed-exchange-rate system. Without the U.S. Constitution, and our Constitutional tradition you couldn't save this planet. It's finished. The U.S. is essential: And the Russians don't understand this. It's been clear. They understand some things, but they don't understand this crucial thing. They don't understand the American System.

Because with the Russians there is a problem: The Russians got bad `Marx' in economics. And therefore, they have a Marxian view of reality, which is bad Marx. And thus, they have the axiomatic assumptions of the British economic system. That's their problem! They see the British as an oppressor, but they don't see the British System as an empire. Idiots. They don't understand economics, because they think in Marxian terms: either the radical type, the extreme liberal type... But now it's really the British System, that they believe in, the liberals. The others tend toward a more conservative system, which is essentially Marxian, or essentially British in its ontological characteristics. So, they don't understand economy. They understand some things about economy. It's like the guy who knows how to put his tie on, but can't pull up his pants, you know? He can do some things right, but the process is not so good.

So, thus, the key thing is, what I'm doing has to be the key to this. Because you've got to have the American System to save the world. Without the American System, you can't save the world. The American System idea has to come from here; it can not come from Asia, Eurasia. They don't have that view of the world: Therefore, they're not capable of managing this process from the top. It has to be managed from the top, from the American System, which means here: which means me, because you know what the state of knowledge is in the United States.

Which means, as some people around the United States, in the woodwork understand, that in a few weeks ahead, I will have to play a decisive role in whether this present system survives or not. Because without that factor, you can not get out of this mess.

What you do, is, you use the U.S. Constitution. Hamilton's a good point of reference. You take that Constitution, and under our Constitution, you can not utter money except by Federal permission: It's the permission of the Congress, and permission of the Executive branch. And the Executive branch then manages this, once the Congress has authorized the utterance of credit. Our system is a credit system, not a money system. There are elements of a monetary system stuck into the present form of the system, under the Federal Reserve Bank and similar things. But the system remains, Constitutionally, a credit system, not a monetary system.

What has to be done, is we have to eliminate the monetary systems of the world, all monetary systems of the world--and go to a credit system! So, we freeze the monetary system, but we determine what part of the monetary aggregate will be converted into a credit-approved part, under the U.s. Constitution.

The way we extend this, is, we take other nations, such as Russia, China, and India, and we take them into the system, through treaty agreements. Because there are only two ways, under the U.S. Constitution, you can create credit: One, is the monetary creation of credit, which is controlled domestically; the second is by treaty agreement, and the Congressional approval of the treaty agreement affecting credit is done in the same way as the domestic generation of credit. So, now, if you have a treaty with Russia, China, and India, you have established what they could otherwise not establish: An international credit system.

Now, it has to be a fixed-exchange-rate credit system, or it won't work. The price of the fixed-exchange-rate system is not what's crucial, it's the existence of it. Not the relative price. And it must be fixed: If it is not fixed, it doesn't work. Because you can not create an international currency--that doesn't work either! You can only have an international credit system, and it won't work unless you tie the credit systems together, by a treaty arrangement; it must be fixed.

Now: From what I've said, it's obvious to you, that I know exactly what to do, and how it can be done. All you need is a feeling of great pain, in the right places, of the right people, and it can be caused to happen.

So, that's what we're going to do!

If we don't succeed, and do it just exactly this way, there's not going to be a civilized planet for a long time to come. And the population of the planet will drop from about 6.5 billion people to less than 1--hmm?--in a fairly short time. So there's no room for rearrangement of this perspective; it's not possible, unless you're crazy. Unfortunately, we have a lot of crazy people out there, including ignorant ones.

But it has to be done exactly this way: And it should be clear to you that the way is there. The key thing, of course, is not money. Money is an evil you have to control....

So, it's physical values that count.... So therefore, we've got to think in these terms. Get away from the idea of money is value. Money does not define value. Value must define money! Ah! Again, American System! The foolish Europeans have no idea what this is, including the Russians. They want to go back to a Marxian Communist conception of the matter--which again, is another sidetrack, a dangerous one.

We have to be absolutely clear on this. And stick to this, and not compromise on this. Don't compromise at all on these principles! No saying, "Well, maybe you're right." Don't say, "maybe you're right," you say, "You are certainly wrong!" "And that can kill you, being wrong! So stop being wrong! Before it kills you!"