162 



What Kind of Debt? 



Klenetsky then asked LaRouche. 

 "The national banking system which 

 you propose to replace the Federal 

 Reserve creates loans— wouldn't it 

 •lso put us into debt?" 



LaRouche responded: 



"No. We're going into implicit debt 

 because we take full faith and respon- 

 sibility for the value of our currency, 

 which we defend in several ways. 



"We defend it by trade policy, that 

 is, by protectionism, which is the 

 American Way, contrary to some un- 

 fortunate, miseducaledLueoDle who 



think otherwise, and contrary to the 

 Confederate traitors who also thought 

 otherwise. 



"We also manage our money by good 

 monetary policy, good fiscal policy; 

 but essentially, we manage our policy 

 by limiting the lending and the issue of 

 this currency to projects which create, 

 either directly or indirectly, an in- 

 crease in physical wealth significantly 

 larger than the amount of credit issued 

 to cause the creation of wealth. 



"What we use, is the factor of pro- 

 ductivity and technology to invest in 

 technology and productivity, in order 

 to get, in effect, a very large gross profit 

 on the money lent to bring labor and 

 capacity together to produce wealth. 

 Whenever you find an investment that 

 has this technological productivity le- 

 verage which you can make, where the 

 productivity payoff is either in the in- 

 dustry, as, say, a goods-producing in- 

 dustry, or in the industry through the 

 benefits of infrastructure, as in the 

 other case, then you make the invest- 

 ment, if it's a national need. 



"If it is something which is frivolous. 

 or something which is up in the air. 

 like financing real estate acquisitions 

 and secondary real estate markets, 

 you don't loan for it. You say, 'Sorry, 

 buddy, go scratch for your money 

 where you want to. We're not loaning 

 money for that junk We're not 

 allowing junk bonds. We won't tolerate 



that in our economy.' And so therefore 

 the difference is that the debt is in- 

 curred by the utilities and by the pri- 

 vate industries which borrow the mon- 

 ey—not by the federal government. 

 But we restrict the lending to those 

 utilities and to those private sector un- 

 dertakings which in general produce 

 more wealth for the economy, than the 

 value of the loans issued. And that 

 way. we ensure that we have no infla- 

 tion; in fact, we have sort of a deflation, 

 a decline of prices as a result of the 

 benefits of productivity increases." 



What Scale of Investment? 



Later in the interview. LaRouche 

 specified the scale of investments re- 

 quired: 



"In order to get this U.S. economy 

 moving, vou have to realize there is a 

 $1 trillion hole, minimally, per year, in 

 the U S. economy. This economy has to 

 have a real GNP approaching around 



$7 trillion a year. And until we get to 

 that we're not going to be in balance 

 on both private and public account, in 

 terms that we have to keep the econo- 

 my stable and meet the needs of our 

 people. 



"So, if you don't spend at least $500 

 billion a year in terms of lending pow- 

 er to the public sector for public utilit- 

 ies, and the private sector for these 

 kinds of investments, you're just not 

 going to do the job. You're going to be 



a complete failure. It's like the man 

 who tried to patch his pants, only he 

 didn't have any pants. The patch is a 

 good idea; but you've got to have the 

 pants, too. And Clinton came up with 

 the idea of a patch, which is not bad, 

 because the pants are tattered, but he 

 also has to have the pants. And the 

 pants are $500 billion a year, and $10- 

 50 billion a year (what Clinton pro- 

 posed for infrastructure) is only a 

 patch on those pants." 



