Angst on Wall Street, Another Bank Failure in India, as ‘Floating- Rate’ Monetary System Sinks

Now is the time for the leading spacefaring, technologically powerful nations—particularly the United States, China, Russia and India—to create a new international system of credit for scientific and industrial development. The Bretton Woods system launched by Franklin Roosevelt’s Administration in 1944 was such a system, and gave many nations rapid growth and rising living standards until the City of London banks succeeded in destroying it in the early 1970s. The “floating exchange rate” system they put in power on Wall Street is finally, after decades of financial crashes, destroying itself.

Fifty years of currency floats, casino speculation, deindustrialization and globalization have crippled the “developed” nations of the United States and Europe and their allies. They don’t have the hospitals to meet a serious global epidemic of a novel coronavirus. They don’t offer help to stop unusually large swarms of locusts devouring food in Africa, West Asia and South America, let alone think of exporting modern capital goods to those countries in the way that FDR thought of exporting the revolutionary Tennessee Valley Authority to the world.

Now “fears arising from the coronavirus epidemic” are allegedly triggering 1,000-point plunges on Wall Street, a headlong global rush into U.S. Treasury securities driving their interest rates down toward zero, and yet at the same time an aggravated shortage of liquidity (to speculate with!) on U.S. interbank lending markets. And, yesterday, for the third time recently, a significant Indian lending institution has failed and had to be nationalized, the $50 billion Yes Bank Limited in Mumbai.

It is not “virus fears” shaking the City of London’s rotten “floating-rate” monetary system after 50 years. It is tens of trillions of unpayable, speculative, securitized debt in an “everything bubble” of corporate speculation and households’ underpaid overextension. There are hundreds of trillions of derivative bets trembling on top of it.

And underneath that, worn-out real economies in a worldwide manufacturing recession, now rapidly being worsened by the impacts of the COVID-19 epidemic and its quarantines. There are now beginning large losses by airlines (200,000 flights have been cancelled so far worldwide); in hospitality and retail businesses of every kind; in auto production and sales (China auto sales were down 80% year on year in February); in dropping aircraft orders. Oil producers are trying to cut world oil production by 1.5 million barrels/day. A leading Italian economist estimates his country is losing 2.1% of its GDP. The IMF is lowering its world economic estimates virtually every other month.

In her Feb. 27 statement released by the Schiller Institute, its President Helga Zepp-LaRouche called for a summit of the leading economic and technological powers to implement Lyndon LaRouche’s “Four Laws,” including to put the “floating-rate” monetary system out of its misery. President Donald Trump now has to take a leading role, with at least China, Russia and India, in replacing it with an improved New Bretton Woods system. They must first restore Glass-Steagall bank separation—allow the immense bubbles of speculative, unpayable debt to be rapidly written off without destroying lending banks which are the channel of credit. They will accelerate great space exploration missions by cooperation, and use space science and nuclear science and technology to raise human productivity and combat disease. They will replace unpayable debt with new joint credits for great projects of infrastructure in developing countries and at home.

That new Bretton Woods credit system has been waiting since Lyndon LaRouche first outlined it more than 35 years ago.