Executive Intelligence Review, Volume 14, Number 24, June 12, 1987

AIDS WꢄLL CꢀNGE THE WORꢆD'S ECONOMY, AND ꢁꢂSꢃꢄꢅꢆꢆY. Surgeon General Koop and former White House Chief of Staff Donald Regan said fighting AIDS with anything more than condoms and dirty pictures given to school children was "cost-prohibitive." Now, the Everest-high cost of fighting AIDS is going to transform the economies of virtually every nation on Earth. It will be spent, because there is no choice but to spend it. How to reverse the economic policy �ꢀꢁl blunders that led to 'Irangate' QUARTERLY CONTENTS •An international financial blow-out: ECONOMIC the real stoꢀ behind 'Irangate' REPORT •The technologyꢂdriver of the new economic upsurge: the. forꢁꢂ year Marsꢂcolonization project •The explosive impact of AIDS on the world economy Make check or money order payable to: EIR Ouarterly Economic Report 51,000 annual subscriptron 5250 single issue. First Executive Intelligence Review P.O. Box 17390 Qu1a9rt8e7r Washington, D.C. 20041·0390 Founder and Contributing Editor: Lyndon H. LaRoucheꢞ Jr. Editor-in-chief: Criton Zoakos Editor: Nora Hamerman Managing Editorsꢃ Vin Berg and Sꢐꢊan Wꢄlꢊh Conꢀibuting Editors: Uwe Paꢀꢁrꢂ-ꢃꢄnkꢄꢅ Nancy Spannaꢐꢊꢞ Webꢊꢂer Taꢀleyꢆ Christophꢄr Whiꢂeꢞ Warrꢄn ꢃꢁꢇꢄꢈnꢉ William Wertzꢞ Gerald Roꢊꢄ. Mꢄl Klꢄnꢄꢂꢊꢋꢌ Antony Pꢍertꢎ Allꢄn Salꢏꢊbꢐꢑ ꢀꢁꢂ the Editꢁr Science and Technologyꢃ Carol Whiꢂe Sꢁcial Seꢂicesꢃ Richard Freꢄmꢁn Adveꢄising Director: Joꢊeph Cohen Circulation Manager: Joseph Jꢄnnings As this number of EIR goes to preꢁs, President anꢇ Nancy Reagaꢊ have arriveꢇ in Venice, where the Pꢃesiꢇent anꢇ Treasury Secꢃeꢂaꢃy James Baker III are scheꢇuleꢇ ꢂo take part in what is calleꢇ a "sꢄꢉ- mꢋꢂꢅ meeꢂiꢊg of various goveꢀments. Leaꢇing circles in Weꢁꢂeꢀ Eꢄꢃope expect ꢂhe Venice meetiꢊg to be a woꢃlꢇwiꢇe caꢂaꢁꢂꢃophe, "a poꢋꢊꢂ of ꢊo ꢃeꢂꢄꢀ_ꢅ INTELLIGENCE DꢅRECꢆORSꢇ Aꢈca: Douglas DeGrootꢉ Maꢑ ꢒlꢄvꢓꢄ Agricultuꢉ: ꢔarcia ꢔeꢕ Asiaꢃ Linꢖ de Hoyos Counterintelligenceꢃ Jꢗꢘey Sꢂꢄꢏnbꢄrgꢉ Paꢐl Goldstein Economics: David Goldman Eurꢊꢁan Economics: Wꢟlliam Engdꢁhlꢉ Laurenꢂ ꢔurawiec Eꢋꢌoꢁꢃ Viꢜian Freyre Zoakoꢊ ꢅꢍꢎo-Americaꢃ Robyn Qꢐꢙanoꢚ Dennꢏꢊ Smꢁll Lawꢃ Edward Spannaus Medicineꢃ John Grauerholzꢉ ꢔ.D. Middle East: Thierꢛ ꢒleꢜꢓꢄ Soviet Union and Easteꢏ Eꢋꢐꢁ: Rachel Douglas. Konsꢂanꢂꢏn Gꢄorgꢄ Sꢁcial Pꢐjecꢑsꢃ ꢔark Burdman United Statesꢃ Kathleen Klenꢄꢂsꢋ The Pꢃeꢁiꢇent arriveꢇ in Venice aꢂ the lowest point ꢋn hꢋꢁ political caꢃeeꢃ. He has cost the Uniteꢇ States the confidence of our allies wiꢂh his puꢁhing for a "zero option" agreement with Soviet leaꢇeꢃ Mikhail Goꢃbachov_ Oꢊ pages 41-43, we ꢃepoꢃt on how the "zeꢆ opꢂionꢅ wiꢊꢇs fꢃom Waꢁhingꢂoꢊ have almoꢁꢂ completely pusheꢇ West Gerꢉaꢊy inꢂo ꢂhe Soviet camp of "neutrals." The "zeꢃo optionꢅ is a ꢇiꢁaꢁꢂeꢃ woꢃse ꢂhan Munich 1938_ INTERNATIONAL BUREAUS: Bangkok: Pakdee and Sophie Tanꢍꢐrꢁ Bogoꢒꢓꢃ Javier Almario Bonn: George Gregoꢝꢞ Rainꢄr Apel Chicagoꢃ Paul Greenberg Coꢁnhagen: Poul Rasmuꢊsꢄn Hoꢋston: Harley Schlanger Lima: Sara ꢔadueno Los Angelesꢃ Theadore Andromꢟꢠꢊ Mexico City: Joseꢡna ꢔenendez Milanꢃ ꢔarco Fanini New Delhiꢃ Susan ꢔaitra Paris: Christꢏne Bierre Rio de Janeiꢎoꢃ Silꢜia Palacios Rome: Leonardo Serꢜadioꢉ Sꢂꢄfania Sꢁcchꢏ Stꢔkholm: William Jones United Nations: Douglas DꢄGrooꢂ Washington. D.C.: Nicholꢁs F. Bꢄnꢂon Wiesbadenꢃ Philꢏp Golub. Garan Haglꢐnd The economic anꢇ monetary policies coming out of Waꢁhingtoꢊ ꢬ sheer insanity; see the ꢃepoꢃt on Volcker's ꢇepaꢈuꢃe, on page 4, aꢊꢇ aꢃtꢋcleꢁ on the steel inꢇustry, shipping, farming, anꢇ ꢃegioꢊal bankꢁ. Abroaꢇ, ꢂhe "Projecꢂ Democꢃacyꢅ buꢊch operaꢂing aꢁ a paꢃallel goveꢀꢉeꢊꢂ iꢊ Waꢁhington, is tuꢀꢋꢊg one of our moꢁt loyal allꢋeꢁ, ꢂhe Philippines, ꢋnto the colony of one of Wall Sꢂreet's moꢁꢂ ꢇꢃug- ꢂaꢋnꢂeꢇ "iꢊvestmentꢅ fiꢌs (pages 46-48). Now let's ꢂalk abouꢂ the kinꢇ of cultural warfare which can aveꢃꢂ ꢂhe fall into Soviet slavery. It begiꢊs with our Feature, in which pꢃeꢁiꢇeꢊꢂial caꢊꢇiꢇaꢂe Lynꢇon LaRoꢄche waꢍꢁ againꢁt pꢃeeꢉpꢂive "gꢋveawayꢁꢅ ꢂo ꢂhe Sovꢋet Union, anꢇ evokes the "Peaꢃl Haꢃboꢃꢅ ꢁpiꢃiꢂ of an American citizenry unꢇer the conditions of an impenꢇiꢊg fiꢊaꢊcꢋal cꢃash (page 32). Secoꢊꢇ, ꢂhe Science & Technology section ꢇiscuꢁses a new mꢋl- iꢂary ꢂhreat, ꢃaꢇio-frequency weapons, being ꢇevelopeꢇ by ꢂhe Sovieꢂꢁ now: a challeꢊge ꢂhe West has to meet through a cꢃaꢁh pꢃogꢃam ꢂhaꢂ will alꢁo help a tꢃꢄe ecoꢊomic recovery aꢊꢇ open the paꢂh foꢃ a cꢄꢃe ꢂo ꢂhe moꢁꢂ ꢇꢃeaꢇeꢇ ꢇiseaseꢁ, ꢁꢄch as AIDS. Thiꢃꢇ, ꢂhe whole woꢃlꢇ kꢊowꢁ thaꢂ EIR anꢇ Lyꢊꢇon LaRouche pioꢊeereꢇ ꢂhe political fighꢂ foꢃ the AIDS testing policy Presiꢇeꢊt Reagaꢊ paꢃꢂꢋally aꢇopteꢇ on May 31 (page 62). Finally, the batꢂle agaꢋꢊꢁꢂ malꢂhꢄsꢋaniꢁm ꢃaging in Peꢃu (page 14) goes to ꢂhe coꢃe of a ꢊew, jꢄꢁt woꢃlꢇ economic orꢇer, as we have long iꢇenꢂifieꢇ iꢂ. EIRIExecutive Intelligent·, Review (ISSN 0273�ꢂ14) is published weekly (ꢃ0 issues) exapt for the sꢀꢁꢂꢃ wꢀꢀk' ꢄJuly and last week ꢄDecembꢀr ꢅ New ꢆꢂꢇꢈrꢉꢊ Internatiꢂnal Press Service P.O. Bꢂx 65178. Washꢉng/ꢂn. DC ꢀꢁꢂꢃ (ꢀ0ꢀ) 78ꢃ-1ꢂ47 ꢄꢅꢆꢇ Hꢈꢉ_ꢊ: Executive Intꢂlligꢂncꢂ Rꢂꢟiꢂw Nachriꢎhꣁenagentuꢃ GmbH. Postfꢀh 2308. ꢁimꢂꢃstꢃasꢄ 1ꢅꢆꢇ-62ꢈ Wiesbꢗdenꣅ Fꢉ Rꢂpuꢡlꢯc ofꢊyꢋ Tel: (ꢌ1ꢍ1) 8840. Exeꢎuꣁive Direꢎtoꢏꢐ Anno HꢂUꢂnbꢑichꢒ Michaꢂl Liebig I" ꢀꢁꢂꢃ: E1Rꣅ Roꢄnvaengeꢓs Aile ꢄ. ꢔ1ꢈ Cꢕnꢖꢗgꢂn OE. Tel. (01) 4ꢍꢘꢙSꢚꢛ I" Mexkꢅꢆ EIR. ꢜꢃꢗꢝciꢞo Dlas Coꢟaꢠꢡiꢗꢢ ꢇA-3 Colonia San Rafael. Mexiꢎo Oꢜ. Tꢂl: 705-1ꢔ95. Jꢋꢌꢍꢎꢏo" ꢈꢉes: O.T.O. Rꢂꢄꢣꢖ ꢤꣅꢥ ꢦakeuꢎhi Bldg 1ꢪꢫ Tel: (03) ꢔ08ꢚ7821. .•1-34ꢚ1ꢍ Takatanobabaꢒ Sꢖinjuku-Ku. ꢦꢧꢨꢩ Copyright ꢊ1987 New Solidarity Inꢬtionꢗl ꢭꢢꢢ ꢮꢯcꢂꢫ All ꢰꢱꢖꢲꢢ ꢳꢴꢂdꢵ Rꢂpꢶuꢎtiꢩn in ꢷꢸlꢂ ꢋ ꢯn ꢐ ꢷꢯꢹꢺt ꢻrmiꢢꢢion ꢼꢎꢲlꢽ prꢩhibitꢂdꢫ Sꢂꢎꢩnd-claꢢꢢ ꢑꢒ ꢾꢿ ꢗt Wꢗꢢhington D.C .• ꢌ<ul style="display: flex;"><li style="flex:1">at an additionꢗl mꢗilꢯnꢱ ꢩfficeꢢ. </li><li style="flex:1">3</li></ul><ul style="display: flex;"><li style="flex:1">ꣀnꣁꢖꢢꣂꣃ꣄ꢔ5ꣅ 6 montꢖsꣂ$ꢍꢍ5. </li><li style="flex:1">꣄</li><li style="flex:1">yꢂ꣆꣇$3꣈꣉ Sinꢱlꢂ </li></ul>iꢢꢢ�10 Aꢎadꢂmiꢎ liꢡra꣊ rate: 5245 ꢍ ꢽꢂ꣆ ꢓꢔꢕ ꢖnd all addꢗsꢘ ch angeꢢ ꢎ ꢙꢚꢛ P.O. ꢜꢝ ꢞꢟꢠꢡꢢ Washinglꢣꢤꢥ D.C. ꢦꢧꢨꢞꢩꢪꢠꢡꢫ (2ꢪ2) 785-134ꢟ -�ꢇꢈlꢉtenꢊ Depaꢀꢁnts <ul style="display: flex;"><li style="flex:1">Eꢌꢎꢄꢎmꢈꢌꢊ </li><li style="flex:1">ꢃꢄꢅꢆꢇꢈꢆꢉꢊ </li></ul>15 Monsignor Augusto 6Africa Report 479Paul Volcker leaves the <ul style="display: flex;"><li style="flex:1">sinking ship </li><li style="flex:1">Vargas Alzamora </li></ul>Africans move on the debt front. He decided not to be on hand for the recriminations, when the foreign credit of the United States collapses. The secretary general of the Peruvian Bishops' Conference refutes the malthusians' 20 Report from Italy Austerity menus to prevail in Venice? popꢁlation-control policy. The debt moratorium option is thrashed out in Venezuela No longer is it the well-behaved debtor, boasting of its sꢃcial statꢁs. Bꢎꢎk Rꢆvꢈeꢉꢊ 56 From New Delhi India joins the race for new materials. 49 The Soviet Army between the Prussian General Staff and Dostoevsky's madness 57 Report from Paris Laꢁrent Murawiec reviews The Soviet Mꢀlitaꢁ by E.S. Williams, and Le chef de I'Armee Rouge, Mikaꢀl Toukhatchevski by Pierre Fervacqꢁe. French take leadership against terror. British economy is Tories' Achilles heel 58 Andean Report Narco coꢁp brewing in Colombia. 11 Sound the alarm: U.S. shipyards have zero 59 Report from Rio merchant vessel orders Project Democracy gang in Brasilia. Marcia Merry reports on the crisis condition of a U.S. shipping and shipbꢁilding indꢁstry that has been entirely dependent on military Sꢌꢈꢆꢄꢌe & ꢋꢌꢍꢄꢎꢏꢎꢐ <ul style="display: flex;"><li style="flex:1">24 West must couꢀter Soviet </li><li style="flex:1">72 Editorial </li></ul>radio-frequency weapons <ul style="display: flex;"><li style="flex:1">Ambassador Richard ꢀꢁꢂ: </li><li style="flex:1">a</li><li style="flex:1">orders that are no longer enoꢁgh. </li></ul><ul style="display: flex;"><li style="flex:1">Soviet asset. </li><li style="flex:1">Jonathan Tennenbaꢁm reports on </li></ul>the most critical threat which the West must now meet from Soviet Marshal Nikolai Ogarkov's 14 Peru's bishops rip lies of the neo-malthusian ꢑꢒ Update 'population lobby' technological war bꢁild-ꢁp. .22 WHO announces plan for 17 Currency Rates Uganda 27 Soviet strategic radio- frequency and other assault weapons: a primer By Warren J. Hamerman. 18 Steel standoff shows policy 62 Reagan sides with impasse LaRouche on AIDS testing 19 Banking 68 Senate approves AIDS Termination with extreme prejudice. testing for immigrants 68 Kennedy introduces AIDS 21 Agriculture education bill Jꢁdge stays foreclosure actions. 70 Soldier with AIDS faces 22 Business Briefs court martial •Volume 14 Numꢀr 24, June 12, 1987 <ul style="display: flex;"><li style="flex:1">Fꢓꢔꢅꢕꢖ </li><li style="flex:1">ꢃꢄꢅꢆꢗꢔꢅꢘꢎꢄꢔꢏ </li><li style="flex:1">Nꢔtꢘꢎꢄꢔꢏ </li></ul>62 Reagan sꢄdes with 38 Ogarkov uses Cessna shꢀk to shake up deꢈense ministry LaRouche on AIDS testing His first majꢑr ꢇlicꢈ statement on AIDS ꢉs an ꢉꢃꢇꢊꢋꢂt first step, if oꢂꢓꢈ thꢋt, tꢑwꢋrd an effective ꢭꢮꢯꢰy for dꢆꢋꢓꢉꢂg with the AIDS ꢅisꢋstꢆr. The ꢓight pꢓꢋꢂe's ꢁꢂiꢃꢄꢅꢆꢅ progress to Moscow ꢐan oꢂlꢈ ꢋid thꢆ ꢎrogrꢆss ꢑf thꢆ Rꢆꢅ Arꢃy mꢋrshaꢓ's pre-wꢋr mꢑbiꢓꢉzꢋtꢉoꢂ. ꢀumentaꢁion:Whꢂ is Dmitri Memorial Day, 1987: Vꢎtꢎꢌans of Foꢌꢎign Waꢌs at aTimofeyevich Yazꢑv? ꢀ Eꢇꢇiott Abrams disgraces ꢃꢄꢅꢆꢇꢈ; Will Shultz ꢁ next? ceꢀmꢁꢂy in Virginꢊa. Many commꢊt thꢎ ꢎꢉꢎmꢎntary <ul style="display: flex;"><li style="flex:1">bluꢂder of ignorꢊng thꢎ effꢎcts of </li><li style="flex:1">a</li><li style="flex:1">"finaꢂcꢊaꢉ Pꢎarꢉ </li></ul>Harꢃrꢄ ꢅhꢆk ꢇꢈn thꢎ ꢊntꢎꢌnal ꢈꢉꢊtꢊꢋaꢉ pꢌꢍꢎssꢎs of 41 Kohl capitulates, endorses thꢎ U.S.A.-and othꢎꢌ ꢌꢎlꢎvant nations. zero option Thꢆ mꢋꢂ EIR hꢋs exꢇsꢆd as a kꢉꢂgꢎꢉꢂ iꢂ the Cꢑꢂtra cꢑver-up is ꢆꢌꢇsꢆd ꢑꢂ the witness stand as "either incompetent . . . or a liar." 32 The power of the U.S.A. 42 The 'Republikaner' Party-Moscow's new fifth column in West Germany has yet to be seen Presidential candidate Lyndon LaRꢑuche takes on the dꢋngerously incoꢀect view, reꢐently expressed by the prꢑmꢉnent Italian industrialist Carlo De Benedetti, that the United States will be replaced by the Sꢑviet Union as the world's dꢑminant economic power: "I intend to become the next 66 Eye on Washington Oꢉꢓ ꢍꢎ wꢏs ꢑf Persian Gulf 45 The Soviets play the cꢁtꢑff. 'Canada card' 67 Elephants & Donꢂeys 46 Philippines: behind the Gorꢆ hꢉts thꢆ cꢋmpꢋign trail-in Cory magꢄc Mosꢐow. 47 Wall Street firm owns <ul style="display: flex;"><li style="flex:1">Jaime Ongpin </li><li style="flex:1">68 Congressional Closeup </li></ul>President of the United States. . . . Under those cꢑnditionspresuming you had not already given irreversible concessions to Mꢑscow before then-the financial disaster which Sr. De Benedetti foresees will be conquered, and the world will move rapidly into the greatest scientific, 52 New bꢁꢂ on mission to the Slavs liﬅs veil from the true East 70 Natꢄonaꢇ News The 'Third Rome' mystics iꢂ Moscow cannꢑt bꢆ pleꢋsed wꢉth the Schilꢓer Institute's rꢆꢓeꢋse ꢑf Prof. JiN Maria Veselfs Grideranno Ie pietre (The Stones Shall Cꢂ Out), revolving ꢋrꢑuꢂd the figures ꢑf the sꢋinted brꢑthers Cyril ꢋꢂꢅ Methꢑꢅius. Corꢃꢄꢁꢅoꢆꢇ Lꢋst week's issue ꢉꢂꢐꢑꢒectꢓꢈ reꢇꢔꢆd the date of the Vꢆꢂꢉꢐꢆ summꢉt ("Glꢑbaꢓ fiꢂaꢂciꢋl crꢉsꢉs ꢎrꢆꢅiꢐtꢆd fꢑr Octꢑbꢆr," page 6); ꢉt shꢑulꢅ hꢋve ꢍꢋd Jꢁꢂꢆ 8-1 0. technological, and economic grꢑwth in the history of mankind." 53 Schiller Institute fetes third birthday 55 Soviets 'offer' to broker debt crisis 60 International Intelꢇꢄgence ꢂꢋꢌꢍꢎꢏꢐꢑꢒcs Paꢂ Volcker leaves ꢃe sꢄ ship by Daꢀd Goldman For two years, Federal Reservꢕ ꢋfficials pꢋinꢃ ꢋut, Fed chairman Paul Vꢋlckꢕr issuꢕd rꢕgular ꢀꢁings ꢃhaꢃ ꢃhꢕ Uniꢃꢕd Sꢃates cꢋuld nꢋꢃ cꢋnꢃinuꢕ ꢃꢋ livꢕ ꢋn ꢃhꢕ fꢋrꢕign ꢏapiꢃal inflꢋꢀs that have madꢕ ꢃhꢕ Uniꢃꢕd ꢟꢃaꢃꢕs ꢃhꢕ ꢀꢋrld's biggꢕst debtꢋr natiꢋn. Insꢃead, hꢕ dꢕꢓandꢕd, Cꢋngress and ꢃhꢕ administraꢃion would havꢕ ꢃꢋ ꢃakꢕ draꢏꢋnian ausꢃꢕriꢃy ꢓꢕasures ꢃꢋ reduce federal spending. In ꢃhꢕ fꢕꢀ days bꢕfꢋrꢕ his June 2 ꢩeciꢆion to refuse a ꢃhird ꢃꢕrm in ꢋffiꢏꢕ, Vꢋlcker appꢅrently ꢩetermined that ꢃhis ꢂesidenꢃ ꢀꢋuld nꢋꢃ ꢃakꢕ such dracꢋnian ꢄeꢅꢆuꢇsꢈleast ꢋf all in an elecꢃiꢋn yꢕar. Hꢕ decided not to ꢀ on hand for the recriminations, ꢀhꢕn ꢃhe foreiꢎn cꢇdit of the Uniꢃed Sꢃates ꢏꢋllapsꢕd. At ꢉe Inteꢊaꢃiꢋnal Mꢋnꢕꢃary Fund, ꢃhꢕ Fꢕdꢕral Reservꢕ, and leading Wall ꢟꢃreꢕꢃ invꢕsꢃmꢕnꢃ firms, Vꢋlcker's departure leﬅ seniꢋr ꢋfficials ꢃhundꢕrsꢃruꢏk; Vꢋlcker himself had told friends ꢋnly days ꢕarliꢕr ꢃhaꢃ hꢕ fully inꢃꢕnded ꢃꢋ acꢏepꢃ a third term. In effꢕꢏꢃ, ꢃhꢕ ꢋn-ꢃhꢕ-grꢋund ꢏꢋmmandꢕr had announced thaꢃ ꢃhꢕ batꢃlꢕ ꢀas lꢋsꢃ bꢕfꢋrꢕ iꢃ ꢀas jꢋined. The ꢃruꢕ ꢃuꢊing pꢋinꢃ ꢏaꢓꢕ May 29, ꢀhꢕn ꢃhꢕ Nꢕꢀ York Federal Rꢕserve Bank's fꢋreign ꢕxꢏhangꢕ ꢏhiꢕf ꢟam Crꢋss told a press conference ꢃhaꢃ ꢃhꢕ vꢋlumꢕ ꢋf cꢕnꢃral banks' foreiꢎn exchanꢎꢕ inꢃervꢕnꢃiꢋnꢈrꢋughly $34 billion durinꢎ the thꢇe mꢋnꢃhs ꢃꢋ April 30-ꢕquallꢕd ꢃhꢕ U. S . ꢃrade dꢕficiꢃ for thaꢃ ꢌriꢋd. Fꢋrꢕign privaꢃꢕ lending ꢃꢋ ꢃhꢕ Uniꢃꢕd Sꢃaꢃes ꢆhrꢅnk durinꢎ ꢃhe secꢋnd haꢫf of 1986, and disaꢍꢌaꢇd dur- ing 1987. America's entire foꢇiꢎn deficit, and ꢃwo-thirdꢆ of ꢁe feꢩeral budꢎet deficit, ꢀere financed this year to dꢅꢃe by the prinꢃing-prꢕssꢕs ꢋf fꢋrꢕign cꢕnꢃral banks, as they purchasꢕd ꢀiꢃh ꢃhꢕir ꢋꢀn ꢏuꢐꢑncy, unꢀanꢃꢕd dꢋllars in ꢃhꢕ fꢒiꢎn-exchangꢕ ꢓꢔꢕꢃ, ꢖd ꢗinvꢕsꢃꢘd ꢃhꢋsꢕ dꢋllꢙs in U.S. Treasury sꢕcuriꢃiꢕs. "Thaꢃ is ꢃhꢕ pꢋinꢃ ꢀherꢕ yꢋu havꢕ ꢃꢋ sꢃꢋp ꢕxꢚaꢛlaꢃing," ꢀꢜꢕd a sꢕniꢋr Fꢀꢁ Rꢕsꢕꢝꢕ sꢃaffꢕr. "Thaꢃ iꢆ obviously nꢋꢃ susꢃainablꢕ fꢋr ꢃhꢕ lꢋng haul." Since ꢃhe retiremenꢃ lasꢃ year ꢋf Federal Rꢕserve Governꢋr Hꢕnry Wallich, Paul Vꢋlckꢕr has bꢕꢕn Aꢓꢕrica's cꢋnnectiꢋn ꢃꢋ ꢃhe Bank fꢋr Inꢃꢕꢞaꢃiꢋnal ꢟꢕꢃꢃlꢕꢓꢕnꢃs grꢋup of central banks, ꢀhich nꢋꢀ providꢕ ꢃhꢕ only sꢋurcꢕ ꢋf ꢕxꢃeꢊal financing fꢋr ꢃhꢕ Uniꢃꢕd ꢟꢃaꢠs. In ꢕffꢕꢏꢃ, hꢕ sꢋliciꢃꢕd ꢃhe foreign lꢋans ꢀhich prꢋppꢕd up ꢃhꢕ fading ꢏrꢕdiꢃ ꢋf ꢃhꢕ U. S. goveꢊmenꢃ, and, aꢃ ꢃhꢕ pꢋinꢃ aꢃ ꢀhich hꢕ cꢋuld dꢋ nꢋ mꢋre, he left office. The two governments ꢧhꢅtever his ꢌrsonal motivꢕs fꢋr leaving, Vꢋlcker remains the casualꢃy ꢋf ꢃhꢕ ꢏivil ꢀar aꢓꢋng ꢃꢀꢋ gꢋvꢕꢊmꢕnꢃs in Washingtꢋn. Having usuꢡꢕd ꢃhꢕ Cꢋngrꢕss's poꢀꢕr to creaꢃe cuꢢency, ꢃhe majꢋr Amꢕriꢏan banks havꢕ ꢏꢋnsꢃiꢃuꢃꢕd a secꢋnd gꢋvꢕꢊmꢕnꢃ. Thaꢃ is truꢕ nꢋꢃ ꢓꢕrꢕly in ꢃhꢕ ꢃechnical ꢆense, i.e. , that their cꢋmbinꢕd ꢋffshꢋrꢕ ꢋpꢕraꢃiꢋns create money at will, a privilꢕge reservꢕd fꢋr gꢋvꢕꢊments; ꢃhꢕy also builꢃ ꢃhe parallel intelligence coꢀꢀuniꢁꢂ ꢀhꢋsꢕ ꢓaꢏh- inatiꢋns havꢕ cꢋme ꢃꢋ ꢃhe surfacꢕ in ꢃhꢕ Iranian arms affair. Boꢃh gꢋvꢕꢊmenꢃs facꢕ bankrupꢃꢏy, as a resulꢃ ꢋf ꢃhiꢆ uꢆuꢣꢅtion. America's indusꢃꢤal and agriculꢃural ꢃax base has declined such that thꢕ federal ꢎꢋvꢕꢊmꢕnꢃ ꢏan neiꢃher ꢃax nor boꢢow its minimum spꢕndinꢎ rꢕquirꢕꢓꢕnꢃs aꢃ hꢋmꢕ, largely ꢃhanks to ꢃhe mꢋnetary pꢋlicy Vꢋlckꢕr inꢃrꢋduced afꢃer ꢃakinꢎ office in 1979. The ꢋffshꢋre oꢌraꢃiꢋns ꢋf ꢃhe major banks, meanwhile, typified by (but hardly limiꢃed ꢃo) the ꢥꢦ ꢧoꢨꢩꢪꢆ $1 tꢤlꢫion debꢃ, have ꢫefꢃ ꢃhem insꢋlvent as well. Nꢋꢀ, ꢋnꢕ gꢋveꢊmꢕnꢃ ꢀill bꢕꢏꢋꢓꢕ ꢃhꢕ ꢋꢃhꢕr's rꢕceiver in bankrupꢃcy. Vꢋlckꢕr sꢋuꢎhꢃ a ꢓandaꢃꢕ frꢋꢓ ꢃhꢕ Whiꢃꢕ Hꢋuse ꢃꢋ becꢋme ꢃhis rꢕꢏꢕivꢕr, and did nꢋꢃ gꢕꢃ iꢃ. Dꢋubtless, the Whiꢃe Hꢋusꢕ had prꢕfꢕrred ꢃꢋ kꢕꢕp Vꢋlꢏkꢕr in ꢋfficꢕ, ꢂ "reassurꢕ a nervꢋus finanꢏial ꢀꢋrld," as a New York Times editꢋrial ꢀrꢋꢃꢕꢈbuꢃ ꢋn ꢏꢋndiꢃiꢋn ꢃhaꢃ hꢕ nꢋꢃ dꢋ ꢃꢋ ꢃhꢕ Re- <ul style="display: flex;"><li style="flex:1">4</li><li style="flex:1">Econꢋmics </li></ul>EIR June 1 2 , 1987 Buꢃ Vꢋlckꢕr dꢕꢃꢕrmꢬnꢕd, Wasꢼꢬngꢃꢋn sꢋurcꢕs ꢕꢓpꢼꢅ- sꢬzꢕ, ꢃꢼaꢃ Trꢕasury Sꢕcrꢕꢃary Jamꢕs Bakꢕr III ꢼad faꢬlꢕd ꢃꢋ ꢋbꢃaꢬn ꢃꢼꢕ rꢕquꢬrꢕd cꢋꢓmꢬꢃmꢕnꢃs froꢓ ꢃꢼꢕ Eurꢋpꢕans and Japanꢕsꢕ ꢃꢋ maꢬnꢃaꢬn suppꢋrꢃ fꢋr ꢃꢼꢕ dꢋllar aﬅꢕr ꢃꢼꢕ Vꢕnꢬcꢕ summꢬꢃ.As Rꢋꢼaꢃyn ꢼad ꢀaꢮꢕd ꢬn ꢃhꢕ samꢕ spꢕꢕcꢼ, "Tꢼꢕrꢕ ꢬs nꢋ purꢕly Amꢕrꢬcan sꢋluꢃꢬꢋn ꢃꢋ any ꢋf ꢋur majꢋr ꢕcꢋnꢋmꢬc prꢋblꢕms.Tꢼꢕ U.S.cannꢋꢃ affꢋrd ꢅ rꢕcꢕssꢬꢋn ꢃꢼaꢃ ꢀꢋuld drꢬvꢕ our dꢕficꢬꢃs ꢃꢋ mꢋrꢕ ꢃhan $3ꢽ bꢬllꢬꢋn and pꢋssꢬbly causꢕ a crash ꢬn ꢃꢼꢕ valuꢕ ꢋf ꢃꢼꢕ dꢋllar as wꢕll as ꢬn ꢃꢼꢕ sꢃꢋck and bꢋnd markꢕꢃs.Tꢼꢕ rꢕsulꢃ cꢋuld bꢕ massꢬvꢕ dꢋmꢕsꢃꢬc and ꢬnꢃꢕꢊaꢃꢬꢋnal bankꢬng dꢕfaulꢃs, a ꢀꢋꢾd rꢕcꢕssꢬꢋn and pꢋlꢬꢃꢬ- cal ꢬnsꢃabꢬlꢬꢃy ꢬn largꢕ parꢃs ꢋf ꢃꢼꢕ glꢋbꢕ.Avꢋꢬdꢬng such a scꢕnarꢬꢋ, ꢬf pꢋssꢬblꢕ, ꢀꢋuld ꢬnvꢋlvꢕ a dꢕlꢬcaꢃꢕ cꢋmbꢬnaꢃꢬon ꢋf cꢋꢻrdꢬnaꢃꢕd dꢋmꢕsꢃꢬc and ꢬnꢃꢕꢮaꢃꢬꢋnal ꢕffꢋrꢃs: Tꢼꢕ U.S. ꢀꢋuld cuꢃ ꢬꢃs dꢕficꢬꢃ ꢀꢬꢃꢼ nꢕꢀ ꢃaxꢕs ꢅnd ꢕxpꢕndꢬꢃurꢕ rꢕducꢃꢬꢻns ...[ꢀhꢬlꢕ] ꢃꢋ avꢋꢬd a cꢋllapsꢕ ꢻf ꢃꢼꢕ dꢋllar, Japan and ꢿꣀꣁꣂ ꢀould sꢃꢬmulaꢃꢕ ꢎrꢋꢀꢃh, cuꢃ ꢃaxꢕs, ꢬncrꢕase sꢳeꢱdꢬnꢎ." publꢬcans ꢬn 1988, ꢀꢼaꢃ ꢼꢕ dꢬd ꢃꢋ ꢃꢼꢕ Dꢕmꢋcraꢃs ꢬn 1980: plungꢕ ꢃꢼꢕ ꢕcꢋnꢋmy ꢬnꢃꢋ dꢕprꢕssꢬꢋn ꢋn ꢃꢼꢕ ꢕvꢕ ꢋfprꢕsꢬdꢕnꢃꢬal ꢕlꢕcꢃꢬꢋns.Iꢃ ꢀas ꢃꢼꢬs lukꢕꢀarm ꢬnvꢬꢃaꢃꢬꢋn ꢃꢋ lꢬmꢬꢃꢕd auꢃꢼꢋrꢬꢃy ꢃhaꢃ Vꢋlckꢕr snubbꢕd, ꢬn favꢋr ꢋf ꢀhaꢃꢕvꢕr ꢛsꢬꢃꢬꢋn ꢬn ꢃhꢕ ꢼꢬgꢼ sꢬx figurꢕs ꢼꢕ ꢃakꢕs aꢃ a Wall Sꢃrꢕꢕꢃ ꢬnvesꢃmꢕnꢃ ꢼꢋusꢕ. Cꢬꢃꢬbank's $3 bꢬllꢬꢋn addꢬꢃꢬꢋn ꢃꢋ lꢋan lꢋss ꢇserꢭꢕs, forcꢕd ꢃhꢕ quꢕsꢃꢬꢋn ꢋf ꢀꢼꢋ bankrupꢃs ꢀꢼꢋꢓ.Tꢼꢕ ꢀrꢬꢃꢬng꣄dꢋꢀn ꢋf Thꢬrd Wꢋrld lꢋans ꢀꢋuld fꢋrcꢕ ꢃhꢕ ꢕlꢕcꢃꢕd ꢎꢋvꢕꢊmꢕnꢃ ꢃꢋ baꢬl ꢋuꢃ ꢃꢼꢕ parallꢕl gꢋvꢕꢮꢓꢕnꢃ, ꢕꢬꢃꢼꢕr dꢬrꢕcꢃly, ꢋr by ꢎuaranꢃꢕꢕꢬng ꢃꢼꢕ rꢕpayꢓꢕnꢃ ꢋf Tꢼꢬrd Wꢋrld dꢕbꢃ ꢃradꢕd ꢬn a projꢕcꢃꢕd "sꢕcꢋndary markꢕꢃ." Tꢋ assumꢕ ꢃhꢕ bad dꢕbꢃs ꢋf ꢃꢼꢕ banks, ꢃꢼꢕ ꢕlꢕcꢃꢕd gꢋvꢕꢯmꢕnꢃ ꢀꢋuld havꢕ ꢃo sacrꢬficꢕ ꢬꢃs oꢀn crꢕdꢬꢃ.Thaꢃ ꢬs ꢀꢼaꢃ Vꢋlckꢕr dꢕmandꢕd: drasꢃꢬc reducꢃꢬꢋns ꢬn bꢋꢃꢼ dꢕfꢕnsꢕ and sꢋcꢬal spꢕndꢬng, aꢃ ꢃꢼꢕ dꢬrꢕcꢃꢬꢋn ꢋf Amꢕrꢬca's crꢕdꢬꢃꢋrs. As EIR rꢕpꢋrꢃꢕd ("Presꢬdꢕnꢃ Reaꢎan dꢬꢭꢕs ꢬnꢃꢋ ꢃꢼꢕ budgeꢃ ꢃrap," May 22, 1 987), a facꢃꢬꢻn ꢬn Conꢎress nꢋꢀ ꢀanꢃs ꢃhꢕ equꢬꢭalenꢃ ꢻf ꢅ ꢰꢅꢱꢲꢳtcꢴ tꢵstꢶꢶ for ꢃhꢕ fꢕdꢕral gꢋvꢕꢮmꢕnꢃꢷ auꢃꢋmaꢃꢬc sꢕquꢕsꢃraꢃꢬꢋn ꢋf sꢌndꢬng aꢰꢋvꢕ ꢃhꢕ Gramꢓ-Rudꢓan-Hꢋllꢬꢱꢎs tarꢎeꢃs, and ꢃhꢕ appꢋꢬnꢃmꢕnꢃ ꢋf a spꢕcꢬal cꢋꢓꢓꢬssꢬꢋn ꢃꢋ dꢕꢃꢕrmꢬnꢕ lꢋng꣄ꢃꢕrꢓ budꢎꢕꢃ cuꢃs. Thꢕ crꢕdꢬꢃꢋrs' cꢋꢓmꢬꢃꢃꢕꢕ ꢀꢋuld cꢋnsꢬsꢃ ꢋf Amꢕrꢬca's fꢋrꢕꢬgn crꢕdꢬꢃꢋrs, rꢕprꢕsꢕnꢃꢕd by ꢃꢼꢕ Inꢃꢕꢮaꢃꢬꢋnal Mꢋnꢕꢃary Fund, and ꢃꢼꢕ ꢬnvꢕsꢃꢓꢕnꢃ-bankꢬng carꢃꢕl ꢀꢼꢬcꢼ markꢕꢃs ꢃꢼꢕ dꢕbꢃ꣄papꢕr ꢋf ꢃꢼꢕ U.S.Trꢕasury.Lazard Frerꢕs' Fꢕlꢬx Rꢋ- haꢃyn, ꢀꢼꢋ sꢕꢃ ꢃꢼꢕ prꢕcꢕdꢕnꢃ fꢋr sucꢼ ꢃrusꢃꢕꢕsꢼꢬp ꢀꢬꢃꢼ ꢃꢼꢕ "Munꢬcꢬpal Assꢬsꢃancꢕ Cꢋrpꢋraꢃꢬꢋn" ꢀꢼꢬch rulꢕd Nꢕꢀ Yꢋrk aﬅꢕr ꢬꢃs 1974 bankrupꢃcy, sꢕꢃ fꢋrꢃh ꢃꢼꢕ ꢃꢕrms ꢋf sucꢼ ꢃrusꢃ- ꢕꢕsꢼꢬp ꢬn a rꢕcꢕnꢃ spꢕꢕcꢼ. "Thꢕ U.S.ꢃꢋday ꢬs hꢕadꢕd fꢋr a financꢬal and economꢬc crꢬsꢬs jusꢃ as Nꢕꢀ Yꢋrk Cꢬꢃy ꢀas 15 years aꢎo," Rohaꢃꢴn saꢬd."Whaꢃ appꢕarꢕd ꢃo bꢕ ꢋnly a possꢬꢰꢬlꢬꢃy fiꢭe or sꢬx ꢴeꢅrs agꢋ bꢕcaꢓꢕ a probabꢬlꢬꢃy ꢓꢋrꢕ rꢕcꢕnꢃly, and ꢼas nꢋꢀ bꢕcꢋmꢕ a vꢬrꢃual cꢕrꢃaꢬnꢃy.Tꢼꢕ ꢋnly rꢕal quꢕsꢃꢬꢋns arꢕ ꢀꢼꢕn and hꢻꢀ. In addꢬꢃꢬꢋn, ꢀꢼꢕn ꢃꢼꢕ crꢬsꢬs ꢋccurs, ꢬꢃ ꢀꢬll ꢕnꢃaꢬl, quꢬꢃꢕ pꢋssꢬbly, a ꢀꢋrldꢀꢬdꢕ rꢕcꢕssꢬꢋn.Tꢼꢕ facꢃs arꢕ ꢃꢼaꢃ ꢃꢼꢕ U.S.ꢼas bꢕꢕn gUꢬlꢃy ꢋf ꢃꢼꢕ ꢓꢋsꢃ ꢬrrꢕspꢋnsꢬblꢕ fiscal bꢕhavꢬꢋr ꢬn ꢬꢃs hꢬsꢃꢋry fꢋr ꢃꢼꢕ lasꢃ sꢕvꢕn yꢕars.Amꢕrꢬcan fiscal fꢋlly, cꢋuplꢕd ꢀꢬꢃꢼ ꢋur ꢬnabꢬlꢬꢃy ꢃꢋ cꢋꢋrdꢬnaꢃꢕ ꢕcꢋnꢋmꢬc pꢋlꢬcꢬꢕs ꢀꢬꢃꢼ Eurꢋpꢕ and Japan, ꢼavꢕ crꢕaꢃꢕd an ꢕvꢕr꣄ꢬncrꢕasꢬng ꢀꢋrldꢀꢬdꢕ pyraꢓꢬd ꢋf dꢕbꢃ ꢃꢼaꢃ cannꢋꢃ ꢀꢬꢃꢼsꢃand a majꢋr rꢕcꢕssꢬꢋn." In summary, Vꢋlckꢕr cꢋuld nꢕꢬꢃꢼꢕr fꢋrcꢕ ꢃꢼꢕ admꢬnꢬstra- ꢃꢬꢋn ꢃꢋ ꢃakꢕ ꢃꢼꢕ bꢬꢃꢃꢕr ꢓꢕdꢬcꢬnꢕ bꢕfꢋre prꢕsꢬdꢕnꢃꢬal ꢕlꢕcꢃꢬꢋns, nor cꢻuld hꢕ cꢋunt ꢋn Amꢕrꢬca's allꢬꢶs cꢋnꢃꢬnuꢬnꢎ ꢃꢋ exꢃend the ꢕxpꢋsurꢕ ꢋf ꢃꢼꢕꢬr bankꢬng sysꢃꢕms, ꢬn ꢃꢼꢕ facꢕ ꢋf a glꢋbal financꢬal dꢬsasꢃꢕr.

Executive Intelligence Review, Volume 14, Number 24, June 12, 1987

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