Rachel Brown: Glass-Steagall, and a National Bank
January 12, 2012 • 5:15PM

by Rachel Brown

At this moment in history, there is no relevant issue for discussion other than the subject of the American System of physical economy, as the replacement for the deceased world monetary-financial system. Glass-Steagall will dump the worthless derivative debt and stop the bailout, and the National Bank will fund the recovery. Money, when taken as having value in and of itself, has only been (and can only be) used to prevent necessary measures for development of a national economy, resulting in claims that "It costs too much!" Now, we are beyond hope for the current system. It must be buried, and the American System, as laid out in our constitution by Hamilton and Franklin, must be brought back to life.

Glass-Steagall must be reinstated now, but once that is done there will not be enough credit in the American banking system for funding the recovery effort we need. This means that we will need a new national bank which will employ the principle of credit, not money, to generate useful economic activity. This is a Hamiltonian principle, which was tied in with the founding of the United States itself, as a defining trait of our then newly-founded sovereign nation-state, which established that we did not need to borrow money to do what was necessary for the development of our nation, and the needs of our citizens. Originally, this principle of credit was employed for funding the revolutionary war debt, which debt was itself founded in a higher principle, as expressed in our Declaration of Independence. Hamilton created public bonds to fund the debt, which, with their value guaranteed by the unimpeachable power of our newly-formed Federal government, could be usable as a form of money, thereby using the debt "as a blessing" to improve economic output and ensure its own future fungibility.

Lincoln later used the same principle of credit to finance economic development with his greenback policy, making the United States the economic leader of the world. The policy resulted in incredible development; the construction of more rail lines in the United States by 1900 than in all of Europe combined, the increase of the issuance of patents from 883 in 1850, to 14,000 in 1876, and the massive rise in population, nearly tripling from 31 million in 1860, to 92 million in 1902. Franklin Roosevelt not long after employed the same constitutional principle by directing federal credit via the Treasury and the RFC to build his ingenious development projects which still sustain our nation to this day, and made the United States a greater economic powerhouse than the world had ever seen, allowing us to produce the logistical support required to crush Hitler's army.

The essential difference between a monetary system, and a credit system, is analogous to the difference between an oligarchical system and the renaissance principle of human creativity. None of the candidates for President today understand this, or are prepared to act on it. Lyndon LaRouche, and our Federal slate is committed to forcing the principle of the credit system into action, because it is the only Constitutional way to save the world now.

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