The Fed Failed, Must Have Special Session—Establish Two-Tier Credit Rate, or Forget the United States
August 5, 2008 • 4:02PM

Following the Federal Reserve's non-action on interest rates today, Democratic statesman and economist Lyndon LaRouche responded urgently to that potentially suicidal failure for the United States.

"The Fed has failed to raise interest rates today—that is a clinically insane non-act," LaRouche said. "A general bank interest rate of 4% must be instantly established—but with two tiers of rates—whatever you have to do to establish it! If you're loyal to the United States, you'll get the Fed to do it."

The 4% general overnight rate, LaRouche has explained in a nationally circulated statement, is necessary "to keep funds inside the United States banking system," keep them from fleeing and finishing off the dollar in an uncontrolled collapse. Bank of England interest rates are far higher, and so are the British-manipulated rates of the European Central Bank. The dollar is set up for a collapse unless the Fed is made to act now.

But a "second tier" of credit also has to be established, at a very low rate, selectively to target stimulating economic activity which increases employment and productivity. "We need a cheap line of credit from the Treasury, at 1-2% per annum, for growth—Franklin Roosevelt-style infrastructure and related investments—to stabilize and grow the United States' physical economy. If you do that, you turn the physical economic collapse around—but you must have the general overnight Fed rate doubled, to 4%, immediately.

LaRouche called on his own supporters and other political forces to "run a major campaign on this. No more cheap bailout money! If you're a patriot, you'll join me to push the Fed into a special session to get this done now."

He commented on the current staging in Washington of a Republican demand on House Speaker Nancy Pelosi to call a special Congressional session. "They should have one," LaRouche said. "It's the right demand, though for the wrong purpose. This has been a 'do-nothing Congress.' They need to save the sinking economy—two-tier credit, Federal credits for infrastructure and productivity projects.

"Otherwise, whatever it takes, get the Fed to raise the overnight rate to 4%, now—or forget the survival of the United States," LaRouche said.