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The LaRouche PAC and Economic Sufficiency

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HS - Jason Hartman Income Property InvestingJoin Jason Hartman for an interesting interview with Harley Schlanger, the Western States Bureau Chief for the controversial and interesting LaRouche Pac. Harley defines the purpose of LaRouche Pac, describing it as based on the intersection of philosophy, history and science, looking at economics as physical processes and not just monetary. Lyndon LaRouche stands for a sovereign state in the United States and has been warning of the smoke and mirrors politics that have been going on since the assassination of John F. Kennedy. For more details, listen at: www.HolisticSurvival.com. Harley discusses the deregulation that has been going on in this country for years, as well as many of the predictions that LaRouche Pac has made that have come true or are in the process of coming true, including the stock market crash in the ‘80s, the era of speculation that began with the end of the Glass-Steagall Act, and the freezing and collapse of the banks most recently. Jason and Harley talk about the environmental movement and who profits, the disappearing middle class, and the loss of production in the United States with NAFTA. Harley says we’ve lost the understanding of wealth, citing examples of production going offshore, energy production going back to solar and wind power, and how we don’t even consume most of what we produce because it’s shipped overseas. Harley lists many ways that our physical economy can be improved and protected, which could bring the United States back to a self-sufficient state.

Mr. Harley Schlanger has been Executive Intelligence Review magazine’s Southwest Bureau Chief for more than 15 years. In the recent years he has become a national spokesman for Lyndon LaRouche’s Political Action Committee. As Bureau chief he had written numerous articles including on the mid-1980’s Savings and Loan crisis, the looting of pension funds and in September 2008, the illegal bail out the investment funds such Fannie Mae and Freddie Mac by the Federal government. As an investigative journalist Schlanger has contributed to a number of books published by EIR. Some of the research was incorporated in The Ugly Truth About the ADL, Bush: The Unauthorized Biography, for example. Schlanger himself made a run for the U.S. Senate in 1990, receiving 250,000 votes in the Texas Democratic primary. He was born in 1949 in Marietta, Ohio, holds a B.A. from the University of Wisconsin, and an M.A. in European History from Rutgers University, where he was a National Defense Education Act fellow for three years.
LaRouche’s own summary outline of the “seven necessary steps” ran as follows:

“Dumping the present system, absolutely, through the aid of Glass-Steagall, a Glass-Steagall reform in the original form, with the same force and intention as the original Franklin Roosevelt movement, that’s absolutely necessary.

“We need to apply the credit we get available to us, for our states and for the national government, first of all, to provide stability for the economy and actual growth patterns. We need to go further, with large-scale projects based on the creation of a credit system, as opposed to a monetary system. We will use money, but it will be designated as originally under a credit system, not a money system. We will take the credit we can generate, and use that credit, in part, to put the economy back in functioning. “But then, beyond that, we must have a major driver program, based in large-scale infrastructure, of which NAWAPA is the most suitable case. And through that program and through the accelerated program of scientific progress, including, of course, the space program, reviving it and taking it beyond what it has been before; have a science-driver program, which turns capital investment into growth facilities, into the driver for the expansion of wealth produced per capita and per square kilometer in the United States and other nations.”

Narrator: Welcome to the Holistic Survival Show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary to survive and prosper? The Holistic Survival Show is your family’s insurance for a better life. Jason will teach you to think independently, to understand threats, and how to create the ultimate action plan. Sudden change or worst case scenario, you’ll be ready. Welcome to Holistic Survival, your key resource for protecting the people, places and profits you care about in uncertain times. Ladies and gentlemen, your host Jason Hartman.

Jason Hartman: Welcome to the Holistic Survival Show. This is your host, Jason Hartman, where we talk about protecting the people, places and profits you care about in these uncertain times. We have a great interview for you today and we will be back with that in less than 60 seconds on the Holistic Survival Show. And, by the way, be sure to visit our website at HolisticSurvival.com. You can subscribe to our blog which is totally free, has loads of great information and there’s just a lot of good content for you at the site. So make sure you take advantage of that at HolisticSurvival.com. We’ll be right back.

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Start of Interview with Harley Schlanger

Jason Hartman: it’s my pleasure to welcome Harley Schlanger to the show. He is the western state’s bureau chief for the LaRouche PAC. And Lyndon LaRouche is a very colorful and controversial and interesting figure in American politics for many years now. And today we’re gonna talk about some of the predictions for the future, some of the predictions that have or are coming true now. We’re gonna talk about central banks, monetary policy. We’re gonna talk about Hamiltonian economics and the fear and threat of various wars around the world. So I think you’ll find this to be a fascinating interview. Harley is coming to us from Innsbruck, Austria today, a beautiful place that I have been to before and just want to welcome him. Harley, how are you?

Harley Schlanger: Hi, Jason. Great to be with you.

Jason Hartman: Yeah, likewise. First of all, Lyndon LaRouche, I remember my first contact with people from the LaRouche group, the supporters, and I don’t know, I just couldn’t really get my arms around what he stood for and what you guys are all about. So tell us more.

Harley Schlanger: Well, it’s not an uncommon first response. Because, really, we operate from the standpoint of an intersection of philosophy, history and science you might say. We look at economics as physical processes, not purely monetary. And so Mr. LaRouche’s concern for years has been that the United States, since the assassination of John F. Kennedy has been moving increasingly into a post industrial society, a deregulated economy, moving away from what Franklin Roosevelt did after The Great Depression to regulate banking. For example, we’ve been deregulating banking. So, Mr. LaRouche has had a very consistent record for years standing for the idea of a sovereign nation state, The United States, investing internally to develop its infrastructure, its scientific and technological capabilities, and from that stand point entering into trade agreements, not free trade but regular bilateral and multi-lateral agreements. And his forecasting has been largely the result of the opposite taking place and Mr. LaRouche consistently providing warnings against what happens when you move into a purely monetary policy, especially as we’ve seen since 1987 when Alan Greenspan came into the fed.

Jason Hartman: Now, the distinction there, it’s interesting and I like what you said because you said fundamental things of economics trade commodities, things that have intrinsic value, whereas monetary, when you reference monetary, I suppose you’re talking about basically the scam which is the concept of central banking and fractional reserve lending, fractional reserve banking, and all of this stuff that is just smoke and mirrors rather than real intrinsic value, right? Maybe expand on that a little bit if you would.

Harley Schlanger: The United States was based on the idea of physical production and the idea that we wanted to have a credit system which the British disallowed. We had something in the Massachusetts Bay Colony which we shut down by William of Orange in 1696. And less than 100 years later, we finally made a revolution against it. The idea of our nation has always been physical production is what produces wealth. And that wealth comes from largely improvements in the productivity of labor, which is mostly scientific advance and an upgrading in the skill level of the people who are producing. Now, to do that, you have to have a constant source of credit. And what we have seen at times, for example, under Alexander Hamilton or Abraham Lincoln’s Greenback policy or what John Kennedy started to do with the NASA program and also his offering of treasury bills rather than Federal Reserve notes. We’ve had moments in history where we’ve gone back to physical production. And we’ve always had incredible wealth production from that. And then what’s happened is the financial elite came in and said, oh no, now we need to go with deregulation. We need to make money. And Mr. LaRouche is not opposed to anyone making a profit, provided it’s a profit that adds something to society, as opposed to these Ponzi schemes, the whole creation of the derivative trading, the mortgage backed securities, all of which came out of the 80s and 90s from Greenspan, the repeal of Glass-Steagall in 1999 and so on.

Jason Hartman: There are so many things I call derivatives. I call them the thing about the thing.

Harley Schlanger: The definition of a derivative is something that’s derived of something from something of value but has no value in itself.

Jason Hartman: Sure, sure. Yeah, makes sense. So, what are some of the predictions that you have made, that Lyndon has made, that have come true or are in the process of coming true right now? Some of them are rather scary. Maybe tie that in with the military industrial complex and the banking complex and let’s see how it all interplays together.

Harley Schlanger: Well, let me go to the first one which actually established LaRouche’s, an internationally known economist. 1969, after the Pound Crisis, he started a warning that there was going to be an attack on the fixed exchange rate system of the Bretton Woods Agreement which is the post-World War II agreement that Franklin Roosevelt Struck. And so, on August 15th, 1971, when Nixon took the dollar off gold and did away with fixed exchange rates, he opened up the whole arena in which currency became treated as commodities. And we’ve seen people like George Soros be interest of the Inter-Alpha Banks of London which are tied to the Rothschild interest who have taken this and added layer and layer of debt upon the shrinking physical productive economy. So LaRouche forecasted breakup of Bretton Woods, which occurred in August 15th, 1971.

In the 80s, he warned of the effects of Paul Volcker’s high interest rate policy, which you may remember was designed to stop inflation, but it figured another move away from physical production. His only stock forecast was he forecasted the end of October, 1987 there would be a dramatic shift drop in the stock market, and you may remember that was a very dramatic shift. And then during the 90s, he warned repeatedly of what he called a Salami Recession, a slice by slice drop in physical production. Now, at the end of the 90s, when Glass-Steagall was repealed in 1999, he warned that this would usher in an era of almost unlimited speculation. He put out warnings in the early part of 2000. As soon as the euro was introduced, he said this would never function because you cannot have a single currency with economies of such disparity and cultures that are so different.

Now, perhaps the most recent and powerful forecast was July 25th, 2007. A year before Lehman collapsed, just as we were beginning to see the problems with Bear Stearns and the mortgage backed securities and Fannie and Freddie, he gave a public international webcast and he said the banking system’s going to freeze up and it’s going to collapse. And he immediately said that we’ve got to go back to a reorganization of banking which separates out the financial speculative side from the productive side, the commercial banking side. And he said we’ve got to do that because we have to save the banking system because we need a banking system, but we don’t need to have the federal government, or in this case the federal reserve, defend the speculators. Let the speculators take their losses.
And so between 2007-2008, we were campaigning on this idea in 2008 when the bailouts started, Mr. LaRouche said this going to increase the rate of physical collapse of the US economy which is true. You look at the collapse of manufacturing and he said ultimately it’s going to lead to a hyperinflationary blowout. That hasn’t occurred yet because most of the money is still sitting on the books of banks and corporations.

Jason Hartman: It hasn’t trickled down yet, but it ultimately has to trickle down and that’s when we will see the hyperinflation. Okay, so back up just a moment. I want to just ask you a few things that you said. That was a long complicated things. First of all, Paul Volcker, I always looked at Paul Volcker as the guy who kind of did the right thing like making us take the hard medicine, swallow that pill to break the back of inflation, something that you would never see Bernanke or Greenspan do I’m sure. I think your statement was that he further separated the physical economy from the monetary economy by doing that, by raising rates?

Harley Schlanger: Yeah, because what happened is that corporations began, if you realize two things happened as a result of Volcker. One was Michael Milken and leverage buyouts. Even though credit was jacked up to 21% I think, the prime rate, what it meant is that in order to make any investments, you had to find higher rates of return. And so why would anyone invest in a steel mill where you might get 4% or 5% of profit when Milken was supposedly showing how you can make 30% if you move into leverage buyouts.

Jason Hartman: LBOs, okay. Now, Milken, I know he’s demonized – well, you guys are demonized, too, in many ways – but Milken is also credited with a lot of people who say we wouldn’t even have cellular phones or we wouldn’t have them until much later if it wasn’t for Milken and so many industries were financed that just would have never had access to financing without his work at Drexel Burnham and the junk bonds and he was the junk bond king, right?

Harley Schlanger: I think, Jason, you know enough about investing to know that at a certain point there was a Ponzi Scheme that was set up by Drexel Burnham and all the related banks and savings and loans, Columbia SNL, the Keating SNL out of Arizona.

Jason Hartman: Good old Charles Keating, can’t forget him.

Harley Schlanger: So, they reached the extreme limit of what you could do with leverage for that system. And so what was done was that Milken was pulled down and Greenspan went to the CFTC, the Commodities Futures Trade Corporation with Wendy Graham, the wife of Phil Graham, as the chairman, and said we’re going to totally deregulate commodities. And this set in motion the derivatives market where the leverage went higher and higher, that is you needed fewer and fewer real assets to borrow.

So, what Volcker did, Volcker was right about one thing which is you had to do something about inflation. But Mr. LaRouche’s view is the way you deal with inflation is you write off the bad investments over time through bankruptcy reorganization. You have to do that with the banks. You can’t let the banks keep these bad assets and keep giving them money to hold them at book value. You’ve got to market it at a certain point. And instead then you need credit. In fact, what we proposed to Volcker is the Federal Reserve has a basis within it where they can do a two-tier credit system, high interest rates for speculation and low interest for those areas that will increase production, increase productivity, and increase jobs. And so that was Mr. LaRouche’s proposal then. Volcker just went across the board with high interest rates and it squeezed out a lot of medium sized producers where a lot of the new technologies were coming online.

And, to your point that all these new industries came in, if you look at the net effect of them, we’ve just had new monopolies that were set up over time as a result of these things, because the consolidation that supposedly stops the initiaves, the smaller companies, at a certain point the bigger companies have the credit and they come in and buy it all up anyway.

Jason Hartman: Well, that’s what really, really scares me. I don’t like big government and I don’t like the big corporatocracy either. I say that if I had to be more fearful of one over the other I’d be more fearful of big government. But the big corporatocracy is very abusive, too. I mean, you look at these giant corporations with the scale they have and they just get in bed with the government.

Harley Schlanger: That’s exactly the point. What we have now is the worst of both worlds. We have a government which is not doing what it should do to protect the small guy, the medium producer, the entrepreneur. Instead, the government is bailing out the corporate cartels. The Obama health care plan was a bailout of the insurance companies and the HMOs and the drug companies. That’s what we’re seeing in all of these areas. Of those people who say Obama is a socialist, I just say I’ve never seen a socialists who redistributes wealth to the upper 1%.

Jason Hartman: It’s interesting because it’s a new breed of government that we have. It’s not pure in any way. He’s sort of a fascist in his love for the corporatocracy because he’s definitely supporting them. But then he also tries to appeal to the little guy. He’s like a socio-fascist.

Harley Schlanger: Well, that’s the rhetoric, though. His rhetoric is now increasingly class warfare – we’ve got to take care of the little guy. But look at what his policies do.

Jason Hartman: Couldn’t agree more.

Harley Schlanger: He’s never done anything for the little guy. He’s continued what Bush and Cheney were doing with the redistribution to the people who have proven they don’t know how to handle money. Now, I’ll add one other point to that because you’re absolutely right. In the 20s, when Mussolini did this, it was called corporatism. And that was the official academic word for what Hitler called fascism where the government aided the cartels, including through a tax on labor, a tax on businesses, small businesses and so on. And this is what we’re seeing under Obama. This is what we’re seeing in Europe with the European union, the same system. And it doesn’t work. You see, ultimately, if you keep increasing the total volume of debt to pay off uncollectible debt, you’re never gonna do it.

There’s not enough money to cover the outstanding derivative obligations of the big 5 banks in The United States.
Your example of Volcker, Volcker was the Dutch uncle who said you gotta bite the bullet somewhere. If we had a president who was serious, he would say, okay, the too big to fail banks, you’re gonna bite the bullet and you’re gonna eat your losses. We’ll keep you open for a year, depositors, your commercial accounts, but we’re not going to protect your derivative obligations. Let them be rewritten over time.

Jason Hartman: Now, here’s the thing I want to add to what you were talking about, how the physical economy has been in decline for many years, and it’s so true. You take what you said about how monetary policy reduced the size of the physical economy and increases the size of the smoke and mirrors economy. The smoke and mirrors economy takes place mostly on Wall Street. The physical economy takes place mostly on Main Street. And here’s another part of it. It’s even worse than you said because they first started hollowing out the American economy through the monetary angle. But then what came along is you took the environmental angle. You took the regulatory angle. You took the union angle. And I would have a feeling that your group would support unions. I’m assuming, I don’t know, but what’s your stance on unions just out of curiosity.

Harley Schlanger: Well, we’re in favor of the kind of unions that are technologically progressive that are actually working for the benefit of the industry and the workers. What we’ve seen with a lot of the unions, especially SEIU, some of the service unions and so on, is that they’re in bed with the corporatists.

Jason Hartman: Yep, it’s odd, isn’t it?

Harley Schlanger: So, we have to distinguish between what is the function of union? If you go back to Walter Reuther in The United Auto Workers, even though they had huge battles with Henry Ford, ultimately both of them agreed that a happy productive worker increases the profit of the corporation and the future earnings of the company. So, I think in that sense we had a better model coming out of World War II. But, to go to the broader point, which I think is really important, we’ve lost whole sections of our manufacturing economy. And we may not get them back. And what Mr. LaRouche has been proposing is not only do we do a bankruptcy reorganization of Wall Street, but then we go back to what he talks about is a Hamiltonian policy, and this is something we may have to fight about for a couple of minutes to get the idea. What Hamilton did, we had a huge war debt at the end of the revolutionary war, and there were some people like Jefferson saying let’s just canceling or pay it all off at once, similar to the debate we had around the budget deficit in the last congress. And what Hamilton said is if we don’t pay it, we’ll never be able to borrow again. However, let’s transform the debt into a way of getting credit to produce goods. And the two things Hamilton focused on was a national bank that would make credit available to the private banks so you’d have a national currency, but the banks would then invest in 2 areas, one was infrastructure which, at the time, were canals, roads and ports which cheapened the overall cost of physical production, and then secondly manufacture, including manufacturing that fed into the agricultural sector. And Hamilton not only won the fight with George Washington, but we paid off the Revolutionary War debt within 20 years and had a huge jump on the rest of the world with the Industrial Revolution.

And so that’s what we mean by Hamiltonian economy. The government regulates banking to ensure that credit is available for bankers to decide where it’s going to go. The government doesn’t tell them where it’s gonna go and it doesn’t go to government corporations because local bankers do a better job of that than anybody else. But did you make sure cheap credit is available for physical production? And that’s how our nation has always advanced.

Jason Hartman: Speaking of physical production, nowadays you see all of the money on Wall Street, the venture capitalists, it’s all attracted to software companies, companies like Facebook and Groupon and companies that they’re great but they don’t really produce anything.

Harley Schlanger: Jason, as an investor, you know if you can lower your costs and your only concern is to make a profit, then there are many ways to make a profit which actually harm the real economy. And the question then is do you have a social conscience when you encourage people to invest with you. Or is it like George Soros who’s willing to destroy a country like Indonesia to squeeze out a short term profit in the difference between the peg of the Indonesian Rupiah and what it’s actually worth. So, we’ve seen people who use investment policy not just to make money but for the targeting of physical production and the idea then that we can use free trade to outsource. And we’ve reached a point where The United States is in a real deficit when it comes to our physical production. And if we don’t reverse it, then we’re going to not just see the dollar collapse, but we’re going to see what’s left of the middle class disappearing in The United States.

Jason Hartman: Just two more elements on that issue of physical production collapsing. And it’s so true. I mean, I’m not a fan of unions. I mean, in concept, I think they had their place in history. For sure we needed them. But nowadays, and we don’t have to spend the time debating this, nowadays, and we don’t have to spend the time debating this, nowadays I think they’ve kind of largely outlived their youthfulness, and we may have some distinctions where we disagree on that but it doesn’t matter – it just seems like the unions and the environmentalists have chased business out. It’s not just a monetary thing. And the great example of this is the disaster called Detroit, Michigan, an abject disaster of a city. And I’ve never understood – you’ve got big 3 auto makers and they’re supposed to compete. They can’t merge together the federal trade commission, the DOJ, the justice department, they would never let the big 3 auto makers merge because they’d say that would be anti-competitive. Yet, all big 3 automakers have to buy their labor from the UAW, the United Auto Workers. Tell that isn’t restraint of trade. I can’t believe they’re forced to do that.

Harley Schlanger: Let me go back to another point which you just made which I think is important which is that the unions used to put jobs in production ahead of what I see as a phony environmentalism. Because the so-called environmentalism that grew out of the 68-er movement, the anti-war movement, the idea really the technology is bad, the people are bad, and that we have to have fewer people and less technology and get rid of science and put up windmills – this is another aspect of a destruction of productivity. And one of the things LaRouche has insisted upon is nuclear power but going beyond it to nuclear fusion, matter and anti-matter reactions. There are certain things being worked on in labs that are astounding but get no funding.

Here’s an interesting point. The environmental movement, which you’re right, it did eventually take over the unions, it was funded by the Rockefeller Brothers, it was funded by Soros, by leading Wall Street tycoons who basically profit from restricting technological development.

So, I think what we’re looking at, LaRouche’s argument is the post-Kennedy period has been a period where we threw out everything that we knew from the beginnings of American history about economics, that is that any change is going to dislocate certain people. But if you’re doing the change from the standpoint of future production, of increasing the total wealth of society as a physical product as opposed to a monetary product, then people will adjust and they’ll develop. We’re not saying we should go back to a buggy whip and carriage days, but you take the idea that anything physical cost too much and therefore we’ve got to look for areas where we can make big profits without investment, you end up with casinos and whorehouses.

Jason Hartman: On the environmental angle, I’ve always liked the saying green trees have red roots, in other words rooted in controlling people, controlling businesses, and in communism, basically. And what’s interesting about it, it’s so hypocritical. All we’ve done is offshore our manufacturing, mostly to China, and China’s environment is really going down the tubes. There’s very little consciousness for environmental issues at all in China from what I understand. It’s just build, build, build, manufacture, sell, sell, sell, and it’s as if John F. Kennedy’s statement wasn’t true, “We all breathe the same air”. That air doesn’t just satay in China. It floats all around the globe. And so, all we’ve done is really worsen the environment by chasing manufacturing business offshore and we’ve certainly worsened the American economy and lessened the middle class.

Harley Schlanger: You’re absolutely right in that. Here’s the point on that. Why do we do it? Because it’s cheaper to use labor forces that are not educated, are not organized, do not have quality control in the plants. You remember this initially started with the NAFTA agreement. And Ross Perot was right about that.

Jason Hartman: The giant sucking sound, yeah.

Harley Schlanger: And the point is at a certain point China was much cheaper than Mexico. And so Mexico, a lot of people don’t realize Mexico actually had a steel industry. They had nascent manufacturing which they shut down to take advantage of the free trade agreement, and then as soon as they built some of these twin plants like El Paso and Ciudad Juárez the companies moved to China where they could get cheaper labor or to Honduras. SO, the point is that what we’ve lost in this country is an understanding that wealth is physical and physical in the sense that changes in production come from scientific discovery. And you cheapen the cost of energy production by increasing the intensity of energy, just as they had to go from a wood burning or a coal economy to oil, gas, nuclear.

We’ve always made those kinds of discoveries. And now we’re basically told, oh no, we have to go back to wind and solar. Well, we have solar economy. It’s plants and vegetables. But it’s not very efficient to have companies like Solyndra and these other kinds of scams that he greening movement has come up with. So, it’s an extra tax on physical production.

Jason Hartman: Yeah, it is an extra tax. Look at Solyndra. I’m here in Phoenix, so I’m all too familiar with what’s going on with solar. And these companies have just basically stolen money from the American taxpayers. The politicians, mainly Obama in this case, it’s crony capitalism, it’s just ridiculous what has happened.

Harley Schlanger: And then, Jason, you know what these companies end up doing? At a certain point, they go over to China to produce the solar cells.

Jason Hartman: Yeah, I know. It’s unbelievable.

Harley Schlanger: If you want to boil down what LaRouche is saying, we’ve gone into an insane economic paradigm, largely as a result of the triumph of the radical free market policy of the hardcore Austrian school, or Adam Smith, that everything is based on buying cheap and selling dear. We’ve turned our productive economy into a consumer economy. And now we don’t produce what we consume anymore.

The thing that made The United States grow was that our consumption largely improved as a result of improvements in our productive economy. And now we want to consume the best of everything without producing it. And you can’t do it. It’s not gonna work.

Jason Hartman: Would you guys then be in favor of tariffs? Or how do you keep the manufacturing onshore? Certainly the monetary issues, we talked about the unions, the environmentalists. What do you do today? Do you implement tariffs and protectionism? It sort of seems like this thing we can’t have it both ways. Either we want to go to Costco and Walmart and get all this stuff really cheap – and I’ve noticed over the years how inexpensive everything has become, it’s amazing how cheap it is – or do we want to have American jobs? How do we have the best of all worlds?

Harley Schlanger: Well, you need to have a tariff policy on certain areas where you must sustain production. And I would say, for example, modern steel production. If some country’s gonna try and send steel here cheaper than we can produce it, for the time being until we get better at it, we should put a tariff on it because we’ve got to have a steel industry. We still need things or build things which need steel. There’s certain other areas. Certainly, I think we can improve our auto industry. We probably should have done this 15 years ago when we were getting the cheaper cars before the auto industry or maybe 20 years ago before the auto industry went into a real tailspin, but you don’t need to protect everything. But there are certain things you do need that are of national security. Aerospace is another. We may in the very near future lose the few areas we have left that are physical production where we have benefits like the aerospace sector. And that becomes a national security question.

Jason Hartman: So, do you really mean to say we shouldn’t be buying the boots for our soldiers from China?

Harley Schlanger: As I said, there are certain things you have to look at whether it’s physically…

Jason Hartman: I’m being sarcastic, of course. I have heard, Harley, that we import the boots for our soldiers in the military from China.

Harley Schlanger: Well, if those boots are not good, then I would say, yes, we should go back to boot manufacturing here. But let me give you an example that may not come to mind. You were talking about things being cheaper. Food is becoming more expensive.

Jason Hartman: Yes. True and so is energy. And I love the way you focus on real things, hard goods because I think that almost all wealth, all real wealth, comes from real estate and resources, the things we all need to live – food, clothing, shelter, those 3 vital things. And those are real resources. Food is going through the roof.

Harley Schlanger: And it’s because we’re destroying US agriculture. We’re turning our corn production into the ethanol fuel which is ridiculous. There’s no reason, where there’s hunger in the world, that you should take a centrally important crop and turn it into fuel production.

Now, more importantly, though, the drought is wiping out about a third of our cattle industry in Texas, in New Mexico, in Oklahoma. We’re losing the basis of the cheap food that we had in the past. And this largely came as a result of the shift from the idea of having a food reserve which every president from FDR, Eisenhower, Kennedy, even Nixon understood the importance of a food reserve. In the 80s, it got turned into the idea of a surplus. We started applying the same Adam Smith free market ideas to food and it became cheaper to buy food from Africa and South America where you don’t have the same quality control. And in the meantime, we’re losing the physical production. And agriculture’s an important aspect of industry because with agriculture you have machinery, you have advances in fertilizer, all kinds of other things, shipping. So, again, these are areas where I think we have to rebuild our domestic production. And if we don’t do that, we’re going to be in a situation where we’re going to be dependent on food from countries which are much more susceptible to diseases of crops, locusts, things like that. And we’re going to end up with much poorer quality of food.

Jason Hartman: And I think it even becomes broader than that in that we need to have our food production be in the hands less of the corporatocracy and we’ve got the former head of Monsanto now working in the Obama administration – I think he’s the head of agriculture or something like that. Stuff should not be monopolized. We need to have freer more open markets and less centralization and smaller producers of all goods and all services.

Harley Schlanger: In the name of competition, they squeeze out competition. The corporate cartels in grain, there are 5 or 6 of them, Monsanto, ADM (Archer Daniels Midland), there are just a handful that control global grain supply. And, in the meantime, the old farmer cooperatives, these small farms that you used to see in the Midwest, they’re disappearing.

Jason Hartman: Well, the FDA’s attacking them to some extent. I’ve done shows about co-op groups and arrests and fines, and it’s unbelievable how they are just constantly supporting the corporatocracy and constantly attacking through legislation. From every angle they’re just attacking the small producer of goods and services. It’s incredible, it’s amazing.

Harley Schlanger: Well, here’s the irony on that. The republicans who attack Obama for it actually had the same policy that Obama has adopted which is to facilitate the too big to fail in every single area. Because once you take away competent regulation – I’m not talking about regulating the grade of toilet paper that’s used in a factory warehouse. Ocean and these other things went way overboard. But regulation of certain key areas of finance, regulation of certain kinds of industrial processes, if you take that and turn it into the so called free market, then what you’re going to get is the corporations that have the most immediate connection to the financial interests are the ones who are going to undersell everyone else, price everyone else out of business and become the giant corporations. And this is where you see the fraud of the campaign where many of these areas Obama is going to do more damage to Medicare than the republicans would. Obama will do more damage to social security than the republicans would if he’s reelected.

So, one of the things – I should have mentioned this up front – we’re not gonna have any reform in the economy in this country if Obama stays in The White House because Obama is a puppet of these Wall Street City of London financial interests.

Jason Hartman: Yeah, Obama’s just a George Bush #2. Come on, it’s just a new flavor of the same thing. The only way we’ll see any real change is to have a 3rd party or maybe Ron Paul if he’s on the republican ticket. But I don’t know what you think of him.

Harley Schlanger: I think what we need, and I’m very happy to participate with you on this discussion because we need to get people to start thinking outside the box, start thinking about what has gone wrong. Because we’ve had the same democratic and republican crowd run by Wall Street ever since Al Gore set up the democratic leadership council in the 1980s where the democrats said hey, we’ve gotta get some of that Wall Street money, too. And so we’ve had the two parties that are controlled at the top by these corporate interests.
Now, the point I would like to just finally get across is that for people who are interested in these ideas, these are not so difficult to wrap your mind around unless you are stuck in the axioms of either a radical free market or some kind of Keynesian socialist approach. LaRouche is not a Keynesian, he’s not a free marketer. He goes back to what used to be called the American system of economics. It came from Ben Franklin and Hamilton. The most important continuity between the American revolution and the civil war was a man named Henry Carey whose father was the publisher of Ben Franklin, Mathew Carey. Henry Carey was Lincoln’s chief economist. And he brought his ideas to Germany which were picked up by Bismark. When Bismark broke with the free trade policy of London and went with the national tariff policy in economic development which made Germany a leading economy in Europe at the end of the 19th century. All these ideas are available in our website. And I’d just like to encourage people, your listeners, to take a look at our website because we have some excellent videos on history, on science, that take up these kinds of philosophical questions. And also, if your listeners are interested, I’ll give a toll-free number in our office in Houston. And if they’d like to hear from me or be in a discussion with me, I’d be happy to get back to them. That number is 800-922-2907. I don’t give investment advice but we’re concerned with policy. And if people are interested in what kind of policies will work, it’s 800-922-2907.

Jason Hartman: Let me take a brief pause. We’ll be back in just a minute.

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Jason Hartman: Okay, hey, I hope you’ve got time because I want to talk to you about a few more things. So, do you have time?

Harley Schlanger: Sure, go ahead.

Jason Hartman: 3 more topic areas. One, we talked only for a couple of minutes before we started the formal show today, but you talked about profiting from inflation and how you believe that the policies now, and I agree with you, are very destructive to the dollar and very inflationary. Maybe talk about that for a moment. I want to ask you about some of the criticism of Lyndon LaRouche. And then I want to conclude with maybe the military situation and the saber-rattling going on with Iran and Syria and the Russia/China connection, too. So, let’s go over those areas if we could.

Harley Schlanger: First of all, on the inflation front, what Mr. LaRouche has been warning for a while is you can’t keep bailing out bad debt without cheapening the value of your currency. And anybody knows that. That used to be the ABCs of economic theory that if you’re putting out more money than your physical production, the costs are gonna go up. In Europe now, we’re beginning to see an inflation. In Great Britain in particular, even here in Austria, it’s the highest rate of inflation since 1974 and it’s starting to scare people.
Now, what’s being proposed for the Eurozone – and this is being proposed by Bernanke and Geithner who have come over to Europe repeatedly to tell Sarkozy, the President of France, and Merkel, the Chancellor of Germany, the only way to save the euro is to go with a hyper-inflationary leverage policy and create eurobots. They’re talking about 3 to 5 trillion dollars of money created by central banks for bailout.

Now, one of the central banks that’s involved with the bailout – and I’m sure you know this, maybe your listeners do, too – is the Federal Reserve. The Federal Reserve is bailing out European banks. And they’re not bailing out the countries. It’s a lie to say it’s a sovereign debt crisis. There is a sovereign debt crisis because some of these countries like Greece and Italy and Spain are spending more just as we are than they’re producing. But the real crisis is that the bankers have been speculating on the bonds of these countries. And many of these countries are not gonna be able to pay off their bonds no matter how much of a bailout there is.

Also, in the United States, there’s a huge amount of liquidity in the banks and corporations. If that gets into circulation, which may happen at some point if they have to sell off some of the derivatives with margin calls or things of that sort, we’re going to see a hyperinflation. I don’t mean a 5% or 10%. We could see 100%-1000%. In case of a country like Greece, they’ll probably dump the euro before it happens, but they’re looking at a situation where no one will be able to afford food. Now, who benefits from that kind of hyperinflation? The banks because they can keep down the debt.

Jason Hartman: Anybody who owes money benefits.

Harley Schlanger: Yeah, and who gets hurt? The saver, the person who has been investing and working on putting together a nest egg for their retirement. Maybe they have $250,000 in an account. That could be knocked down to $25,000 or $2500.

Jason Hartman: Or nothing. I mean, 100% inflation means that $250,000 goes to 0 in one year. Folks, this is so important for you to understand. Remember that inflation destroys the value of your savings, your stock portfolio, your bonds, the equity in your real estate, although the real estate itself is a hedge against inflation. But, wait, it also destroys the value of your debt. So, the problem with these monetary policies we have, Harley, is that they’re encouraging people to do the fundamentally wrong thing.

Harley Schlanger: That’s exactly the point. Why did so many people suddenly reach the decision that their house that they had almost paid off at $200,000 is now worth $500,000, so they should refinance so they have some money to play with?

Jason Hartman: Because they almost intrinsically knew probably, even if they didn’t consciously know, they knew on some subconscious level, that the debt would become worthless maybe and so now we’ve seen it – all the people that got into debt are getting rewarded even though the inflation hasn’t really hit yet because they’re getting the bailouts, they’re getting to live in their house for free for 2 or 3 years. It’s counterintuitive.

Harley Schlanger: And the other thing that happened is that they were encouraged by that by saying don’t worry, this is a real evaluation and it will keep going up by people who knew that it could not keep going up.

Jason Hartman: They call Goldman Sachs the ultimate bubble machine.

Harley Schlanger: Goldman Sachs and the US Federal Reserve.

Jason Hartman: They create bubble after bubble after bubble.

Harley Schlanger: Bernanke just announced yesterday 0% interest rates until the end of 2014. Now, you and I can’t get money at 0%. Who’s that going to?

Jason Hartman: It’s going to the insiders.

Harley Schlanger: So they can keep buying and selling toxic assets.

Jason Hartman: It really is well, folks. Unfortunately, I hate to say this, get into long term debt at fixed rates attached to things that have intrinsic real value-like commodities. And those commodities are the construction materials that build houses and apartments and provide housing because everybody on earth needs a place to live. So, again, it’s counterintuitive and if it’s not totally the right behavior but it’s what you gotta do in an environment like we have.

I want to have you address 2 more things before we go. This has been a fascinating discussion, Harley. The first one is the marginalization that goes on in the corporate controlled mainstream or I kind of love what Sarah Palin called it – the “lamestream media”. They marginalized Ross Perot. He was right. The giant sucking sound absolutely happened. They’ve been marginalizing you guys for years and I didn’t really know what to think of you before I had this discussion with you for the past 40-50 minutes or so. But just address some of this criticism if you would. I look around and I see the Washington Post, the New York Times has described Lydon LaRouche as a conspiracy theorist, a fascist, an anti-semite, and characterized the movement as a cult. They do this to Ron Paul. They marginalize him.

Harley Schlanger: I was just going to say look what they’re doing to Ron Paul in the debates where he gets 89 seconds of air time while Gingrich and Romney who are two really despicable characters in my book are getting all the media. There is a man who was an editor of the Washington Post in 1977 and he said we’ve got to stop LaRouche. And the way to do it is don’t cover what he says, just call him names. Now, I don’t know if you remember this, but we started winning election in the mid-1980s. We won two statewide democratic nominations in Illinois. We won the Harris County, which is Houston, Texas, democratic party chairman’s race in 1988. I got 25% of the vote running for US Senator in Texas in 1990 in an election ultimately run by Phil Gramm. We were winning people over because we were having local reporters and media that were covering us in what we had to say. And all of a sudden, we were called anti-semites. Now, I’m Jewish, I’m not an anti-semite.

Jason Hartman: Are you sure about that?

Harley Schlanger: I’m absolutely sure. I’m not a self-hating Jew, I can tell you that.

Jason Hartman: Just checking.

Harley Schlanger: But the argument was that if you attack the corporations, you’re really saying Jewish bankers. And there was a book written about this on LaRouche which took his quotes and whenever he said the International Monetary Fund or the OECD, they said he needs Jewish bankers. And instead of just allowing these ideas to be debated – and these are important ideas, free trade versus tariffs, a credit policy versus monetary hyperinflation – these are real issues that determine people’s lives. And the decision was made to keep these out of the public discussion. So, anyone who brings them up is called a wild conspiracy theorist. Now, I don’t like a lot of what Ron Paul says because he is somewhat of an Austrian school economist.

Jason Hartman: Being Jewish, I suppose that you wouldn’t like that he doesn’t want to support Israel, too, right?

Harley Schlanger: Well, actually I don’t support the current government of Israel at all.

Jason Hartman: Oh, okay.

Harley Schlanger: But in the case of Ron Paul, he’s absolutely right about the Federal Reserve. And when he brings it up, they say oh there’s Ron Paul going off on a conspiracy and then some people go as far as to say well that’s really his anti-Semitism because he’s really talking about Jewish bankers. We’re not talking about Jewish bankers. We’re talking about a policy that is the kind of policy that actually led to Hitler coming to power because it was the hyperinflation in Weimar, Germany in 1923 which destroyed the physical production of Germany.

Jason Hartman: That’s a very good point. That’s what allowed Hitler to rise was inflation. He created a nationalist fervor and he took a population, a country that was beaten down, it had low self-esteem and the reason it had that is because it had massive inflation in the Weimar Republic. That’s a very good point.

Harley Schlanger: Sure. And when you look at the historical falsification that goes on, you brought up the question of Israel and this could take us into the 3rd question you had about the war danger, the Israelis have nuclear weapons. If Iran developed a nuclear weapon and threated to use it against Israel, Israel could wipe out Iran 20 times over. The Russians had nuclear weapons during the Cold War, so did the Chinese. And we were able to negotiate and live on the same planet.

Now, there may be some suicidal lunatics in Iran, but right now we’re supporting suicide bombers against the Assad regime in Syria, the so-called Lybian al Qaeda. We’ve moved them to Syria to try to overthrow Assad. Now, I’m not a big supporter of Assad but what we’ve done, and this is directly connected to the economy, whenever you have an economic crisis or a crash, war very often happens. Why? To take people’s minds off their own misery and give them an enemy image. And this is what Bush did with the War on Terror. Yeah, we had to do something about the people who hit the World Trade Center – why didn’t you go after the Saudis who funded it? So, we instead have been on this course where The United States has been in a permanent war, if you think about it, since 2001. And this is the old British imperial strategy of having those countries that might oppose them tied up in wars. What Mr. LaRouche is warning is that it’s not really Iran’s alleged nuclear weapons program which today was admitted again that the IAEA report shows that there’s no evidence Iran is building nuclear weapons. The level of uranium enrichment is far below what would be needed. And this comes from Israeli think tanks. So, why are we so hepped up right now on provoking Iran to close the Strait of Hormuz that’ll drive oil prices double?

This is classic geopolitics run by a financial elite that don’t want you to look at what is the real national interest of The United States right now. And so I think the war danger has two aspects. One, it’s a distraction. But, secondly, it’s a way to try and force Russia and China to accept the regime of the globalists and to not go on their own course where, even though they have problems – as you pointed out, China has environmental problems, Russia has a problem generally generating credit internally – but these are countries trying to build their physical economies. And if we went to cooperate with them based on American national interests of manufacturing and so on. We have the potential to help them build high speed rail, the Bering Strait Tunnel, develop the arctic, the Siberian resources that are incredibly rich in potential, but the Russians are never gonna get them. So, there’s a whole different option to war and free trade policy and hyperinflation. And that’s what Mr. LaRouche is largely focused on.

Jason Hartman: So, why is it that we seem to want to pick fights with all of these countries? I know you mentioned the British strategy of just tying them up in war. But what is the connection with Russia and China and Iran and Syria. Can you clarify that? You alluded to it. Give us a little more on that.

Harley Schlanger: That’s a very useful question. The Russians have come out of a pretty rough period. If you look at what happened after the collapse of the Soviet Union, you had this guy Gorbachev who basically said Russia should get fully engaged in the post-industrial economy. And this is what was happening under Yeltsin where The United States was sending over economists – and, by the way, many of them were trained by Larry Summers at Harvard – economists who were basically looting Russia, putting KGB guys in charge of their raw materials and running a scam operation. And Putin came in and said “We’re going to develop the Russian economy”. And it’s not an easy thing to do because they don’t have enough people. But they do have science.

Now, the Chinese have refused to open up their banking system because they don’t want to have a fractional reserve system that will benefit a small group of bankers when they need to create 20 million jobs a year to accommodate their workforce. Because they’re on the verge of real social chaos in China.

Jason Hartman: Yeah. The leaders of China, oddly enough people call them a communist country and I guess they are in several ways, in some ways, but oddly enough the leaders of China are very, very fearful of social unrest. They’re very fearful of people not having jobs. That is something that really runs their thinking in their policy.

Harley Schlanger: And so look what they’re doing. They’re going with a space program similar to what we had under John Kennedy. They’re building high speed rail. They’re building canals. They’re building FDR style infrastructure because they know those will create jobs in the present that will produce wealth for the future. And so when Geithner comes and says you should up value your currency, you should have reforms that allow Chase Manhattan Bank operate within China, the Chinese response is polite but they basically say get the hell out of here, we don’t want that. And so you have forming a kind of transpacific orientation which included Russia, it includes China, it includes to some extent India. Brazil was interested in this for a while, the so-called brick option. And Iran was part of this partly because Iran has oil. But Iran’s idea was they know they’re going to run out of oil and they want nuclear power for the future. So they brought the Russians in. Now, the question is at what point do the globalists run up against governments that can’t be easily toppled like Gaddafi or even Saddam Hussein, and when I say that, Saddam wasn’t easily toppled. We lost a lot of Americans in that and for what? Iraq is more chaotic now than it was before. It’s on the verge of a religious civil war. So we want to do that with Iran and Syria also?

And so what LaRouche is saying is the targeting of Iran and Syria is seen by the Russians and the Chinese as the targeting of them. And Jason, I don’t know if you saw what Obama did on his trip to Asia not too long ago, but he was there rattling sabers against the Chinese. And the Chinese know that the last thing they want is a war with The United States. And, of course, I would say most Americans don’t really want a war with China.

Jason Hartman: That would not be a good one.

Harley Schlanger: No. So what I would argue is that as the transatlantic financial system is collapsing, the elite who still control it through Brussels, through Wall Street, through the City of London, would prefer to have wars for the same reason that the British were hoping that World War I would destroy both Germany and Russia as a threat and then also, for the same reason, hope that Hitler would go against the Soviet Union first to destroy each other. That’s the traditional British geopolitical doctrine.

Jason Hartman: Is that really the concept of the enemy of your enemy is your firend?

Harley Schlanger: Well, the better way to put it is what Laurie Palmer said and who was the one who encouraged the south to fight the north in the Civil War. He said we have no permanent friends, only permanent interests. So, yeah, it’s the same kind of idea. And you can have short term alliances but no principles. And the American system of our founding fathers is based on principle, putting principle above party or private interests, and that’s what we’ve lost in the last 30 years.

Jason Hartman: It’s interesting and terrible at the same time that the whole concept of communism is that communism is billed as something that favors the worker and the little guy. In reality it’s something that favors the elite class and the cognoscenti, the inner circle, and what we have now is just a new version of that with the corporatocracy and the elite bankers. We have this inner circle of high and mighty elites, the Wall Street elites and the political elites that are in business together or in bed together and they’re all billing the stuff they do as a favor to the little guy, but it just doesn’t work out that way.

Harley Schlanger: No. I mean, what we need, in a sense, is a new American revolution. Peaceful, but a new American revolution where people go back to the understanding of the principles of physical economy which Benjamin Franklin studies and which Benjamin Franklin brought to his protégé Alexander Hamilton. And I think there’s a lot of reason to be optimistic because sometimes it takes a profound crisis like a Pearl Harbor to wake people up to the different reality that they’re facing than what they think. But in this modern Europe, it’s pretty dangerous also to wait until you have such a terrible crisis before people wake up.

Jason Hartman: Yeah, it sure is. Harley, just one more point on that physical economy concept. I’ve been talking for a while about how one of the threats Americans face is that as the government becomes more and more broke, it just cannot control its spending, we have huge entitlement obligations, I call them the $60 trillion dollar time bomb, some people call them the $120 trillion dollar time bomb, who knows the exact number of entitlement obligations that can never be repaid, can never be funded, it’s just not possible, but I think one of the next moves we’re going to see in this country that’s going to be a big move that’s going to hurt a lot of people is like Argentina they’re going to try and nationalize their retirement plans, the IRAs. And one of the things that I think the elites like about the smoke and mirrors economy, the fiat economy, the paper economy, it’s really not even paper anymore, it’s just electronic, is that it’s much easier to control and move assets because the assets aren’t real after all. They’re just assets by the legal system and the banking system.

And the physical assets of real estate and resources, those are harder to move and control and re-deed or change the ownership of them. So, if people have their retirement plans in IRAs that are largely stock market based rather than self-directed IRAs, I think they subject themselves more to this threat of nationalization or a new version of nationalization.

Harley Schlanger: And they’re also more afraid of the idea of what we’re talking about with reorganization because they think they’re gonna lose something. What they don’t realize is that, in a sense, much of what they think they have is already gone. And they will lose it. And I think this is where the question of actually creating a revolution in the way people think about economy as opposed to money and finance, you look at something like CNBC where they argue for hours about basically points of perception.

One thing – you were just talking about this question of moving from money to electronics – ultimately, people have to eat. They have to have a place to live. They really do have to have some kind of mission in life. And you can’t eat computer chips or paper.

Jason Hartman: We did an article in my newsletter, the Financial Freedom Report entitled “I Can’t Eat My iPad”.

Harley Schlanger: That’s right. That’s exactly right. So, at a certain point, physical economy will assert its real face. And if you don’t have enough earth being plowed and enough resources being developed and enough people producing physical wealth, you’re going to be subject to war, famine, disease and total chaos.

Jason Hartman: Like you said, there’s a lot of reason for optimism, oddly enough in this discussion which wouldn’t seem on its face optimistic, but the reason for optimism is when you look at the support for a candidate like Ron Paul who was just marginalized by the corporate media, it sounds like the same thing has happened to the LaRouche group as well, but people get it now. You can ask the man on the street about the Federal Reserve and the guy fixing the air conditioner that you walk by who’s fixing an air conditioner on some commercial building, he knows about this stuff now. They didn’t know, they didn’t get it.

Harley Schlanger: Five years ago, no one knew what Glass-Steagall was either.

Jason Hartman: Now everybody knows, yeah.

Harley Schlanger: So, we are seeing a change in thinking but it hasn’t gotten to the point yet where people realize how desperate we really are, how far gone we really are. And I hope we can reach people in time to get the positive kinds of changes we’re supporting. And, again, I would encourage people to go to LaRouchePac.com or give me a call at 800-922-2907.

Jason Hartman: Fantastic. Well, hey, Harley, thank you so much for joining us today. Keep getting the message out there. I appreciate you coming on the show.

Harley Schlanger: Okay, thank you very much.

Narrator: Thank you for joining us today for the Holistic Survival Show, protecting the people, places and profits you care about in uncertain times. Be sure to listen to our Creating Wealth Show which focuses on exploiting the financial and wealth creation opportunities in today’s economy. Learn more at www.JasonHartman.com or search “Jason Hartman” on iTunes. This show is produced by The Hartman Media Company, offering very general guidelines and information. Opinions of guests are their own and none of the content should be considered individual advice. If you require personalized advice, please consult an appropriate professional. Information deemed reliable, but not guaranteed.

Transcribed by Ralph

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