WEDNESDAY, AUGUST 21, 2019 Volume 6, Number 165 EIR Daily Alert Service P.O. Box 17390, Washington, DC 20041-0390

• What Looks Impossible Today May Become Inevitable Tomorrow
• Private Equity Giant BlackRock Proposes ‘Regime Change’ in Monetary Policy
• U.K. Guardian: Environmentalism-Eugenics at Root of Recent Mass Killings
• Italy’s Government Crisis Is Official Now
• China Tells the World, Hands Off Hong Kong and Taiwan
• London Demands Trump Stop Pussy-Footing and Join All Out Assault on China Over Hong Kong
• Pentagon Test Flies Land-Based Cruise Missile
• Beijing and Moscow Oppose Foreign Interference in Internal Affairs, Says China’s Foreign Ministry
• Trump Makes Case To Readmit Russia to G7, Making It Again the G8
• Trump Administration Reported To Be Considering a Temporary
• Payroll Tax Cut
• Macron and Putin Discuss Europe from the Atlantic to Vladivostok

EDITORIAL

What Looks Impossible Today May Become Inevitable Tomorrow

Aug. 20 (EIRNS)—Red lights are flashing across the entire trans-Atlantic financial system, signalling the danger of an imminent financial and banking blowout which will make 2008 pale in comparison. This, on the eve of the Aug. 22-24 Jackson Hole, Wyoming annual policymaking meeting of the world’s central bankers and leading international financiers, and the Aug. 24-26 summit of the heads of state and government of the Group of 7 developed nations, which will be held in Biarritz, France.

A grim, sickly pallor hangs over both meetings—at least for those leaders willing to admit that the British Empire’s entire trans-Atlantic financial system is hopelessly bankrupt, and that every effort to date to bail out its $1.5 quadrillion speculative bubble has failed miserably.

Bail-outs on steroids, in the form of over $15 trillion in quantitative easing (QE), were tried and failed. Bail-ins collapsed before they even got off the starting blocks, because they were politically impossible. Negative interest rates are now the dominant reality across most of the G7 nations—the U.S. is the main exception, but it is rapidly heading in that direction—which is a form of highway robbery against the targeted populations, and a marker of extreme financial dysfunction. Tens of trillions of dollars of phony “green bonds” are soon to be issued, in another desperate attempt to loot physical economies and bail out the City of London’s and Wall Street’s speculative bubble. The Brexit separation between the United Kingdom and the European Union now looms for Oct. 31, which threatens to pull the plug on the City of London’s control of the global derivatives trade—which accounts for about 80% of the total international financial bubble.

And now a policy paper has been prepared for the Jackson Hole confab by top central bankers and others working with BlackRock, the largest private equity group on the planet, which proposes a brazenly suicidal “regime change in monetary policy that’s as big a deal as the one we saw between pre-crisis and post-crisis”—i.e., the quantitative easing hyperinflationary scheme that was unleashed after the 2008 blowout. Their proposal is for central banks to put governments in de facto receivership and themselves “go direct” with vast financial flows to bankrupt public and private sector recipients. This is the equivalent of mainlining financial heroin into the veins of a hopelessly addicted near-corpse—and it will have similar results.

Students of the peerless physical economist Lyndon LaRouche will recognize this situation as one where the rate of growth of monetary aggregates (e.g., QE) of LaRouche’s “Triple Curve” or Typical Collapse Function, has so far outstripped the rate of growth of total financial aggregates (e.g., derivatives), that there is no possible rate of additional monetary hyperinflation that can prevent the $1.5 quadrillion financial aggregates bubble from imploding—and with it, the physical economies of those parts of the world that have not joined China’s Belt and Road Initiative.

Unless, of course, LaRouche’s bankruptcy reorganization of the current trans-Atlantic system is carried out in time. That will require the United States joining with other great powers such as China, Russia and India to put the British Empire and its financial system out of business, permanently.

As Russian President Vladimir Putin told a joint press conference with French President Emmanuel Macron, after a summit between the two leaders yesterday: “What looks impossible today may become inevitable tomorrow.” Putin was referring to the prospect of creating a common Europe from Lisbon to Vladivostok. But the same principle applies to the state of the world economy and financial system today.

As Helga Zepp-LaRouche stated to associates yesterday: “I think that [Putin’s] formulation also applies emphatically for the implementation of Lyndon LaRouche’s solutions to the present crisis…. As the crisis become so great, what seems to be impossible now, namely to implement Glass-Steagall and a New Bretton Woods and a Four Power agreement for the common aims of mankind, will become inevitable tomorrow….

“The situation is coming to a complete polarization between ecofascist ideology, which is basically an ideology like the Nazi ideology was, no less dangerous. The alternative is to have a New Paradigm where the future of mankind has to be organized by scientists and Classical artists, because these are the only two essential groups of people who believe in verifiable universal principles. Lyndon LaRouche stressed that all the time: that you have to have politics based on the physical laws of the universe, and the only people who know that are people who believe in discovery, which is universal.”

COLLAPSING WESTERN FINANCIAL SYSTEM

Private Equity Giant BlackRock Proposes ‘Regime Change’ in Monetary Policy

Aug. 20 (EIRNS)—Former Swiss central banker Philipp Hildebrand, BlackRock Germany chief economist Elga Bartsch, former Fed vice-chairman Stanley Fischer and former deputy governor of the Bank of Canada Jean Boivin have signed a BlackRock paper calling for a “regime change” in monetary policy, involving the end of central bank “independence.” BlackRock is the largest private equity group in the world; their policy paper has been forwarded for the coming Jackson Hole, Wyoming meeting of central banks Aug. 22-24.

Since all instruments of monetary policy have failed, the four BlackRock officials propose what they call “going direct”: central banks and governments should sit together and decide to put money directly into the hands of public and private receivers.

In a Bloomberg interview, Hildebrand says: “We are going to see a regime change in monetary policy that’s as big a deal as the one we saw between pre-crisis and post-crisis, a blurring of fiscal and monetary activities and responsibilities.” The reference is to the introduction of the hyperinflationary policy of quantitative easing, in the aftermath of the 2008 financial crisis.

For those who might think this means money for investments, the BlackRock paper leaves no doubt that it is not: the “going direct” proposal aims at using what Ben Bernanke called “helicopter money” to generate just-enough inflation to supposedly achieve “price stability.” It involves establishing a permanent “standing emergency fiscal facility” that would only be used in extremis and in combination with monetary and fiscal policy becoming “jointly responsible for achieving the inflation target.”

In other words, we are facing a complete overturning of the concept of national banking. It is the institutionalized end of “independence” not of central banks from governments but of governments from central banks, i.e., the markets. The German liberal daily Die Welt calls it “The end of the financial world as we have known it.”

The so-called “inflation target” is in reality a cover to inject enough monetary values into the system to sustain the inflated global financial aggregates, which are now in the range of $1.5 quadrillion. At one point down the road, this will explode into hyperinflation. As Lyndon LaRouche used to reiterate, if they stubbornly refuse to go for a bankruptcy reorganization of the system, central banks have no other option than to supply the rope to hang themselves.

U.K. Guardian: Environmentalism-Eugenics at Root of Recent Mass Killings

Aug. 20 (EIRNS)—On Aug. 16, the Guardian newspaper, in an article entitled “ ‘Bees, Not Refugees: The Environmentalist Roots of Anti-Immigrant Bigotry” which traces out the roots of the El Paso shooter, enviro-fascist Patrick Crusius, reveals what readers of LaRouche publications have known for a long-time: that “recent mass shootings have been linked to‘eco-xenophobia’—part of a tradition that dates to America’s first conservationists.” Three days later, the leftist Mother Jones republished the article, but with a more precise title, “Anti-Immigration White Supremacy Had Deep Roots in the Environmental Movement.”

Susie Cagle, author of the Guardian exposé, gives the background of John Tanton, the founder of the anti-immigration Federation for American Immigration Reform (FAIR), who, as EIR documented decades ago, was a supporter of the infamous 1975-76 Paddock Plan, in which Malthusian agronomist William Paddock proclaimed, “The Mexican population must be reduced by half…. Seal the border and watch them scream.” Paddock’s policy was effectively endorsed by Carter’s National Security Adviser Zbigniew Brzezinski. Paddock was also on the board of Tanton’s FAIR. Previously, Tanton was a leader of the environmentalist Sierra Club and the national president of Zero Population Growth (ZPG), which was founded in 1968 by Paul Ehrlich to achieve mass elimination of population.

Although Cagle did not cover this crucial background to Tanton, she did report that Tanton set the environment for Crusius: “A hate-filled document allegedly linked to the man suspected of killing 22 people in El Paso  on Aug. 3 echoed the kind of rhetoric generally favored by the far right—and also had a decidedly environmentalist, Tanton-like bent. The document praised the Dr. Seuss character, the Lorax, who says he speaks for the trees, and complained about the unsustainable overuse of paper towels, and concluded that the best course of environmental action would be mass murder.”

Italy’s Government Crisis Is Official Now

Aug. 20 (EIRNS)—Two paradigms confronted one another in the Italian Senate today, in the persons of Prime Minister Giuseppe Conte, who announced his resignation, and Lega Party head and Interior Minister Matteo Salvini, who called for early elections.

Whereas Conte accused Salvini of being disrespectful of “rules,” defended his government choice of changing the European Union from the inside, and pushed Green economy schemes as a vision for the future, Salvini called for a 30-year perspective based on investments in “roads, highways, railroads, schools, hospitals” in order to prevent that, by the year 2050, Italy would lose 6 million active labor force members and 4.5 million emigrants.

Salvini quoted Cicero to say that freedom does not mean to have a better master, but to have no master. Italy has had enough of having to ask for EU permission on every minor decision. He quoted from the American Constitution to claim the right of the population to the pursuit of happiness. He said that the government broke down because the M5S said “No” to everything. “In every country in the world, people are happy if oil is discovered, but the M5S is not.” He added that he rejects their “happy de-growth” ideology.

Responding to Conte, who had accused him of disloyalty, Salvini reminded him that he “never complained to Mrs. Merkel about my government ally”—as Conte had done, which was documented in a bootleg video.

At the end of the Senate debate, which lasted 3.5 hours, Conte went to resign his mandate with State President Sergio Mattarella. According to the Constitution, the President must verify whether there is an alternative majority in Parliament. If this is not the case, he must call for early elections.

According to Corriere della Sera, in the case of early elections, the M5S would collapse to 7-8%. Such data have convinced M5S owner Gianroberto Casaleggio to go for a government alliance with the Democratic Party (PD).

According to some sources, the inventor of the “Ursula government”—a reference to the policy of EU Commission President-elect Ursula von der Leyen—is former EU Commission President Romano Prodi. The question is whether Berlusconi would agree to join it. According to some reports, his Forza Italia is split between senators who want to join and others who want to go to early elections. Berlusconi is watching and waiting.

STRATEGIC WAR DANGER

China Tells the World, Hands Off Hong Kong and Taiwan

Aug. 20 (EIRNS)—Chinese government and media are drawing a red line on the issues of Hong Kong and Taiwan, which they describe as “core issues” related to Chinese sovereignty that they will not relinquish. On Aug. 19, Foreign Ministry spokesman Geng Shuang stated that the planned U.S. sale of $2.2 billion in advanced military equipment to Taiwan “severely violates the one-China principle and the three China-U.S. Joint Communiqués, especially the August 17 Communiqué,” according to Xinhua. “China firmly opposes U.S. arms sales to Taiwan as it seriously interferes in China’s internal affairs and undermines China’s sovereignty and security interests,” Geng said. The spokesman said “the Taiwan question concerns China’s sovereignty, territorial integrity and core interests. And China’s resolve to safeguard its sovereignty and security is firm. China urges the U.S. side to fully recognize the highly detrimental nature of the planned arms sales, and abide by the one-China principle and the three China-U.S. Joint Communiqués, said Geng. ‘China will take necessary steps to safeguard its interests according to any developments with this issue,’ he said,” Xinhua reported yesterday.

Meanwhile a Global Times article again hit at the British hand behind the manipulated youth demonstrations in Hong Kong. “Some of the participants went too far by asking the U.K. to ‘re-exercise the Treaty of Nanking and Treaty of Tientsin,’ which were two unjust treaties that the Qing Dynasty signed with the British Empire after the Opium War, that allowed Britain to colonize Hong Kong and start selling opium products to China….”

A China Daily editorial headlined “White House Playing Wrong Card in Its Risky Game with China,” warns that Beijing “holds sovereignty over Taiwan to be a ‘core interest’ as well as a diplomatic redline in its relations with foreign countries…. Washington should stop its grave interference in China’s internal affairs … otherwise China will have to take measures to safeguard its interests depending on how the situation develops.”

London Demands Trump Stop Pussy-Footing and Join All-Out Assault on China over Hong Kong

Aug. 20 (EIRNS)—An article in the Aug. 19 The Hill written by Larry Diamond, Hoover Institution senior fellow and the founding co-editor of the National Endowment for Democracy’s Journal of Democracy, lays out the British demand of Trump: Stop stonewalling on attacking China over the Hong Kong color revolution.

“The [Hong Kong] movement has drawn the free world’s admiration,” Diamond wrote, “and now it’s urgent concern for what may lie ahead.  Leading members of Congress of both parties, from Sen. Lindsey Graham to Speaker Nancy Pelosi, have offered eloquent support for the largely peaceful protests [sic]. So have British and other European leaders, and prominent members of President Trump’s own government, including National Security Adviser John Bolton, who has never been mistaken for a bleeding heart on human rights. All have warned Beijing’s communist leaders of the consequences of using force to suppress the protests. But missing from this chorus has been the most consequential voice among the world’s democracies, that of President Trump himself.”

But Diamond is nervous about the fact that the Hong Kong “protest” movement has been widely exposed as violent and being orchestrated by both U.K. and U.S. government forces, as well as NGOs. So he recommended: “If a movement can craft a smart strategy and periodically adapt its tactics, and if it can maintain nonviolent discipline—restraining angry retaliatory impulses and provocations—it has a good chance of succeeding. The more it turns to or condones violence, or fails to restrain or isolate the violent few, the weaker its prospects.”

Pentagon Test Flies Land-Based Cruise Missile

Aug. 20 (EIRNS)—The Pentagon announced yesterday that it had successfully tested a ground-launched cruise missile that would have, were it still in effect, violated the Intermediate-Range Nuclear Forces (INF) Treaty. “On Aug. 18, at 2:30 p.m. Pacific Daylight Time, the Defense Department conducted a flight test of a conventionally configured ground-launched cruise missile at San Nicolas Island, California,” the announcement said. “The test missile exited its ground mobile launcher and accurately impacted its target after more than 500 km of flight.” How far it actually flew and the location of the target were not said, but the Tomahawk has a range of 800 to 1,500 miles.

The accompanying video shows what looks to be a Tomahawk cruise missile being fired out of a vertical launcher mounted on a flatbed trailer. This is clearly not an operational configuration but the data gathered from the launch will most likely be useful in designing one. The launcher, itself, is probably a single cell out of an MK 41 vertical launcher, the type used on U.S. Navy Aegis destroyers. Officials said the missile is designed to carry a conventional, and not a nuclear, warhead, reported UPI.

The Russians, as one might expect, have reacted harshly against the Pentagon test. “All that is regrettable. The United States has evidently set a course for mounting military tensions. We do not give in to provocations,” Russian Deputy Foreign Minister Sergei Ryabkov told TASS this morning. “There can hardly be a clearer and more explicit confirmation of the fact that the United States has been developing such systems for a long time, and preparations for withdrawing from the [INF] agreement included, in particular, the relevant research and development,” he observed.

RT finds that there’s only one possible conclusion: that the test was in planning and preparation for months before the official end of the INF Treaty on Aug. 2. “In two weeks, one can prepare and get a green light for a test program, and even that would take extra effort,” RT’s defense expert Mikhail Khodarenok remarked. “The rest of it, including bringing the tested weapon system to the range, training the crew in its use, preparing the target, putting sensors in place—that cannot be done in two weeks….

“Now it turns out that all the while Washington was telling the world how the treaty could still be salvaged—if only Russia pled guilty and destroyed its stockpiles of missiles that supposedly violated the INF—it was also developing a weapon system that breached the very same treaty….” RT concludes, “Who could have seen this one coming?”

Beijing and Moscow Oppose Foreign Interference in Internal Affairs, Says China’s Foreign Ministry

Aug. 20 (EIRNS)—Chinese Foreign Ministry spokesman Geng Shuang stressed, during a regular briefing today, that China stands with Russia in opposing foreign interference in the internal affairs of both countries. China and Russia share common interests and demands in safeguarding national sovereignty and security, maintaining social stability and order, and opposing external interference, Geng said. “The Russian government took measures to uphold social stability” in response to illegal marches, he said. “What is disturbing is that some Western countries rushed to the scene with their finger-pointing and tricks. Just as Russia described, this is typical interference in other countries’ internal affairs and the very embodiment of hegemony.”

Geng recalled that the Russian Foreign Ministry had recently pointed to foreign involvement in the Hong Kong riots. “A recent Russian statement on the situation in Hong Kong said that Western interference in China’s domestic affairs goes far beyond rhetoric. They will do whatever it takes to contain China,” he said. “These remarks put certain countries’ dishonorable role in the violent activities in Hong Kong into sharp focus. They also exposed the hidden intention of external forces in instigating violence to destabilize Hong Kong. China completely agrees with and highly appreciates the statement.”

U.S. POLITICAL AND ECONOMIC

Trump Makes Case To Readmit Russia to G7, Making It Again the G8

Aug. 20 (EIRNS)—President Donald Trump called Aug. 20, for Russia to be admitted to the G7, making it once again the G8, ahead of the global group of industrialized nations’ summit in Biarritz, France Aug. 24-26. Trump said, “I’ve gone to numerous G7 meetings and I guess President Obama, because Putin outsmarted him, President Obama thought it wasn’t a good thing to have Russia in so he wanted Russia out. I think it’s much more appropriate to have Russia in and it should be the G8. So I could certainly see it being the G8 again,” speaking jointly to the press with Romanian President Klaus Iohannis before their meeting at the White House today.

Last year, he shocked media at the G7 in Charlevoix, Canada, when he told them during his press conference: “I think the G8 would be better. I think having Russia back in would be a positive thing. We’re looking for peace in the world. We’re not looking to play games.” (See EIR Daily Alert, Vol. 5, #115, Monday, June 11, 2018.)

Trump’s is a very important policy statement, which could help break the new Cold War atmosphere which the British Empire has fomented.

Britain and the Obama regime pushed for Russia to be expelled from G8, using the “Ukraine matter,” after London and the State Department had violently overthrown the elected government of Ukraine in February 2014, and the people of Crimea had freely voted to rejoin Russia.

Trump issued his statement, on the heels of the Putin-Macron summit at Fort de Brégançon on Aug. 19, in which the French and Russian Presidents reportedly discussed subjects including Syria, Libya, and Ukraine, and likely what improved Russian relations with western Europe should be.

Trump Administration Reported To Be Considering a Temporary Payroll Tax Cut

Aug. 20 (EIRNS)—The Trump Administration is considering a temporary payroll tax cut to help goose up the failing U.S. economy, according to a Washington Post report Aug. 19. A White House official later denied the story, somewhat unconvincingly: “As [National Economic Council Director] Larry Kudlow said yesterday, more tax cuts for the American people are certainly on the table, but cutting payroll taxes is not something under consideration at this time,” the unnamed official told CNBC.

If such a policy is adopted, this would add fiscal policy measures to monetary policy measures (for example, quantitative easing), all of which are manifestly failing to do anything to stop the onrushing financial meltdown.

The payroll tax is used to make good on previous worker pay-ins to Social Security. The Washington Post article observed that Obama had cut the 6.2% payroll tax rate to 4.2%, to try to increase consumer spending, but then returned it to 6.2% in 2013. The Post reported that “The size of the cut could equate to a bigger tax cut for many families than the 2017 tax law.”

There are clearly growing concerns in the Trump Administration that the economy is going south, despite the brave face being put on it by President Donald Trump and others, just as the country heads into the 2020 elections. The Post reported that “Trump has spent much of the past week conferring with business executives and other confidants seeking input on what they are seeing in the economy…. Kudlow has scheduled briefing calls this week with state and local business leaders, conservative groups, and others to both gauge the economy’s strength and seek more input. White House spokesman Judd Deere said the calls, which ‘have been long-planned’ will focus on Trump’s economic agenda, including issues such as deregulation and energy production.”

THE NEW GLOBAL ECONOMIC ORDER

Macron and Putin Discuss Europe from the Atlantic to Vladivostok

Aug. 20 (EIRNS)—French President Emmanuel Macron and Russian President Vladimir Putin, held a 2.5-hour meeting at the French leader’s summer residence on the Mediterranean at Fort de Brégançon. Under discussion was the Syrian settlement, the situation in Libya, the Iran nuclear deal, and prospects for another summit in the Normandy Format on Ukraine.

They also discussed relations between Europe and Russia, prompting President Putin to thank France for its role in returning Russia to the Council of Europe, which is based in Strasbourg.

Speaking at a joint news conference ahead of the meeting, Putin responded to a reporter’s question: “As far as the outlook for creating a common Europe from Lisbon to Vladivostok is concerned, it is not our idea. General de Gaulle voiced it a while ago. He mentioned Europe lying between Lisbon and the Urals. But Russia stretches much farther, to the Pacific. This is a space of European culture. It is important to understand this. What really matters is different, though. Today this may look impossible. But what looks impossible today may become inevitable tomorrow…. The important thing is to choose the path and slowly move in the right direction in accordance with the current conditions.”

For his part, Macron said Russia plays an extremely important role in settling global crises.  “All the major crises in the world will be in the focus of our discussion with the Russian President. This is both because France is holding preparations for a summit of the G7 Group, over which it is presiding, and because Russia plays a key role in settling crises,” TASS quoted the French President as stating.

Today the world is “living through a truly historical phase because the principle of multilateralism is subjected to attacks. And we need to think about how to transform this world order. I am deeply convinced of that. That is, we need to work out new forms of relations and useful actions,” Macron said. “In this sense, the relations between France and Russia, Russia and the European Union are of crucially decisive nature. I stressed this repeatedly,” the French President said.

“I am also aware of those talks that are underway [in Russia regarding its] relations with the West. But I also know another thing: Russia is a deeply European country. We believe in this Europe, which extends from Lisbon to Vladivostok,” Macron said.

“We need to work out [together] a new architecture of security and trust between Russia and the European Union. France will have to play its role in this process. And it will play it,” Macron stressed.

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