LaRouche Was Right on Consequences of Nixon Pulling the Plug on Bretton Woods

Aug. 16—Yesterday marked the 53rd anniversary of the fateful Aug. 15, 1971 televised policy speech by President Richard Nixon in which he announced the end of the Bretton Woods fixed-rate international financial system. That announcement began the era of runaway speculative destruction of the world economy.

We focus renewed attention here on the cause of the global military, financial, and cultural crises, that the late statesman and physical economist Lyndon LaRouche uniquely forecast over a half-century ago would be the consequences of what Nixon did, following the bad advice of British agent and Office of Management and Budget Director George Shultz, by “pulling the plug” on the Bretton Woods system.

On Aug. 14, 2021, the LaRouche Legacy Foundation issued an invitation to its conference “On the 50th Anniversary of LaRouche’s Stunning Forecast of August 15, 1971: So, Are You Finally Willing To Learn Economics?” which read in part:

“On August 15, 1971, Nixon delivered a dramatic 18-minute televised address, broadcast nationally, in which he announced:

“1. The dollar was being taken off the gold exchange standard: the dollar would no longer be redeemable in gold;

“2. A floating exchange rate system would replace the existing fixed exchange rate international monetary system;

“3. A temporary wage and price freeze would be instituted in the U.S., which quickly became Phase I, II, and III drastic austerity measures. Although Nixon announced these measures purportedly to rein in financial speculation against the dollar, they in fact opened the floodgates to the most massive, lengthy speculative binge in the history of mankind, coupled with physical economic collapse—which continues to this day.

“The August 15, 1971 announcement was the most far-reaching and catastrophic economic policy decision of the 20th Century in terms of its consequences down to the present. One economist, and one economist alone, called it. He warned that it was coming and explained what it meant within hours of its announcement. That man was Lyndon LaRouche.

“LaRouche spent the next five decades warning that, if those policies were continued, the world would head into a systemic breakdown crisis and the likelihood of fascist economic policies. All the while he presented detailed programs to reverse the crisis, based on the idea of peace through development and on fostering the productive powers of labor of every person on the planet.

“For this, LaRouche was reviled and unjustly imprisoned for five years [1989-1994]. His policies were not implemented in the trans-Atlantic sector, and the planet today is paying the price for that folly in the form of a hyperinflationary blowout, an uncontrolled and deadly pandemic, and the danger of thermonuclear war.”

LaRouche was right on the mark in forecasting the global financial system that would ensue, as the financial system was untethered from the real economy and allowed to create financial and monetary values out of thin air, unsupported by any created real productive value from the labor expended to create industrial product, mining, and agricultural product.

As LaRouche was later to explain with his famous Triple Curve function, the growth in monetary and financial aggregates has actually an inverse relationship to the real (physical) economy, pulling that economy into collapse. At some point, the upwardly trending curves of the monetary and financial aggregates intersect, sending the speculative financial casino—sometimes referred to as the markets—out of control, and the curve of the productive economy, which supports all human life on this planet, is sent catastrophically downward into an accelerating collapse.

We have long since passed that point, and while real production in the West has indeed collapsed, the actual results of the collapse have been delayed, for a time, by various financial tricks and the launching of wars by Global NATO and its assets, with related growth in purely wasteful military production. (Can you really eat a bomb? LaRouche once asked.)

But, while LaRouche’s warnings and economic teaching was suppressed in the West, including in his native United States, some important people, especially over the last 40 years or so, have taken notice in such powerful nations as Russia—whose economy was looted after the collapse of the Soviet Union by the Western financial powers—and in China—which has succeeded in creating a viable productive economy, lifting two-thirds of its people out of a poverty enforced by the stupidity of Maoism, and by the attempted rape of China by the financial powers in especially Europe and United States, who sought to use China as a source of cheap labor to replace the discarded and looted productive workforce of the West.

It is in the policies of these two nations, Russia and China, and in the BRICS economic alliance that they have created, that we see LaRouche’s economic ideas in play.

For example China’s globe-spanning Belt and Road Initiative for the development of transportation-based economic development corridors is explicitly modelled on the World Land-Bridge and New Silk Road policies championed by LaRouche and his wife, Helga Zepp-LaRouche, who carries on her husband’s fight for peace and global development as the Chairwoman of the international Schiller Institute which she founded with her husband some 40 years ago. We also see them moving to a new financial system, which has its center, not some mechanism for a global financial dictatorship to collect unpayable debts as we now have under the decayed Bretton Woods institution, the International Monetary Fund, but one centered on an International Development Bank as proposed 50 years ago by LaRouche, to extend credits for development and the improvement of living standards, which will trade in an international trading currency, not the dollar, to which all currencies will be pegged, in a fixed exchange rate, gold reserve system, that can deal with trade imbalances. This is all in process under the BRICS, to be centered around its New Development Bank and related trading currency discussions.

Development policies such as those mentioned are our only salvation from an onrushing economic collapse, which will strike globally, but strike the West much harder, because its ruling elite tried to kill both LaRouche and his ideas. But it is LaRouche, who died in 2019, who continues to stalk his stupid adversaries with ideas and policies whose time in this present conjunctural crisis has truly come and which dooms those who have failed to heed his precise warnings. The future does not come from the present or the past, LaRouche always said, but from the creative mind of men and women which crafts the future from ideas and principles learned from the past and from new ones they discover.

This human power to create the future is what is meant by the famous phrase “pursuit of happiness,” found in the 1776 Declaration of Independence, which the Founding Fathers of the American republic defined as among the unalienable rights of every man and woman, and which the great American President, Franklin D. Roosevelt extended as the right of everyone on this planet.

Because the current global financial system is in such a massive violation of this principle, it has doomed itself to the historical junk heap, just as LaRouche forecast more than 50 years ago.