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LaRouche's Triple Curve in Action

October 13, 2009 (LPAC)—New Federal Reserve figures show that the bank credit shrinkage in the U.S. economy—banks cutting down lending despite trillions in government bailouts—continued to intensify through September, with the policy of the Fed directly contributing to the credit crunch. At the same time the monetary aggregate that the Fed is printing kept zooming up, while productive employment and production continues to contract, and that at an accelerating rate. Taken as a totality, this is precisely what Lyndon LaRouche has repeatedly warned of in his "Triple Curve" forecast of the global economic meltdown underway.

This train-wreck-in-progress cannot be handled with any jiggery-pokery; only full bankruptcy reorganization, as specified in the LaRouche Plan, actually addresses the underlying problem.

Federal Reserve figures published weekly through Oct. 9 (reflecting data through Oct. 2) show bank lending falling at an annual rate of -19% through the third quarter. And within that total, commercial and industrial credit from the banks was falling at a -28% annual rate. Commercial and industrial credit has shrunk 6.7% in the third quarter alone, from $1.5 trillion to $1.4 trillion, accelerating a year-long drop.

In the first and second quarters of 2009 combined, U.S. businesses consumed more capital than they raised for the first time since the 1930s. London bank economist Leigh Skene of Lombard Street Research, quoted on this contraction by MarketWatch, called it "the hallmark of depression, and difficult to reverse." It was a nice attempt at analysis, but way off the mark: We are not dealing with a depression, that's wishful thinking, but an ongoing breakdown crisis of the world economy shown in LaRouche's triple-curve forecast, and to be dealt with through the LaRouche Plan for Rescuing the World Economy.

In contrast, at the same time, the U.S. monetary base has doubled in one year since last October, from just over $1 trillion to over $2.1 trillion. This means currency printed by "Helicopter Ben" Bernanke's Federal Reserve plus "excess bank reserves" deposited at the Fed by banks instead of lending from them. In many cases, the banks have borrowed these reserves from the Fed, at a virtual zero interest rate, and the Fed is paying the banks interest on those deposits for the first time in its history.


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