What really creates inflation?

From LaRouche’s remarks in a debate with Keynesian economics professor Abba Lerner, at Queens College in New York City, Dec. 2, 1971.

LaRouche scored a stunning victory against prominent economist Abba Lerner at a debate at Queens College in New York, in December 1971, in which he laid bare the fascist roots of Lerner’s outlook, and forced Lerner to admit his self-damning belief that had Germany capitulated to the demands of banker Hjalmar Schacht, “Hitler would not have been necessary.”

The response from the parasites was immediate and predictable: Never again, they informed LaRouche, would he be allowed to challenge them publicly. Keep your mouth shut and follow the rules, or we will destroy you.

Economic policy is that which determines the lives, and daily lives and conditions of people; the form of economic policy determines the kind of government which is necessary to carry it out. And, the only kind of government which can carry out the kind of policy which Professor Lerner recommends—in all well meaning, all good intention—would have to be a Bonapartist or fascist government.

He may be opposed to fascism with every fiber of his being; this was also true in Germany, where many economists, liberal economists, proposed austerity, who also opposed the Nazi regime. But, nonetheless, there are men who will take up these policies and carry them out, and they will be Bonapartists or fascists. . . .

The expansion of the monetary system, and the growth of debt . . . is due to the debt-service and profits on purely fictitious instruments, which is assigned as a burden to production. Thus, the major reason for rising prices, for inflation, inflation, has nothing to do with wages as such, but has to do with debt-service, directly and indirectly put on production. . . .

A further factor is that the structural features of the economy are changed, to cause a structural inflation. That is, productive employment stagnates, as has been the case in the United States since 1953; whereas the growth of administrative services tied to this apparatus of paper capital expansion, generates expansion in both administrative employment and in services. . . .

Potentially, in terms of real economy, we could have a shift to a production—productive employment, and very easily solve this problem, if we could only take the paper which stands for fictitious values—the rising debt, which is essentially based on fictitious values; stock values, which are based on fictitious values; rents, based on fictitious values—you just take this out and burn it, and reconstitute the economy, there’s no reason we couldn’t have full employment and full productivity. . . .

However, if production is declining, relative to the rate of expansion of promissory notes, then obviously what you get into is a simple process of refinancing promissory notes. . . . And that, of course, leads to bankruptcy, which is precisely the problem we face: that when you get bankrupt, you hock somebody—maybe your grandmother, if you’re a certain kind of businessman. . . . And therefore, the only way that the kind of policies that Professor Lerner is talking about can be carried out, is by a Brüning and von Papen regime, succeeded by a Hitler regime, or its equivalent in the U.S.