September 18, 2007—Hours before the Federal Open Market Committee (FOMC) announced a 0.5 percent rate cut, Lyndon LaRouche issued a pointed warning that the Fed was about to do something suicidally stupid. LaRouche said:

What the Bank of England is doing; what Paulson is doing is purely political. It makes no sense. A soaring interest rate is the worst possible thing for the system, but lowering the interest rate is the worst possible thing for the system—so, the only thing that can be done is the firewall. There is only one answer—freeze the worthless paper.

Monetarist theory, LaRouche continued, does not work at a time like this. Don't be a monkey—or a monetarist. Monetary policy applied to something like this [e.g., Northern Rock] is insane. You have one guy insisting he urgently needs something—like Paulson calling for bail-outs, and another insisting he urgently needs something completely contradictory—like Mervyn King. They're contradicting each other—and, more to the point, they're both contradicting reality.

This is the time for a selective tax program: tax the hell out of people who need to be taxed—people for whom taxation is the only medicine that can work to curb their compulsion to speculate; and give preferential tax breaks to those who are prepared to make long term investments to promote infrastructure and rebuild the productive economy.