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LaRouche – Ugly Truth About Milton Friedman

In this post my summary of a book by Lyndon LaRouche “… About Milton Friedman”; it’s more a history lesson on British monetary policy destroying mankind than about Friedman, who won the Nobel Prize for economics in 1976.
LaRouche also tries to give “his” ideas on sound economics, based on Charles de Gaulle’s economic adviser Jacques Rueff, who he had worked with, which I don’t subscribe to. It sounds to me that his whole idea is investments and government spending to “fix” the economy…


Drugs, VOC, East-India
The British Empire was founded on the opium trade, as Kalimtgis, Goldman, and Steinberg document in “Dope, Inc.”: https://forums.richieallen.co.uk/showthr...p?tid=1363

The Jesuits reached the orient after the first Portuguese trade and military inroads at the end of the sixteenth century. When the Dutch drove the Portuguese out of Asian trade, they negotiated with the Jesuits on the Chinese trade. The Dutch took over the centuries-old dope-trading routes from the Portuguese, including opium between Canton, China's key port city, and Portuguese-controlled Macao.
The Dutch later negotiated an opium monopoly for north India with the Jesuit-influenced Mogul court. The monopoly permitted the Dutch to force Indian peasants to produce opium in exchange for taxes paid to the Mogul court.
A century later, the Dutch were shipping more than 100 tons of opium per year to Indonesia. The Dutch found opium "a useful means for breaking the moral resistance of Indonesians”. By 1659, the worldwide opium trade was second only to the spice trade.

In 1601, the (English) East India Company was founded that was dealing in opium by 1717. The East India Company only took over the opium trade after the British military victories in India in 1757 that put Bengal under British rule.
In 1784, Lord Shelburne started the reorganisation that turned the East India Company into a looting organisation, with the help of the "free trade" flank against the US. This had been proposed in 1772 in Adam Smith's supposed economic masterpiece “Wealth of Nations” in 1776.
Shelburne sent David Hume and Adam Smith to France for Jesuit training and then paid to create a "theory" of free trade, which meant the narcotics trade. The Jesuits continued the tradition of the Delphic Cult of Apollo, which in turn drew on the "secrets" of the priesthood of Babylon.
This "economical science" didn’t start with Smith and Bentham, who worked for Shelburne, but with the Order of St. John's group of pet intellectuals, the physiocrats, who rewrote Chinese zero-growth economics, based on Chinese texts brought to Europe by the Jesuits; like the work of Confucius and Mencius.

Scottish mafioso Henry Dundas, Pitt's secretary of state and an early patron of Adam Smith, directed the Board of Control for the East India Company, and in 1787 wrote a master plan to extend the opium traffic into China.
In his Wealth of Nations, Smith urged the colonies to not enter into manufacturing, and above all not to keep British goods out. He wrote:

Were the Americans either by combination or by any other sort of violence, to stop the importation of European manufactures and by this giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of the capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country toward real wealth and greatness. This would be still more the case, were they to attempt in the same manner to monopolize to themselves their whole exportation trade.

Britain used the the opium trade to conquer the USA. British banking families, including the Barings, who had intermarried with the Philadelphia Binghams, cut some Boston merchants in on the lucrative dope traffic to China. In 1816, John Jacob Astor was trading opium for the East India Company, and William Hathaway Forbes, of Boston, even joined the founding board of directors of the central opium bank, the Hongkong and Shanghai Bank. The Cabots, Lodges, Forbes, Cunninghams, and other leading Boston merchant families made their initial fortunes through Russell and Co., whose principal business were African slaves and opium to China.

The East India College at Haileyburg became the clearinghouse for the next generation of British economists, including James Mill, his son John Stuart Mill, David Ricardo, and Parson Thomas Malthus. Jeremy Bentham was their intellectual leader until his death in 1821. Pitt encouraged the 1798 publication of Malthus' “Essay on Population, which argued for the extermination of "useless eaters". John Maynard Keynes later praised Malthus' Essay as "a work of youthful genius"
Malthus became the Chair of History and Political Economy at Haileyburg. A generation of Malthusians was put into controlling positions for the opium traffic in Asia. In his 1819 “Principles of Political Economy”, Malthus elaborated his depopulation program into a zero-growth approach to economy. India was basically a laboratory for zero-growth doctrines.

By the 1830s, opium was the largest commodity in international trade.
Britain imported cotton from American plantations (which it backed during the Civil War); turned into textiles in British mills; and exported the textiles to India for opium- that was then sold to China.
Because it was owned by the Crown, the East India Company couldn’t trade opium in its own name. It used a set of "cut-outs", intermediaries, who exported opium to China covertly for the company. The East India Company used a network of private dope traders to found the Hongkong and Shanghai Bank in 1864.
India depended on opium for 30% of its exports, most of it to China. In British India, taxes on the opium trade provided almost 20% of total government revenues by 1880. Gross revenues from the opium traffic was about two thirds of the total exports from Britain from 1840 to 1890.
By the end of the nineteenth century, Britain was importing 50% more than it exported — £450 million in imports against £300 million in exports. It made up the difference through opium. In 1890, the value of the British opium revenues in China alone equalled the entire home trade deficit!


Fabian Scoiety, Vienna, Chicago – zero growth in the 20th century
In a nice Orwellian twist, British "free trade" really means trade warfare.
In 1892, the University of Chicago was started as the chief American project of the Fabian Society. It incorporated both the "right-wing" economics of the Cobden Clubs and Thorstein Veblen's imitation of Ruskin-Morris socialism from the outset. The new Chicago university, launched with funds from Rockefeller, Schiff, and Field, transferred the Oxford economic crookery to the shores of Lake Michigan. The Fabian Society’s Beatrice Webb was its real founder.
One of John Ruskin’s students in economics, George Bernard Shaw, founded the “anti-capitalist” Fabian Society with Sidney and Beatrice Webb. Under the patronage of Opium War PM Lord Palmerston, the Fabian leaders really followed Oxford economics. Shaw beat the drum for the master race in “Man and Superman” (1901) long before Adolf Hitler arrived on the scene.

In 1912, Wesley Clair Mitchell went to Vienna for additional studies and shared Bohm-Bawerk's classroom with future Soviet official Nikolai Bukharin. In 1914, Mitchell tried to prove that inflation and depression are "not disruptions . . . but fluctuations systematically generated by economic organization itself". Mitchell forgot to mention that every American depression until the Panic of 1907 was the direct result of contractions in loans available on the London market. Mitchell helped to draft the “Report of the National Monetary Commission” that became the Federal Reserve Act of 1913.
On the advice of banker Paul Warburg, Father of the Federal Reserve, President Woodrow Wilson named Bernard Baruch to create a War Industries Board, with powers similar to the present Federal Emergency Management Agency (FEMA). Bernard, grandson of B'nai B'rith founder Kuntner Baruch, was attorney for the Anglo-American Guggenheim firm and a personal friend of Winston Churchill.


Mont Pelerin – right wing Fabians
The Austrian School of monetarists later joined forces with Chicago in the Mont Pelerin Society and included Friedrich von Hayek and Ludwig von Mises. These products of the Viennese salons trained Milton Friedman's teachers, including the founder of the National Bureau of Economic Research, Wesley Clair Mitchell. Mitchell and his pupil, Milton Friedman, are really right-wing Fabians.
When Friedrich von Hayek gave the inaugural address of the Mont Pelerin Society in 1947, in his audience were most of Wesley Mitchell's boys: George Stigler, Henry Simons, Chicago professor Aaron Director and Milton Friedman (Director's brother-in-law).

The Mont Pelerin Society is never even mentioned in the newspapers but wields enormous power over the right wing of US politics. The Mont Pelerin Society is merely the economic arm of the "political" Pan-Europea Union that was co-founded by Otto von Habsburg. One of Von Habsburg's closest friends in the Mont Pelerin Society is William F. Buckley, Friedman's close collaborator throughout the 1960s.
Another Von Habsburg associate was the Nazis' puppet PM in wartime Hungary, Ferenc Nagy, who later founded the terrorist organisation Permindex (that was probably involved in the assassination of JFK).
In 1939, Von Hayek had already brought together the core for the Mont Pelerin Society under the name "Society for the Renovation of Liberalism".
In 1943, Von Hayek wrote the Mont Pelerin Society's founding document “The Road to Serfdom” in London. On the surface, Von Hayek shows the same concern for "individual liberty" against the "tyranny of the state" of Friedman, but behind the facade the policy recommendations lead to “serfdom” similar to feudal Europe.

In 1946, Abba Lerner published “The Economics of Control”, advocating the totalitarian state in which the state controls each facet of economic life. Milton Friedman himself argued that Lerner's totalitarianism was only the mirror image of his own economics, that: "totalitarian direction might achieve the same allocation of resources as a free price system" and achieve "a reasonable approximation of the economic optimum".
Mont Pelerin's European headquarters is directed by its secretary, Max von Thurn und Taxis, and by its president, Friedrich von Hayek. Von Hayek and Archduke Otto von Habsburg direct Mont Pelerin's German-speaking branch.

Milton Friedman became vice-president of Mont Pelerin. The Mont Pelerin Society's operatives infiltrate every “conservative” American institution. Besides Milton Friedman:
George Stigler of the University of Chicago, President of Mont Pelerin in 1980;
Glenn Campbell, and Martin Anderson, respectively director and economist of the Hoover Institution and both advisers to Ronald Reagan;
Robert M. Bleiberg, Barron's Magazine editor;
William F. Buckley, Jr., National Review editor;
Donald Kemmerer and John Exter, respectively president and board member of the National Committee on Monetary Reform;
Edward H. Levi, former US attorney general and Chicago professor;
Edwin McDowell, Wall Street Journal columnist;
Edwin J. Feulner, Jr., Heritage Foundation director;
William J. Baroody, Sr., American Enterprise Institute president.

The Marshall Plan's official target was to reduce European imports from the US from $3 billion in 1938 to $2.7 billion for 1952-1953 and $6.7 billion in 1947.
Under the direction of British treasury official Sir Eric Roll, Harlan Cleveland (in 1980, chairman of the Aspen Institute), and George Kennan's State Department planners, the Marshall Plan reduced America's exports to trifling levels compared to those of other industrial countries. Britain made the US into a rentier instead of an industrial power.


From Nixon to Carter and Reagan
Milton Friedman pushed Richard Nixon into a disastrous money crunch in 1969, throwing the economy into recession and forcing the US to sever the dollar's link to gold, which Friedman had lobbied for.
In 1968, Friedman justified the floating rates regime on purely military grounds:

A really serious rearmament drive is almost certain to produce inflationary pressure, differing in degree from country to country because of differences in fiscal structures, monetary systems, temper of the people, the size of the rearmament effort, etc. With rigid exchange rates, these divergent pressures introduce strains and stresses that are likely to interfere with the armament effort.

Each of these steps is within the unilateral control of the U.S. No other country can by its action prevent us from taking them.

Friedman stopped monetary growth from June 1969 to December 1969, and the economy collapsed. Starting in the summer of 1969, industrial production fell, and unemployment rose from 3.5% in 1969 to 5% in May 1970.
On 15 August 1971, Nixon continued the Friedman program with the addition of the wage-price controls demanded by "populist monetarist" Henry Reuss.
In August 1971, to the disbelieve of some Europeans, Nixon took Friedman's advice, to set the dollar “free” at the urging of then Undersecretary of the Treasury Paul Volcker.

Ironically the US payments deficit didn’t benefit the US, but London as dollars were flowing to the Eurodollar market through British banks, which eventually grew to over $1 trillion, and gave the bankrupt City of London a new life.
In the 1950s, the “great” City of London was virtually a ghost town, where less than a dozen foreign banks did business. But after in 1962, Anglophile Secretary of the Treasury C. Douglas Dillon and his Undersecretary Robert V. Roosa, presented the British with the “Interest Equalization Tax” that penalised American loans to foreigners and made it more lucrative to hold dollars in London than in New York.

See how “real” net investments in the 10 years since 1969 became negative.
Figure 10 - Productive fixed investment


From March 1979 to March 1980, Americans lost 8% of their purchasing power - the largest drop in real income levels since the Great Depression.
Instead of the forecast of a $40 billion deficit this fiscal year and a $16 billion surplus next fiscal year by the Carter administration, the Treasury now officially projects a $100 billion deficit in the 2 fiscal years, not counting an additional $80 billion in so-called “off-budget” borrowing.


Chile – who needs food?
Milton Friedman once explained on his “cure” for Chile: “My only concern is that they push it long and hard enough”.
Chile was made into a creditors' dictatorship. Between the coup in 1973 and the beginning of 1979, Chile's annual payment of debt service to international banks rose from $200 million annually to $1.6 billion. The Pinochet regime saved a lot of money (for the bankers) by eliminating food imports, effectively reducing average caloric consumption to less than 1,200 calories per day by 1975. In 1976, average per capita food consumption in Chile was about the same as it was in Nazi concentration camps.
In 1976, the Organization of American States reported:

Its most dramatic consequences are observed in the psycho-motor development of children. The spirit saddens to see a two-year-old seated on the ground, scarcely able to keep its balance. It cannot smile, or play, or look at its hands; it cannot stand, much less walk or speak.

In 1977, unemployment had reached 20% officially and more than 40% unofficially. Gross Domestic Product never recovered from the 13% fall that occurred in 1975 alone. Real wages fell in 1974 to a little more than half of 1971. In 1978, agricultural production was down 27%.
The Chicago Boys did score "successes": reduction of government expenditure from 15.8% of national consumption in 1972 to 12.1% in 1977. All the more impressive as consumption fell sharply in that period. And, of course, continued monetary austerity will produce a lower rate of inflation, in the same way that holding an influenza patient's head under water will ultimately “cure” influenza.


Adviser to British PM Thatcher
Milton Friedman also became the official adviser to the government of Margaret Thatcher in Britain.
In the single year, since Queen Elizabeth selected Thatcher as PM, the Bank of England brought money supply growth down from 15% to 7% per year, at the direction of Mont Pelerin Society members Geoffrey Howe and his deputy, John Biffen.

The result was completely the opposite of what they and Friedman had predicted, in a single year: Britain's rate of inflation rose from 6% to 22% and the industrial production index fell from 108.2 to 98.1. British living standards fell by a sharper margin than during the 1930s.
Milton Friedman's money crunch accomplished to drive up the cost structure of industry, including pay increases to workers (lower than inflation of course).

A good analogy of Friedman’s method is the following hypothetical case of a loan-sharking victim. A person with $20,000 earned income incurs $5,000 in debt service payment obligations to a loan shark. Unable to pay all of the $5,000, the victim "refinances" $2,000 of the debt service payment at 50 percent effective annual interest. He pays the $1,000 instead of the $2,000 portion of the $5,000; a total of $4,000. The following year, he owes $6,000 in current debt service, instead of $5,000. The next year $7,000, and so forth.

Figure 6 - Productivity and total debt



Lyndon H. LaRouche, Jr. and David P. Goldman – The Ugly Truth About Milton Friedman (1980): https://archive.org/stream/the_ugly_trut...n_djvu.txt