The Lead

Schachtian Economics and War

by Dennis Small (EIRNS) — Mar. 09, 2024

March 9, 2024 (EIRNS)—If you don’t know the cause of a problem, you’ll never be able to solve it, no matter how good your intentions. Why is the world careening towards nuclear war? Why is Satanic genocide being practiced against a defenseless population in Gaza?

Schiller Institute founder Helga Zepp-LaRouche has repeatedly explained that the systemic breakdown of the trans-Atlantic financial system is behind the drive to war and genocide, and that nothing less than a new international security and development architecture based on an entirely different concept of Man will provide an actual solution. Why is that the case?

Nearly a half-century ago, Lyndon LaRouche pinpointed the issue as Schachtian economics. In a May 15, 1976 article Why Ignorant Bankers Believe Schacht Succeeded LaRouche explained the significance of the economic policies of Hjalmar Schacht, Hitler’s Economics Minister and central banker until 1939, who was put into those posts by his British banker sponsors:

“Every competent political analyst knows also that it was Schacht’s monetary policies which directly and inevitably caused the emergence of Nazi criminal practices in the occupied territories and the slave-labor death camp system.… The entire structure of pre-World War II imperialist debt rested upon the foundation of the reparations debt imposed upon Weimar Germany by the victorious World War I Allied Powers. From 1923 through 1928, through combined debt-payments rescheduling and U.S. credits, Weimar enjoyed a modest recovery. As a result of the 1928-1929 speculative crises and inevitable crash, the capacity of the U.S. economy to issue further credit for support of world trade was curtailed, and the world economy began a chain reaction collapse leading directly and inevitably into the consequences of 1931 and of the 1932-1934 period….

“The result, a kind of cannibalistic turning-inward of inflation against the body of the affected economy … brought the Nazi German economy to the point of internal crisis in 1936.… Without German military conquests, Schacht’s policy would have brought about immediate collapse of the German economy sometime shortly after 1936.”

In a March 4, 1980 article LaRouche elaborated:

“For most of the German economy, Schacht and Hitler imposed the kind of austerity … [that] wiped out independent German business en masse, maintaining only a war-economy prosperity among the Nazi Germany equivalent of the `Fortune 500.’ Schacht controlled Germany’s continuing inflation by increasing the cuts in real income of the German population at rates corresponding to or exceeding the continuing rate of inflation.… It was this looting policy which impelled Hitler’s regime to cut the proportion of the population to be supported through, first, euthanasia against the aged and seriously ill and, later, the `useless eaters’ policy of more generalized genocide.”

With that in mind, consider the significance of the latest news reports from Germany that document the accelerating collapse of the entire German industrial economy. In January, the manufacturing sector as a whole collapsed by 6.3% over a year earlier. The electrical equipment sub-sector plummeted by 33%; transportation equipment fell by 27%; capital goods dropped by 13%. The only thing that is growing is the arms production sector of the economy.

Russian President Putin addressed this strategic problem from a related vantage point in a dialogue with participants in the World Youth Festival in Russia:

“The countries of Africa now have such a cumulative debt which, by definition, cannot be repaid. Whatever you do, you can’t repay it. But such terms for their financial relations were formulated, and African countries were forced to take loans on these terms, as if the Western financial community did not understand that it would never be possible to pay this money back.

“You know, there was a similar case in the history of mankind, in the history of Europe. After the First World War, the greedy rulers, the then greedy rulers of France and Great Britain, created such financial terms for Germany and imposed such indemnities and such conditions for repayment of debts, they believed, to the Entente states that it was by definition impossible to repay those debts. And this was one of the reasons for Hitler’s rapid rise on the political scene.”

So, if your concern is to prevent a return to the policies of Hitler, with the attendant danger of nuclear war, you have to stop the Schachtian policies which the City of London and Wall Street are hell-bent on imposing—again.

That is why a new international security and development architecture is required.