The London-Wall Street banking system is heading into a crash, and the fundamental cause is the complete stagnation of economic growth, but particularly of productivity, in the European and U.S. economies.
U.S. Treasury Secretary Jack Lew disgraced his office in the G20 meeting just ended in China, when he called on other countries to do everything possible to increase their economic growth, but said that the U.S. economy needs no new measures of credit or investment. American economic growth is so low, Lew needs to use European zero-growth to puff himself up.
China — whose economic progress and credit have been holding up the world for a decade, whose economic growth rate is four times that of the United States — told the truth at that meeting: “The situation of the global economy is grim,” as China’s trade minister said.
China continues to create large volumes of combined public and private credit issuance (estimated at $240 billion in June alone) for investments both within China, across the Silk Road Economic Belt and Maritime Silk Road, and in Africa, the Mideast and South America — and for its space science and technology program, the most dynamic in the world today. But the London-Wall Street financial powers who are making the world economy “grim,” continue to lumber towards another financial crash with a no capital investment, no productivity, no profit economy.
EIR Founding Editor Lyndon LaRouche did not mince words on Lew’s defense of a dead economy. “Setting those kinds of standards actually means bankruptcy,” LaRouche said.
That policy has got to be shut down. Pick up the productivity rates for real economic activities — otherwise, this whole thing is going to blow up. The United States and Europe will not survive. They can survive, if you do what has to be done. And that is, provide the real productivity of scientific drivers for the economy.
These are also the drivers for real increases in the incomes of individuals and households.
Studies of U.S. economic history call 1935-1970 the “golden age of American productivity” because of sustained growth in total factor productivity — productivity growth attributable to technological advances, rather than simply more application of labor hours and capital. Its peak was during Franklin Roosevelt’s New Deal and “Four Corners” great infrastructure projects, growing at 3.3%/year. It was still growing an just under 3%/year in JFK’s 1960s, driven by perhaps the most important infrastructure great project of all, NASA’s Apollo program bringing mankind to the Moon and potential far beyond.
The IMF, European Central Bank, the U.S. National Bureau of Economic Research talk constantly about total factor productivity growth, and closely track it, while completely failing to produce it. During the Bush and Obama decades, the IMF just reported, such growth in the United States has been 0.5%/year, and now, in 2016, it is about zero. In “highly productive” Germany, it has also been at 0.5%/year.
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