Keith Evans
2 min readJan 8, 2021

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Your piece is mostly accurate, but leaves out several critical points.

FDR didn't actually "fund" his programs with taxation. No one had any money after the crash, just as happened in '08. He also didn't want to become known as the President that killed capitalism. His programs were only possible after he ended the domestic conversion of dollars to gold on demand, which enabled the massive deficit spending to fund reconstruction without necessitating bond issues.

This was America's introduction to fiat currency, but its politicians never got cozy the term publicly, out of fear of a mostly econ illiterate electorate that couldn't grasp anything beyond their kitchen table budgeting. It didn't hurt the banking industry that is more than happy to "fund" the economy with money pulled from its collective backsides with almost no risk. So, the "little people" were made to believe that "they" funded their government via taxation and all benefits received from it came at a price to someone, which was the basis of RayGun's "welfare queen" fantasy that gained enormous traction in his election.

That understanding mandated "getting" dollars before spending them. It was assumed that the origin and mechanics involved in creating US dollars was above the masses and the government had bigger problems than teaching advanced econ to an electorate whose average level of education was somewhere around the eighth grade. FDR once remarked that the only purpose for payroll deductions in his Social Security program was to give the people a sense of ownership of it and prevent Republicans from whittling it away as a go to budget cut.

One of FDR's chief advisors was Beardsley Ruml, who he appointed to chairmanship of the New York Fed in 1937. Ruml was an advocate for deficit spending to fund the federal government and even wrote a paper titled "Taxing For Revenue Is Obsolete" in which he accurately described the process of money creation and destruction that occurred with every dollar in circulation.

Needless to say, his paper wasn't well received after the war when bankers and bond traders were the kings of the economy and the government was focused on transitioning from war to peacetime without massive inflation worries. It wasn't perceived as wise to tell the people that their government could "afford" anything that was for sale, including their labor.

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Keith Evans
Keith Evans

Written by Keith Evans

Meandering to a different drummer.

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