RETURN OF THE ROBBER BARONS 4.0

TIME TO REDISTRIBUTE THE WEALTH

NORTH DAKOTA NON-PARTISAN LEADER 1918 – – HISTORY REPEATS
https://digitalhorizonsonline.org/digital/collection/ppf/id/24639/rec/706

Senior citizens are rightfully concerned about the “security” of Social Security. We hear endless
warnings claiming the program is insolvent and bankrupting the federal government. The
“Department of Government Efficiency” (DOGE) would happily gut and privatize the program
(something the Robber Barrons of Wall Street have wanted since its establishment under the
Franklin D. Roosevelt administration in 1935) but for politician’s fear of outrage by millions of
elders who paid into the system their entire working life.

But perhaps the warnings of insolvency are based on false premises to begin with. History, as
always, enlightens.

Luther Gulick, an expert in public administration, was an advisor to FDR. The following 1941
conversation between Gulick and FDR is from the National Social Security Historical Archives.

Gulick:
“In the course of this discussion I raised the question of the ultimate abandonment of the pay
roll taxes in connection with old age security and unemployment relief [Social Security] in the
event of another period of depression. I suggested that it had been a mistake to levy these
taxes in the 1930’s when the social security program was originally adopted.

FDR replied:
“I guess you’re right on the economics. They are politics all the way through. We put those pay
roll contributions there so as to give the contributors a legal, moral, and political right to collect
their pensions and their unemployment benefits. With those taxes in there, no damn politician
can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re
straight politics.”

Let this conversation register. FDR and Gulick were agreeing that it was not economically
necessary to collect payroll taxes to pay for future Social Security benefits. Those taxes were
instituted for political/social reasons and were not needed to fund the program. The Federal
Government could simply pay the benefits.

How could FDR and Gulick possibly believe this? We all “know” our taxes pay for Federal
Government spending and the government has no money of its own. What were FDR and
Gulick thinking?

The answer comes from another historic conversation the took place between then Chairman
of the Federal Reserve Bank, Alan Greenspan, and then Congressman Paul Ryan (R-WI) in 2005.
It is from the Congressional Record and the 2-minute exchange is worth watching here on
YouTube.
 https://youtu.be/DNCZHAQnfGU?si=loOaSIURUFLD81IG

Below is the transcript of the conversation. Congressman Ryan ascribed to the Reaganomic
ideology that the government could do nothing right and only the private sector was efficient.
His goal was to have Chairman Greenspan agree that privatization of Social Security into
personal retirement accounts (Wall Street “investors” would realize their long-sought dream)
would make the benefits “more secure.” The remarkable exchange:

Congressman Ryan:
"Having personal retirement accounts is another way of making a future retiree's benefits
[Social Security payments] more secure for their retirement. And also, do you believe personal
retirement accounts as a component to a system of solvency does help improve solvency,
because when you have a personal retirement account policy, if it is a company with a benefit
offset, with that feature in place do you believe that personal retirement accounts can help us
achieve solvency for the system and make those future retiree benefits more secure?"

Chairman Greenspan:
“I wouoldn’t say the pay-as-you-go benefits [Social Security payments] are insecure in the sense
that there is nothing to prevent the Federal Government from creating as much money as it
wants and paying it to somebody. The question is, how do you set up a system which assures
that the real assets are created which those benefits are employed to purchase? So it is not a
question of security. It is a question of the structure of a financial system which assures that the
real resources are created for retirement as distinct from the cash. The cash itself is nice to
have, but it has got to be in the context of the real resources being created at the time those
benefits are paid and so that you can purchase real resources with the benefits, which of course
are cash."

Now, we really must let this register. The Chairman of the US Federal Reserve Bank is clearly
telling Congressman Ryan that Social Security benefits are not in any way insecure (and never
can be) because “there is nothing to prevent the Federal Government from creating as much
money as it wants and paying it to somebody.” This single sentence explains what FDR and
Gulick were thinking. Both men understood that the Federal Government is the ultimate source
the nation’s money.

It will be declared total heresy, but at the Federal level, and only at the Federal level – not state
or local – taxes do not pay for government spending. Government spending creates and
circulates the money into the economy that we as citizens use to pay our taxes. Taxes at the
federal level do have 4 critical functions:

 They enforce the legitimacy of the dollar as the nation’s official currency.
 They can be used to help control inflation.
 They can be used to reduce unwanted behavior (e.g. tobacco tax).
 They can be applied progressively to reduce gross inequality and prevent a billionaire
class from destroying our democracy as was done following the Great Depression and
WWII. Tragically for our democracy and our nation, progressive taxation has fallen
victim to tax cuts for the Robber Baron class by bought off politicians.

As clearly explained in this  http://Kucinich Report he power of the Federal Government to create
our nation’s money is enshrined in Article 1, Section8, Clause 5 and Article 1, Section 10, Clause
1 of the US Constitution. These articles also explain how our government’s money creation
power was turned over to the private banking industry by the Federal Reserve Act of 1913. The
result – – – instead of our Federal Government creating the nation’s money debt and interest
free, it is now required to borrow its own money from the private banks creating our massive
domestic government debt.

Why does all of this matter? We are watching our America being gutted of all of the programs
and services that gave us and our families a good life, that made us a democracy of the people,
of average citizens. All of this gutting and destruction is “justified” by the endless message:

“Government spending is out of control!” “Government debt is bankrupting us.” “Government
programs and services (except the cash cow for billionaires – the Dept. of Endless Wars
(misleadingly a.k.a. the Dept. of “Defense”) must be cut!”

All of the protests and growing concerns of working Americans we are beginning to see across
the nation are vitally important in stopping the current madness, but fundamental to all of this
must be monetary reform. Return the money creation power to our Federal Government.

Abraham Lincoln said it well:
“The Government should create, issue, and circulate all the currency and credits needed to
satisfy the spending power of the Government and the buying power of consumers. By the
adoption of these principles, the taxpayers will be saved immense sums of interest. Money will
cease to be master and become the servant of humanity.”

To learn more, see:
The Alliance for Just Money https://www.monetaryalliance.org/

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