First, if it did, people would begin to wonder about the
A TOOL FOR SOCIAL PLANNING
The January 1946 issue
His theme was spelled out in the title of his article: "Taxes for Revenue Are Obsolete."
In an introduction to the article, the magazine's editor summarized Ruml's views as follows:
His thesis is that, given control of a central banking system and an inconvertible currency [a currency not backed by gold], a sovereign national government is finally free of money worries and needs no longer levy taxes for the purpose of providing itself with revenue. All taxation, therefore, should be regarded from the point of view of social and economic consequences.1
Ruml explained that, since the Federal Reserve now can create out of nothing all the money the government could ever want, there 1. "Taxes for Revenue Are Obsolete," by Beardsley Ruml,
THE MANDRAKE MECHANISM 205
remain only two reasons to have taxes at all. The first of these is to combat a rise in the general level of prices. His argument was that, when people have money in their pockets, they will spend it for goods and services, and this will bid up the prices. The solution, he says, is to take the money away from them through taxation and let the government spend it instead. This, too, will bid up prices, but Ruml chose not to go into that. He explained his theory this way: The dollars the government spends become purchasing power in the hands of the people who have received them. The dollars the government takes by taxes cannot be spent by the people, and therefore, these dollars can no longer be used to acquire the things which are available for sale. Taxation is, therefore, an instrument of the first importance in the administration of any fiscal and monetary policy.
REDISTRIBUTION OF WEALTH
The other purpose of taxation, according to Ruml, is to redistribute the wealth from one class of citizens to another. This must always be done in the name of social justice or equality, but the real objective is to override the free market and bring society under the control of the master planners. Ruml said:
The second principle purpose of federal taxes is to attain more equality of wealth and of income than would result from economic forces working alone. The taxes which are effective for this purpose are the progressive individual income tax, the progressive estate tax and the gift tax. What these taxes should be depends on public policy with respect to the distribution of wealth and of income. These taxes should be defended and attacked in terms of their effect on the character of American life, not as revenue measures.2
As we have seen, Senator Nelson Aldrich was one of the creators of the Federal Reserve System. That is not surprising in light of the cartel nature of the System and the financial interests which he represented. Aldrich also was one of the prime sponsors of the federal income tax. The two creations work together as a far more delicate mechanism for control over the economic and social life of society than either one alone.
In more recent years, there has been hopeful evidence that the master planners were about to abandon Ruml's blueprint. We have 1- Ruml, p. 36.
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THE CREATURE FROM JEKYLL ISLAND
heard a great deal both in Congress and at the Federal Reserve about the necessity of reducing expenses so as to diminisn the growth of federal debt and inflation. But it has been lip service only.
The great bulk of federal funding continues to be created by the Mandrake Mechanism, the cost of government continues to outpace tax revenues, and the Ruml formula reigns supreme.
EXPANSION LEADS TO CONTRACTION
