JFK and Federal Budgetary Policy

By Mathew Forstater

On this, the 50th anniversary of the assassination of President John F. Kennedy, we would do well to remind ourselves that another loss resulting from that fateful day was that of a progressive trend in leadership regarding federal budgetary policy.  The points are expressed so clearly they require no interpretation or commentary.

President John Fitzgerald Kennedy
Commencement Address, Yale University, June 11, 1962

“If our Federal Budget is to serve not the debate but the country, we must find ways of clarifying this area of discourse. Still in the area of fiscal policy, let me say a word about deficits. The myth persists that Federal deficits create inflation, and budget surpluses prevent it. Yet sizable budget surpluses after the war did not prevent inflation, and persistent deficits for the last several years have not upset our basic price stability. Obviously, deficits are sometimes dangerous—and so are surpluses. But honest assessment plainly requires a more sophisticated view than the old and automatic cliché that deficits automatically bring inflation.

There are myths also about our public debt…debts public and private are neither good nor bad in and of themselves. Borrowing can lead to over-extension and collapse—but it can also lead to expansion and strength. There is no simple slogan in this field that we can trust.

The stereotypes I have been discussing distract our attention and divide our efforts. These stereotypes do our nation a disservice not just because they are exhausted and irrelevant, but above all because they are misleading—because they stand in the way of the solution of hard and complicated facts.

It is not new that past debates should obscure present realities. But the damage of safety of all the world—the very future of freedom—depends as never before on the sensible and clear-headed management of the domestic affairs of the United States.

We cannot understand and attack our contemporary problems…if we are bound by traditional labels and worn-out slogans of an earlier era.

But the unfortunate fact of the matter is that our rhetoric has not kept pace with the speed of social and economic change. Our political debate, our public discourse on current domestic and economic issues, too often bears little or no relation to the actual problems the United States faces.

What is at stake in our economic decisions today is not some grand warfare of rival ideologies which will sweep the country with passion, but the practical management of a modern economy. What we need are not labels and clichés but more basic discussion of the sophisticated and technical questions involved in keeping a great economic machinery moving ahead.

The national interest lies in high employment and steady expansion of output and stable prices…The declaration of such an objective is easy. The attainment in an intricate and interdependent economy and world is a little more difficult. To attain them we require not some automatic response but hard thought.

I am suggesting that the problems of fiscal and monetary policy [today] as opposed to the kinds of problems we had in the Thirties demand subtle changes for which technical answers—not political answers—must be provided.

These are matters…which government and business should be discussing in the most sober, dispassionate and careful way if we are to maintain the kind of vigorous economy upon which our country depends.

How can we generate the buying power which can consume what we produce on our farms and in our factories?

How can we take advantage of the miracles of automation with the great demand that it will put upon high-skilled labor and yet offer employment to the half a million of unskilled high school dropouts every year who enter the labor market?

How do we eradicate the barriers which separate substantial minorities of our citizens from access to education and employment on equal terms with the rest?

How, in sum, can we make our free economy work at full capacity, that is, provide adequate wages for labor and adequate utilization of plant and opportunity for all?

These are problems that we should be talking about, that the political parties and the various groups in our country should be discussing. They cannot be solved by incantations from the forgotten past.

Let us not engage in the wrong argument at the wrong time, between the wrong people in the wrong country, while the real problems of our time grow and multiply, fertilized by our neglect.”

19 responses to “JFK and Federal Budgetary Policy

  1. Wow!

    What a find.

    Thank you Prof. Kelton.

  2. Ditto John Casper’s comment! It is startling how similar the questions and obstacles then and now.

    If we understand the assassination of President Kennedy to be our nation’s coup d’etat, we can understand why and how far we’ve gone off track since his death.

    What we so sorely need now is a true leader with the vision, wisdom, intellect, and other qualities of stewardship that JFK brought to bear. No more narcissistic sociopaths. The corruption, stupidity, and recklessness we have throughout Washington are a disgrace and a curse upon us and the rest of the world. To fix this mess is going to take a very long time.

    We have got to, first, find a way to awaken many more of the people. This website and others like it are empowering a few of us to begin the process.

  3. Over fifty years wandering in the Wilderness! We have exceeded Moses’ record.

  4. Great read. He really was too progressive for his assassination to be a coincidence.

    Meanwhile, the mainstream press keeps dismissing Kennedy as someone whose policies “wheren’t all that significant”, who is “overrated”, “would have done basically the same stuff LBJ had done were he still alive” and all that blather.

    • I’ve seen nothing to show he wasn’t overrated. He wrecked talks with the Soviet Union, blundered into the Bay of Pigs, and nearly drove us to nuclear war in the Cuban Missile Crisis. Yes, he gave great speeches, but was a horrible president on a very fundamental level. Glad to see we’re still admiring a man who could talk the talk but couldn’t walk the walk.

      • Hi Joe Allen. Can you make more explicit by explaining what do you call “fundamental level” ? Thanks

  5. Pingback: Links 11/23/12 « naked capitalism

  6. “On June 4, 1963, a virtually unknown Presidential decree, Executive Order 11110, was signed by President John Fitzgerald Kennedy with the intention to strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business. This matter has been exhaustively researched by the Christian Common Law Institute through the Federal Register and Library of Congress, and the Institute has conclude that President Kennedy’s Executive Order has never been repealed, amended, or superceded by any subsequent Executive Order. In simple terms, it is still valid.”


    • Mark Robertson

      Achofield writes, “President Kennedy’s Executive Order has never been repealed, amended, or superseded by any subsequent Executive Order. In simple terms, it is still valid.”

      >> No. On 9 Sep 1987, Reagan issued E.O. 12608, which revoked E.O. 11110.

      Regarding Kennedy being eliminated because he signed E.O. 11110, the thinking is that Kennedy was bumped off because he tried to transfer power from the Federal Reserve to the Treasury by replacing Federal Reserve Notes with Silver Certificates.

      This claim has a fatal flaw. It assumes (incorrectly) that the US government borrows all its money from the Fed. In reality, the US government borrows NONE of the money it spends, from ANYONE. Instead, the US government creates its money out of thin air, simply by crediting bank accounts.

      For example, if you receive Social Security benefits, then the US government sends instructions to your bank once a month, directing your bank to credit (i.e. increase) your bank account by whatever figure you are assigned. Social Security money is not lent by anyone, and it comes from no physical place. Money itself is not physical. Hence, for monetarily sovereign governments like the USA’s, money is limitless. The US government has infinite money. (Literally.) It does not need to borrow or tax in order to spend. In fact, the US government has no need or use for tax revenues, and destroys such revenues upon receipt. Likewise, the FICA tax does not pay for Social Security. It is deducted from your paycheck and destroyed.

      Meanwhile the “national debt” is trivial, and merely represents the total amount of T-securities that have been sold. It has no effect whatsoever on the US government’s ability to spend. The Fed could pay off the “national debt” any time, instantly and effortlessly. So could the Treasury.

      The Fed’s purview (or jurisdiction) is limited to monetary policy. The Fed’s main function is to control inflation. However fiscal policy (i.e. the source of US dollars) lies strictly with the Congress and the Treasury. The Fed has no power over the Congress and the Treasury.

      To repeat, the US government creates its money from thin air. So how could the Fed have power over the US government? It doesn’t.

      All of this is basic MMT.

  7. Read the whole thing at


    It’s hard to believe we have fallen so far. Imagine a president today trying to rationally explain things like budgets and deficits. Imagine one who actually understood them…

  8. My own favorite paragraph:

    “For the great enemy of the truth is very often not the lie—deliberate, contrived, and dishonest—but the myth—persistent, persuasive, and unrealistic. Too often we hold fast to the cliches of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.”

  9. Media controllers control the message. Why not return to the Fairness Doctrine?

  10. –what we produce on our farms and in our factories–?

    Really a technical advice much more applicable these days because of huge growth in population and interdependence of nations.

  11. Thanks for this article/blog post, outstanding speech among many by our last true Democrat in the Oval Office.

    There were many reasons the Wall Streeters (i.e., the banksters) could not abide JFK: his stands taken agains US Steel and GE on behalf of labor and the workers, his original Alliance For Progress for South America, his attacks on offshored money to avoid taxation and the oil depletion allowance (in effect since 1913), etc., but it is important to understand that which may be abstract to some — the very last acts of FDR and JFK before they each died in office were very similar.

    FDR gave the go ahead to prosecute the 17 bankers of Wall Street (United States v. Morgan et al.) alleging a criminal conspiracy since 1914 in the concentration of the banks corporate ownership, and JFK’s go ahead to the great populist from Texas, Rep. Wright Patman, with his congressional investigation into how the super-rich hid their wealth and ownership in foundations and trusts.

    Both hit the banksters at their most vulnerable point.

  12. Bayard Waterbury

    I was not FDR who defined the goals of modern progress policies. It was JFK. He wasn’t brilliant, but rather, a great leader of men. Flawed for sure, but a man who was able to muster the popular imagination into optimistic and persistent will. As he so wonderfully stated, we were to put a man on the moon by the end of the 1960’s, not because it was easy, but because it was hard. This defines courage, a commodity which he had in spades, and, perhaps one that got him assassinated, after all. His address contained in this article was brilliant, progressive and bold. And it was so right for his time and for the present day. It is obvious that our Congress holds the power to change the present trend, that is a steady decline into economic chaos, owing to policies promoted by our representatives (both the president and the Congress) who are simply serving the interests of the moneyed interests which have been given free reign to extract from the people the last full measure of their efforts for the benefit of only the global oligarchs. Sad, how far we have fallen over the past four five decades. We sorely need the leadership of an inspired person like JFK who refuse to cowtow to the moneyed interests and stand for true progress for the nation. But, who can or will stand up for us. I don’t see anyone who might unless Bernies Sanders or Elizabeth Warren can acceed to the position.

  13. So do we conclude that a similar fate would await Obama if he were to utter such words today?

  14. How badly do we miss this kind of foresight, insight and vision for the future?

  15. I wonder if inflation hawks ever call for HVAC service ? Do they use a thermostat or do they just untwist the wires?