During 1980 and 1981 the American punk scene saw an influx of 7" EPs from Washington D.C.'s Dischord Records from bands like Minor Threat and Teen Idles. These little high-tempo records packed in 7 to 10 songs each and helped define the 1980s genre of hardcore punk. In wanting to pay tribute to this faster form of punk rock, and to showcase the talents of their new drummer D.H. Peligro, the Dead Kennedys put together some new material and amped up a few songs that had only been heard on their 1978 demo and in early live shows. These songs became the basis for In God We Trust, Inc. Keeping with the rough-hewn style of D.C. hardcore, bits of tape leads announcing the take number and including drumstick clicks and count-offs precede many of the record's songs.
The Dead Kennedys entered tiny Subterranean Studios to record eight songs on June 19, 1981. All tracks were recorded live without overdubs to ½" 8-track reel and with the band determining some of the songs' arrangements between takes. The session was videotaped by Joe Rees of Target Video with Mike Fox, the session engineer, sending the rough mix to the video feed. When the group took the tracks to be mixed, they discovered that the magnetic tape used for the recording was defective—the oxide surface of the tape began to peel during playback, thereby destroying the recordings. The band then re-recorded all eight songs on August 22nd at Mobius Music, and these recordings were used for the record's release.
Years later, enhanced restoration techniques allowed for five tracks to be recovered off of the master tapes from the earlier Subterranean sessions. These, along with the rough video mixes of the remaining three songs, appear on the DVD The Lost Tapes.