States must help restore sound money in America

States must help restore sound money in America

by
Idaho Freedom Foundation staff
August 10, 2016
Idaho Freedom Foundation staff
Author Image
August 10, 2016

By Jp Cortez & Stefan Gleason | Special to Idaho Freedom Foundation

Control the money and you control the people.

The federal government has done just that in the United States.

Over the last 100 years, the federal government and the Federal Reserve, a privately owned bank cartel conceived of without public scrutiny, have waged a war on sound money in America. They’ve ended the free circulation of gold (and, for a time, criminalized its ownership), while imposing taxes on those who trade with it. They’ve replaced gold and silver coins, and the promise of gold redeemability on IOUs, with paper money and credit.

An ever-expanding volume of fiat money has replaced sound money as the primary medium of exchange. Liberty-loving citizens, savers and consumers, who use Federal Reserve Notes (commonly referred to as “dollars”) in exchange for goods and services, all have a vested interest in restoring the soundness of our money – whether they know it or not.

America’s Founding Fathers never intended for a central bank to dominate our monetary system or debase the currency. In fact, the U.S. Constitution instructs states to recognize gold and silver as legal tender and authorizes the U.S. Congress to coin gold and silver money.

Disastrous encounters with fiat money and central banking led James Madison to write, “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”

Adding to the problems is the serial devaluation and the financial turmoil that flows from our corrupt monetary system. With no gold backing the currency since 1971, there is no longer any restraint on the creation of new money and debt. The system is getting more and more precarious and shows increasing signs of breaking down.

Recognizing gold and silver as legal tender

In 2011, Utah became the first state to formally recognize gold and silver coins issued by the United States as legal tender. In practice, this value is based on the coins’ market value not their face value. The impact of this success is multi-tiered. Many forms of gold and silver inside the Beehive State are now recognized as what they are – constitutional legal tender under Article I, Section 10 of the United States Constitution.

Utah now protects the role of gold and silver as money and fosters their use – creating a first-hand opportunity for the state’s three million residents to experience the superiority of sound money. The educational impact of millions of people coming in direct contact with sound money policies cannot be overstated.

Eliminating Sales Taxes and Capital Gains Taxes on the Exchange of Money

Removing sales taxes on precious metals purchases is another important step. Starting in the 1930s, revenue hungry law-makers in Kentucky and Mississippi were the first to levy general sales taxes, and the practice spread rapidly into other states. Putting aside the injustice of taxing the purchase of consumer goods in general, it’s downright ridiculous to assess taxes on the exchange of money itself.

Yet 30 states today slap its citizens with a sales tax when exchanging Federal Reserve Notes for precious metals. Fortunately, several states are considering legislation to end this egregious taxation of money.

Another necessary step in freeing gold and silver to be used as money is to eliminate capital gains taxes on the metals. At the federal level, and in many states, gold and silver are subject to capital gains tax when they are exchanged for Federal Reserve Notes, or when used in barter transactions. If the purchasing power of the Federal Reserve Note has decreased, the metals’ nominal dollar value generally rises and that triggers a supposed gain. In most cases, of course, the capital gain is purely fictional. But these “gains” are still taxed — thus unfairly punishing people for using precious metals as money.

Understanding that the states have an obligation to promote sound money is a huge step in the direction of Americans having some sort of protection against the impending financial crisis.   

Note: This article was originally published by Tenth Amendment Center.

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