Washington State proposed bill to make gold and silver legal tender

If we were on a pure gold standard, de Galle would have never had the $s in the first place.

 

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One sided exchange rates don’t work. Back in the old SU in the 80’s the official exchange rate set by the Soviets was $1.55 per Ruble. On the streets in Moscow I could get 8 to 10 Rubles per dollar. Pepsi tried to broker a deal with the Soviets, but no one could agree on the exchange rate. They settled on a barter of X gallons of Pepsi for X gallons of vodka.

The true world reserve currency is gold. It doesn’t matter if it has an Eagle or a Sovereign stamped on it, an ounce of gold is an ounce of gold. It is the yard stick by which all nations compare their currencies. If we were to do a straight FRN to Gold Reserve conversion, it will result in the debasement of the dollar and bringing on the hyperinflation that it was meant to avert. It would have to be universal or not at all. Some industrized countries don't have a gold reserve.

I think we tend to confuse gold with actual wealth. Gold is a container and nothing more. True wealth is the sweat of your brow and value of your goods and services. Two empires settled the new world. One found gold and the other found nothing. After 150 years, the most wealth part of the world per capita was settled by those who found nothing, and created much.

 

:dead-horse::dead-horse::dead-horse:

 

The only thing I would say about trying to claim face value as your compensation and pay taxes based upon it. Regardless of CJay's post, this tactic has been tried before, found to be not only bogus, but is listed as a tax dodge, which means the argument would summarily be thrown out of tax court and your penalties increased greatly. There are many people on the net advocating this strategy, and some every year feel the full brunt of the law when caught. This argument is akin to arguments that "a person is a sovereign country" or any other the other nefarious tax dodges out there.

Its just a bad, bad idea, and I am begging no one here to be tempted to try it. This is coming from a CPA who has worked on a Federal Treasury panel who worked with the IRS. I cannot warn against this strongly enough.

Chris

 

Maybe I'm oversimplifying this, but wouldn't it just be a matter of your currency being priced in gold that sets the exchange ratio? You are assuming a gold backed currency would have the exchange ratio set by some sort of basket, but that would be an obsolete practice.

Also, my understanding of why Nixon closed the gold window is because we were printing money without adding more gold, and were unable to maintain our gold to dollar ratio as a result. Maintaining this ratio is the key to sound money. Because of the devaluation of the money taking place it prompted other nations to want their gold back instead of dollars, and since there wasn't enough gold to support the existing ratio they closed the gold window.

The number breakdown in this link shows that the money supply was in fact increasing while we were on the gold standard before which is what I view as its undoing.

http://bullionbullscanada.com/index...old-window&catid=79:mark-j-lundeen&Itemid=150

I did notice that they put Dollars per One Ounce US Gold Reserve at $3952.06:1 in 2011 which doesn't match up with the number calculations fatima did which I verified to be pretty close to the mark based on the numbers he provided. So I wonder which is correct now, maybe they forgot to type in a zero in their calculations on this link.

The only way for a gold backed currency to not propel the price of gold is by purposefully enacting deflation, by actually removing dollars from circulation, with the goal being to get gold at today's prices to support the gold to dollar ratio. This is why gold can potentially avoid losing value and outperform other assets even in a deflationary environment. The alternative is buying more gold on the open market which would drive the price up, or to just back it at current levels and revalue gold at a much higher price.

 

Can anyone name a current country where the official currency currently is officially backed by gold, silver, oil, carrots, anything?

The backing of currency with gold or silver will not happen until all of the countries of the world will agree to start it at the same time and a predetermined ratio for forex . Will that happen soon? Of course not IMO, so this idea is just that, an idea, and I suspect ( won't claim) that the reason most people that push it wants it , is not to protect any monetary/financial system, but to drive up the value of their own personal cache. These are the people that the politicians bills are directed towards for their own personal influence cache for elections. All in my opinion.

 

If it is the IRS bringing the charge, I don't understand why the case would be thrown out of court. No matter, in the Kahre case mentioned above, the IRS did not win any convictions. They brought charges against 9 people, 161 different charges, and the jury either acquitted the defendants or the jury was hung. The reason was that the law was not clear on the issue of circulating money gold coins. It was not deemed automatically bogus and tossed out of court. Everyone has the right to defend themselves in court.

2 years later the IRS & Justice department tried Kahre again along with his brother and girlfriend. The other 8 defendants were not prosecuted again. Kahre was convicted of numerous charges of tax fraud. I don't know where he stands on appeal, if any.

The point however is that while I too think it would be stupid to challenge the IRS in this manner, it is not the IRS that makes or judges guilt with the law. It is the congress and then it's the court that decides whether it applies or not and what penalties. I'm of the opinion that a good CPA would advise someone to see a lawyer rather than give them direct legal advice.

 

Well, I guess Fatima you are not even aware that CPA's are allowed to represent clients in tax court, so in tax court a CPA is equivalent to a lawyer. So a "good" CPA would instantly see you don't have a clue what you are talking about. I was warning people to not do what has been suggested here, or they WILL need to see a lawyer since they will be facing criminal charges.

I am aware of precedents. Btw, just to throw a little knowledge your way, the IRS doesn't sue based upon it being an unallowed deduction. THey have the right to throw the deduction out and assess the taxes, penalties, and interest and then the taxpayer has to sue to reinstate them. This is why the taxpayer would be suing using htis defense, which has been determined to be an abuse.

Please educate yourself on the system before you impune my knowledge, which I am confident outsizes your own in this area. If not, please tell us your qualifications on why we should listen to your opinion.

Chris

 

Sigh. Anyone can take the Tax Court examination to represent clients in tax court. It's not limited to CPAs. In the case I referenced, the IRS via the Justice Dept. prosecuted Kahre in Federal District Court, not Tax Court. I might be wrong, but I believe this requires a licensed lawyer for representation.

IMO, CPAs should stick to bean counting.

 

you can't talk with fanatics.

 

of course it is. You will repeat lies in defense of the gold standard until the cows come home. What's new about that? This forum has been pestered with gold standard survivalists for years.

Its DOOM I tell you. America is coming to an end and only GOLD can save 'er!

 

If anyone wants an idea of the types of tax schemes people on the internet propose, here is a partial list from the IRS:

http://www.irs.gov/taxpros/article/0,,id=159932,00.html

Anything on this list, including the scheme of only including the face value of gold coins when clearly this is done for tax evasion, is viewed extremely hostile by the IRS and they will always sue civilly, and many time criminally. Don't be silly and believe any of these arguments. If someone tells you they can avoid you paying any taxes, check with your CPA or lawyer as its most likely illegal.

As is even listed in this document, sometimes a taxpayer wins criminal trials, but the IRS will still sue civilly, and they win most cases. Even if they do not win, your lawyer will take any tax "savings"

Chris

 

I've have nothing against survivalists, why do you? I will say though that internet trolls are another matter. I see that despite having 11,000 posts on this forum, only 7 of them have been liked. Calling people liars and pasting them with labels in a futile attempt to discredit them probably have something to do with that. The results speak for themselves.

Yes I agree with the others that you were proven wrong and nescient in the discussion you started above, but it's no reason to keep trying to bring down this topic with one-liner pot shots. Nobody is buying it and the last I will say about it.

 

Under these circumstances it is important to remember that the Yetzah Hoorah comes as a fly, not on Chariots.

 

Bingo!

Because if it isn't done that way sophisticated investors will just arbitrage it. Just like de Gaulle did. Gold doesn't have to be bought or sold in dollars. That's why we needed Bretton Woods. With Bretton Woods, other currencies were linked to the dollar and the dollar was linked to gold.

 

Medoraman:
Its just a bad, bad idea, and I am begging no one here to be tempted to try it. This is coming from a CPA who has worked on a Federal Treasury panel who worked with the IRS. I cannot warn against this strongly enough.

My warning in that post was way too soft. Thank you for putting it in no uncertain terms. My premise in sighting Kahre vs IRS was to show the United States operates a dual system of currency. It is the inequities between the two systems that is at the core of this argument. I do not or ever will I recommend cheating on your taxes, or more approprate to this form, not claiming captial gains.

 

Ty sir. I apologize if I misread your posts as advocating any such action. I just wanted everyone to be clear.

Chris

 

de Galle did it because the Federal Reserve dollar was being printed without regard to the gold that was behind it. If they had held the number of $s steady vs the gold supply, then one of two things would have happened. $s would have gotten very expensive and deGalle could not have afforded them in the first place. The USA could not have run up such a trade imbalance. The Gold standard self regulates and it doesn't matter if the entire world goes to it or not. Bretton Woods was necessary because the $ had already been partially broken from the gold standard.

This is all academic as they won't be considering such a thing again until the current fiat system runs itself into the ground. Well.... not unless the states force their hand.

 

Reminds me. It takes 34 state legislatures to call a convention for the purpose of amending the US Constitution. It's within their power to do this, then each state legislature gets to vote on it. If 34 of them do so, they can amend the Constitution to specifically eliminate the Federal Reserve and clarify the gold/silver standard for currency. Congress and the President would have not say in the matter.

The last time the states did this was to approve the 21st Amendment which repealed the 18th Amendment imposed on the people by the Congress & President which made alcohol illegal in the USA.

 

Your enthusiasm aside, a metal backed currency is the key to fiscal responsibility. It enforces it by not allowing money printing which has enabled otherwise unfundable wars and record debt levels.

This is exactly what I was getting at in an earlier post, that a gold standard is self regulating. It doesn't rely on the ability of people to set monetary policy whether they are good or bad at it. It allows the free market to set the policy. It doesn't need to be global either. Any nation can use a metal backed currency, and then that would be the one stable currency not being devalued like the rest. Other nations not getting on the bandwagon would not inhibit the benefits of stability gained by this. Whether the rest of the world buys and sells using gold does not impact the ability of any other nation to use gold as a peg. The fact that nobody has done this yet is perplexing considering that whoever does so would instantly be the most sought after currency in the world. I suppose the best explanation is that for any nation to do so would require significant devaluation and/or deflation to do the peg, but after the peg it would have all the safe haven benefits of gold.