Second State In Less Than A Month Challenges Fed, Passes Bill To Treat Gold And Silver As Money

By Justin Gardner

The second state in less than a month has made a direct challenge to the Federal Reserve monopoly on money, by forwarding a bill that would “eliminate capital gains taxes on gold and silver specie.” The Idaho House voted by a margin of 56-13 on March 14 to pass House Bill 206, following the Arizona House’s approval of a similar bill.

According to the Tenth Amendment Center:

The legislation would amend Idaho revenue statutes, providing “that capital gains and losses on precious metals bullion and monetized bullion sales be added to or subtracted from Idaho taxable income.…

Idaho H206 is a revenue neutral proposal over the long run. That’s because both precious metals gains (income) and losses are backed out of the calculation of taxable income for Idahoans. While H206’s passage will have little fiscal impact on Idaho tax revenues, it will have a larger impact on Idahoans’ freedoms.

Capital gains tax on gold and silver is an insidious disincentive based on intentional dollar devaluation. When the dollar’s purchasing power goes down, the metals’ nominal dollar value goes up, triggering a “gain” which is taxed.

If the bill can survive the attack of central economic planners who believe that crushing debt and inflation is the best path toward prosperity, it could pave the way for currency competition. Critical to the Fed’s campaign is perpetuating the belief that gold and silver are merely investments and speculation – rather than the market opportunity is it of creating sound money.

Even though the Constitution recognizes gold and silver as money, the Internal Revenue Service classifies them as “property” which should be taxed as a commodity. It’s no coincidence that the personal income tax (16th Amendment) and the Federal Reserve were established in the same year, 1913. Prior to this, America was experiencing its greatest period of economic growth in history.

Arizona and Idaho seek to join two other states, Utah and Oklahoma, in freeing gold and silver from taxation in the interest of pursuing currency competition and sound money. While these four states are certainly not the most enlightened in other areas – namely the War on Drugs – their efforts at challenging the Federal Reserve are laudable.

Passage into law would mark an important step towards currency competition. If sound money gains a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by H206 would allow Idaho residents to secure the purchasing power of their money.

“This isn’t going to end the fed’s monetary monopoly overnight, but it sets the foundation and opens the door for more market activity by the people,” Tenth Amendment Center executive director Michael Boldin said. “This is an important part of the overall strategy, and activists in Idaho should continue working to get this bill passed.”

Arizona Rep. Mark Finchem, when introducing the sound money bill in his state, argued that any perceived capital gain from gold and silver is not actually a gain, but a protection against losing money in the inflationary federal reserve system.

Enter to Win 50 American Silver Eagles (Ad)

“Let’s say it takes 1,200 of them to buy a U.S. Mint gold coin today, but tomorrow it takes 1,300 of those federal reserve notes,” said Finchem. “You’ve actually experienced a loss. It’s called inflation. The Internal Revenue Service for many, many years has been taxing inflation as though it was a gain.

“The U.S. Mint is charged with protecting the value of money, but the Federal Reserve creates nothing but debt,” Finchem continued. “Yet Congress authorized a tax when making the exchange of precious metals for dollars. It’s illegal and they know it, this bill is an effort by one state to protect the people from such confiscation.”

Justin Gardner writes for TheFreeThoughtProject.com, where this article first appeared.

  • rahrog

    The current banking/monetary system is designed to rob people of the fruits of their labors through constant inflation of the money supply, and the corresponding devaluation (purchasing power) of the dollar. Debt is constantly increased while savings is destroyed.

    Only by returning to commodity based currencies can people break free of the debt chains that have enslaved us.

    The United States federal government & The Federal Reserve are co-conspirators in one of the greatest, and most horrific, crimes in the history of humanity.

    If you are not free to save the fruits of your labors (which the current system denies), you are not free.

    SECEDE from The Federal Reserve system and the governments that it owns.

    SECEDE…SECEDE…SECEDE!!!

    • guestimate

      You are missing something HUGE. The banks are already investing in commodities. The investments are assets on their books according to GAAP (Generally Accepted Accounting Principles.) There’s an asset side (the commodity contract) and the liability side (money to purchase the contract.) The actual commodity can be leveraged 10X more. By making loans and making investments, bank reserves actually increase, not decrease as you may have thought. Only banks are allowed to expand (basically create) money for themselves. That’s how they came by all the money, it’s a cartel, cornered market on currency, a license to steal, you don’t have. Every banker knows that every material thing (not just gold & silver) has value, and s/he monetizes it.

      • rahrog

        I’m not sure what your point is, and I didn’t miss anything.

        Is it easier for you to understand if we look at it as precious metals backed currency vs debt certificate (fiat) currency?

        • guestimate

          There’s not enough precious metals in government possession for precious-metal backed currency to work, and we are from an understanding point-of-view, beyond that. Precious metals are not the only thing on earth of value, in fact the value of precious metals is subordinate to other things that people actually need. A precious-metal backed currency would be extremely artificial and arbitrary, which is what precious-metal holders want, to their own advantage, of course. And precious metals don’t preclude fiat currency, if the bankers own or are in possession of the gold, as when the original goldsmith-bankers issued 10X more notes than they held gold in reserve. The real issue is who creates money and for whose benefit, government or banks. Debt is created when bankers are allowed to call the shots. The government still has the power to renegotiate the original Federal Reserve Agreement of 1913, audit the Fed, and/or make the bankers work for US, cancel bank licenses, write new legislation how banks can operate, or nationalize them. Merely using intrinsic metals as a currency value benchmark, without doing those other things, is simplistic & naive at best. A gold-standard for money is not something new and it never made the Romans or world more civilized. Economies, trade & markets have existed just fine without gold. And I’d also like to point out that the “debt” is a bogus invoice, used as a bludgeon, to control public policy, through fear & ignorance. The bankers owned the store and made the rules since 1913, there’s no way they haven’t already paid themselves far in excess.

          • rahrog

            You are correct in stating “The bankers owned the store … ”

            Other than that vague statement you seem to be quite drunk on bad information.

            I don’t think you have clue how the current monetary/banking system works, and you are obviously clueless about commodity backed currency.

          • guestimate

            Well you are free to highlight where you think I’m clueless, though I’m pretty sure I ain’t. Every material asset can be valued and hypothecated by a bank and loaned against. The asset once on the banks’ books are leveraged 10:1 according to fractional reserve practices that Congress allows, and is not entirely a bad thing, but that the banks are exclusive profiteers to the scheme/scam. Gold, silver, wheat, pork-bellies and Hollywood endorsements/productive labor; all (these “commodities”) constitute “money” (promises to pay.) These already “back” currency. The hard metal fanatics only want it to be their preferred commodity, exclusively. There’s nothing “vague” about what I said above. Why don’t you read “Modern Money Mechanics” put out by the Fed? They explain quite frankly how banks create money (credit.)

          • rahrog

            I’m quite well aware of how banks create money (debt). I do not need the Fed or their various propaganda outlets to “inform” me. Gosh, thanks for offering.

            If you think the 10:1 ratio (money multiplier) is a good idea, then you are lost.

  • guestimate

    The Fed never said that gold & silver weren’t “money,” but only that there are other forms of money, i.e. other things that people value, asset-class items, the ownership of which can be transferred via contract, leveraged (according to fractional reserve banking practices) and loaned against. This is what’s allowed the expansion of the “money” supply and the creation of goods & services far beyond what a limited amount of precious metals would allow. The downside is the banks own the game and keep the majority of profits.

    • Amor Terra

      Are you saying that a limited amount of “money” limits the production of goods and services?

      • guestimate

        Yes, I am absolutely saying that. Isn’t it obvious? You need money to buy stuff, if you didn’t have any, you couldn’t. For the same reason, entrepreneurs need loans to start new businesses, to create the products & services you buy. No one starts from nothing. It takes money to make money, has always been true. What bankers discovered however, is they can extend more credit than they have actual assets on deposits. This is called fractional reserve banking and you might look that up. The loans are secured by promissory notes that the banks use as new money to make even more loans, according to the reserve requirements stated by law. You can learn more about this from the publication “Modern Money Mechanics” put out by the Federal Reserve. It’s remarkably frank, how banks create money. The government is only Kinkos for the Fed, the Fed owns the store.

        • Amor Terra

          I’m quite familiar with fractional reserve lending and with the concept of worthless fiat money. But perhaps you should look into the terms inflation and deflation before concluding that an economy must have adequate physical money supply before it can produce goods and services. That’s got to be one of the dumbest statements I’ve seen on here in quite a while.

  • littljo

    The unFed baloney bank of the U.S. needs to close and shutter, it feeds the beast and foments nothing but misery.
    END the FED and all zentral bankz.
    USURY is unChristian.
    Income tax is theft.
    Silver stakes required.

Thank you for sharing.
Follow us to receive the latest updates.

Like Us On Facebook
Follow Us On Twitter

Send this to friend