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Bill Allowing Gold and Silver as Money; Bureaucratic Nightmare?
Townhall.com ^ | March 30, 2013 | Mike Shedlock

Posted on 03/30/2013 12:32:38 PM PDT by Kaslin

I have encouraging news in the state of Arizona where lawmakers back gold, silver as currency.

The measure is Arizona's latest jab at the federal government, which prohibits states from minting their own money. It also reflects a growing distrust of government-backed money.

The bill, which advanced in a 4-2 vote by a House committee Monday, states that gold and silver should be legal currency not subject to tax or regulation as property. The Republican-led Senate gave the bill its blessing in February in a 17-11 partisan vote.

The bill would let people use the precious metals as money as long as businesses agree to take them. If made law, it would take effect in 2014.

Democrats oppose the measure. They say it would be a bureaucratic nightmare because businesses don't have the equipment to determine the value of gold and silver.

Bureaucratic Nightmare?

Nonsense.

The bill is well written and extremely well thought out. It does not force companies to accept gold or silver (nor should it), it merely allows businesses to do so if they want. Any company that does not want to deal with gold or silver will not have to. So where's the nightmare?

States will not be minting their own money under such a proposal (nor should they) so there is no conflict on that part of Federal law.

I commend this bill, expect Arizona lawmakers to pass it, and urge the Governor to sign it. When that happens, gold will once again be legal money.

I support gold as money and believe gold is money whether or not the bill passes.

There is significant reason for people to distrust government-sponsored fiat currencies backed by nothing. I made the case recently in Fraudulent Guarantees; Fictional Reserve Lending; Comparison of US to Cyprus; What About New Zealand?

Here is a brief synopsis, but I encourage you to read the full article.

Monetary Recap


One Giant Ponzi Scheme

Clearly far more money has been lent than exists. How can it possibly be paid back? If it can't be paid back, how good is a government guarantee on deposits?

In 2010 Bernanke proposed ending reserve requirements completely, but long-time Mish readers understand what Bernanke proposed is the de facto state of affairs already. (see the above link for an explanation).

Five Key Points


  1. In a Fractional Reserve Lending scheme, the notion there are meaningful reserves is ridiculous.
  2. Far more money has been lent out than really exists (the rest is a fictional accounting entry).
  3. Fractional reserve lending constitutes fraud (just as lending something you do not own is fraud).
  4. There is no way for all this money to be paid back (so it won't be).
  5. The Reserve Bank of New Zealand has the most sensible policy on deposit insurance of all the world's central banks. (NZ offers no deposit insurance). See my article for a full explanation.


In the sake of full disclosure, I own gold, silver, platinum, as well as shares in various mining corporations.


TOPICS: Business/Economy; Editorial; Government; US: Arizona
KEYWORDS: arizonagold; gold; money

1 posted on 03/30/2013 12:32:38 PM PDT by Kaslin
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To: Kaslin

The problem with this is that American Eagle gold coins are already legal tender at face value, under the power of Congress to coin money and regulate the value thereof.

So, Arizona does not need to do anything to make a one-ounce gold coin legal tender for $50, and they cannot increase its legal tender value under the supremacy clause.

I will sell you all the goods you want at $50/ounce.


2 posted on 03/30/2013 12:36:37 PM PDT by Jim Noble (When strong, avoid them. Attack their weaknesses. Emerge to their surprise.)
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To: Jim Noble

I would also think there is nothing now in the law that prohibits barter. It sounds to me as if people think this is a way to avoid taxes (sales and income) in a transaction.


3 posted on 03/30/2013 12:52:32 PM PDT by stormer
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To: Kaslin

If the money was loaned, it exists

Money is not tangible. Money is ledger entries.


4 posted on 03/30/2013 12:55:47 PM PDT by bert ((K.E. N.P. N.C. +12 .....The fairest Deduction to be reduced is the Standard Deduction)
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To: Jim Noble

Congress can’t do jack squat about PMs, unless some foolish coin minter stamps “dollar” or the like on the coin.
If the coin just says, “One ounce fine gold” etc, it’s clear sailing. Under the AZ law, deals will be made in weights of PMs, period. The current value of PMs in dollars, or the value in dollars at a future delivery date, will be up to the private citizens making the deal. That is, the dollar value of PMs will change, but the deal will be “struck” so to speak, at an agreed-upon weight of the PM, no more, no less.

Makes sense to me, and it’s not hard at all. I’ve traveled in Mexican border and tourist towns, and with the help of simple calculators, it’s a snap to buy in pesos or dollars, and get change in pesos or dollars. The daily conversion rate for dollars to pesos is posted at the shop’s front door. If you don’t like the conversion rate, you go to the next shop, so the rates are kept very honest.

This is exactly how it will work when conducting business in PMs. Just look up the daily conversion rate of gold or silver in dollars (or any other currency) and strike an agreement in weight of PMs. If the currency / PM rate fluctuates, so be it. The deal was made in weight of PM, and that’s that.

Very simple.


5 posted on 03/30/2013 12:57:57 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: blam; dennisw; TigerLikesRooster

Gold money ping.


6 posted on 03/30/2013 12:58:44 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Jim Noble

There are one ounce bars of gold and even lesser fractions available for public to buy and use to barter with.


7 posted on 03/30/2013 1:00:08 PM PDT by Fee
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To: Kaslin
>"It also reflects a growing distrust of government-backed money."

With a name like Hussein, what's to trust?

8 posted on 03/30/2013 1:02:56 PM PDT by rawcatslyentist ("Behold, I am against you, O arrogant one," Jeremiah 50:31)
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To: Kaslin; Travis McGee
Preparing For Inflationary Times
9 posted on 03/30/2013 1:06:28 PM PDT by blam
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To: Kaslin

“government-backed money”

Backed by what? The only “government backing” has on the Fed’s fiat money is that Congress had mandated that it be used to pay taxes and to settle debts denominated in dollars.

THERE IS NO BACKING, in the normal sense of the word.


10 posted on 03/30/2013 1:18:34 PM PDT by Skepolitic
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To: Kaslin

We don’t need to use Gold or Silver as currency, we need it as a brake on the printing of fiat money. Wouldn’t it be better if your dollars gained in value as you held them instead of lost value. Limit the dollars printed to the supply of gold and let the value of the dollar fluctuate bases on the value of the gold.


11 posted on 03/30/2013 1:22:00 PM PDT by qman (The communist usurper must go!)
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To: Jim Noble

The problem is that as per the old aphorism, “Bad money drives out good”. You would find a big discount on paper money and the price of gold coins would increase dramatically.


12 posted on 03/30/2013 1:55:23 PM PDT by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)
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To: Kaslin
Clearly far more money has been lent than exists.

Because money can only be lent once? Wow, what a silly thing for him to say.

13 posted on 03/30/2013 2:39:01 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: qman
Wouldn’t it be better if your dollars gained in value as you held them instead of lost value.

No, it would be worse.

14 posted on 03/30/2013 2:40:46 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Kaslin

There are some interesting possibilities here. The first is that specie has a natural ally in non-legal tender ‘scrip’, which is a very controlled currency that acts in parallel with the dollar, and is quite legal.

Since a state cannot issue scrip directly, it would license a private company to do so, being heavily regulated and audited by the state. As a controlled currency, no matter how the dollar fluctuated, the value of the scrip and the prices of what is purchased with it are fixed, changing only on a monthly basis.

So say an object sells for $1 or 1 scrip value. The dollar could experience Zimbabwe-style inflation, but the object would still cost 1 scrip for the entire month. And gold is part of this equation, for its official value could be all over the map, but if its value for scrip was a good deal, it would continue to be a good deal.

So it *always* works to the advantage of consumers. If the dollar is better, they use dollars; if scrip is better, they use scrip; and if just holding on to commodities, like gold, is better, they can do that too.


15 posted on 03/30/2013 2:42:26 PM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
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To: Kaslin

The Federal Reserve Note we use as money is worth no more than the South’s Confederate dollar. It is merely printed paper.

It’s value is that it is now accepted as legal tender. So was the Confederate dollar for a while. When people stopped accepting it ,it’s value wasn’t worth the paper it was printed on. Neither is todays federal reserve Note.

There is nothing there to back it’s denomination.
The Bonds that back it were printed on the same paper. It too is worthless when it stops being accepted.

Is that day coming? I don’t know, but I will say that our government isn’t doing anything to stop it from coming.


16 posted on 03/30/2013 2:42:59 PM PDT by Venturer
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To: Jim Noble

Some businesses have tried paying employees in gold coins. IRS did not take “but we only paid them $50/week!” well.


17 posted on 03/30/2013 2:48:21 PM PDT by ctdonath2 (3% of the population perpetrates >50% of homicides...but gun control advocates blame metal boxes.)
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To: bert

Tangible (gold silver) is the keyword my crusty FReeper friend. Not this paper entry or digital entry bullcraaape. If one must invest in paper at least keep tangible precious metals in reserve for you, family and grandchildren,


18 posted on 03/30/2013 3:34:00 PM PDT by dennisw (too much of a good thing is a bad thing--- Joe Pine)
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To: ctdonath2

Can you chop it into microns? One Dollar US 1 micron!
Or one grain of gold dust?
Who would even fathom of putting Gold for currency!


19 posted on 03/30/2013 3:36:28 PM PDT by Conserev1 ("Still Clinging to my Bible and my Weapon")
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To: Kaslin
"2. Far more money has been lent out than really exists (the rest is a fictional accounting entry)."

6. Far more gold has been sold than really exists (the rest is multiple fictional accounting entries).

7. When/If anyone ever audits Ft. Knox, it's gonna be Surprise, Surprise!

20 posted on 03/30/2013 4:11:53 PM PDT by matthew fuller (Fast and Furious fizzled- Enter Sandy Hook.)
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To: Conserev1

:::

Can you chop it into microns? One Dollar US 1 micron!
Or one grain of gold dust?
Who would even fathom of putting Gold for currency!

:::

Easy, you buy inb multiples of the PM coin you are using. You do not buy 1 pound of feed for 30 FRN cents, you buy 100 pounds for a Silver Eagle.

Same for any other product.

Every itemI have sold on line lately is priced in Silver Eagles or Gold Eagles. You would be surprised how much of these metals are trading hands right now.

Any cellphone can get up to the minute PM values.


21 posted on 03/30/2013 4:27:32 PM PDT by wrench
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To: ctdonath2
Some businesses have tried paying employees in gold coins. IRS did not take “but we only paid them $50/week!” well.

I would like to get paid in coins - dimes, quarters and half dollars will be fine.

As long as they are pre-1965.

It is legal tender, coined for everyday use so how could anyone complain?


22 posted on 03/30/2013 5:14:23 PM PDT by Iron Munro (Welcome to Obama-Land - EVERYTHING NOT FORBIDDEN IS COMPULSORY)
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To: Iron Munro

Robert Kahre was convicted in 2009 of conspiracy to defraud the IRS, after paying employees of his construction companies in Las Vegas with gold coins and reporting their legal tender value ($50 per ounce) as the rate paid, for employment taxes.


23 posted on 03/30/2013 6:40:01 PM PDT by research99
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To: Kaslin
This makes no sense to me.

Stores will have to deal with exchange rates between gold & the dollar. Why? Because the goods they sell they pay for in dollars, their books are in dollars - much easier math than Troy ounces, & the gubmint expects to see the books - audits & taxes - in dollars. So, even if a business trades in gold, they still have to do the conversion - often.

Anyone who has had to deal with exchange rates in retail stores in foreign countries KNOWS that the stores make a big profit by taking dollars in addition to the native currencies. I have seen stores side by side with different exchange rates. Banks, too.

People paying for retail goods in gold, especially for small purchases, will lose badly with the store's exchange rate & rounding, not to mention faulty/fraudulent store scales.

With the price of gold fluctuating daily, how will the frugal shopper compare prices among stores with different exchange rates without doing some serious math for every potential purchase? At ~$51.32/gram today, how will you buy a Happy Meal for the kids at McDs with a fifth of a gram or less of gold without some serious, accurate scale work? Measuring out gold dust isn't the same as counting bills & change. Be careful in the wind!

The financial value of gold is in holding it as a hedge against inflation. That is, holding it, not spending it to buy groceries & consumer goods.

24 posted on 03/30/2013 7:51:37 PM PDT by Mister Da (The mark of a wise man is not what he knows, but what he knows he doesn't know!)
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To: wrench

No you buy foriegn currency prob the yen! Or yang whatever is highest on the market and then convert to the dollar!


25 posted on 03/30/2013 8:47:40 PM PDT by Conserev1 ("Still Clinging to my Bible and my Weapon")
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To: Conserev1

The point is US gold coins - real currency with real declared value - have a face value of $20 per 1 oz (or so). $1 is legally 1/20th of one ounce of US Mint issued gold coin. The fact that the market values it at around $1600/oz rather complicates the issue ... and the IRS doesn’t like people playing games with that dichotomy.


26 posted on 03/30/2013 11:49:09 PM PDT by ctdonath2 (3% of the population perpetrates >50% of homicides...but gun control advocates blame metal boxes.)
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To: Tennessee Nana

Nana; you got out in time!!

http://globaleconomicanalysis.blogspot.com/2013/03/fraudulent-guarantees-fictional-reserve.html


27 posted on 03/31/2013 5:15:48 AM PDT by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: Travis McGee

“No State shall make anything but gold or silver coin as payment for tender of a debt.” US Constitution.


28 posted on 03/31/2013 6:21:24 AM PDT by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: Lurker

In the Coin Act, the penalty for deviation was death.


29 posted on 03/31/2013 6:34:58 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Toddsterpatriot

Prior to fiat money, people used gold, and the value of gold waxed and waned based on it’s supply. We currently have a fiat system where the money supply is determined by men who are corruptible and can be influenced by intimidation, envy, or a myriad of other personal corruptions that the fallible man is subject to. In the last 5 years, Bernanke has increased the money supply 4 times, rescuing his friends who dug themselves a hole from which they could not escape, the only reason we have not felt the loss of value in the dollar that would be justified is the game continues. A massive fleecing of the treasury is proceeding apace. I suspect the house of cards collapses in the very near future!


30 posted on 04/01/2013 9:32:56 AM PDT by qman (The communist usurper must go!)
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To: qman
Prior to fiat money, people used gold, and the value of gold waxed and waned based on it’s supply.

And the demand. People always forget about demand.

We currently have a fiat system where the money supply is determined by men who are corruptible and can be influenced by intimidation, envy, or a myriad of other personal corruptions that the fallible man is subject to.

If you take out a loan from the bank, you've increased the money supply. Are you "influenced by intimidation, envy, or a myriad of other personal corruptions that the fallible man is subject to"?

Bernanke has increased the money supply 4 times, rescuing his friends who dug themselves a hole from which they could not escape, the only reason we have not felt the loss of value in the dollar.....

Is that the demand for cash and cash equivalents has soared. And despite the increase in reserve balances held at the Fed, financial firms continue to deleverage.

A massive fleecing of the treasury is proceeding apace.

How?

31 posted on 04/01/2013 2:44:48 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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