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When Thoughts Turn to Gold

Architect of a school of economic thought regarded by many as just a notch above quackery, John Maynard Keynes of Britain once called the gold standard a “barbarous relic.” An honest and time-honored medium of exchange such as gold (or paper money redeemable in gold) stood in the way of Keynes’ snooty preference for lots of government spending and easy money.

Henry Hazlitt was an infinitely better economist and closely associated with FEE for decades. He picked Keynes apart virtually line by line in his definitive 1959 tour de force, The Failure of the New Economics. If you’re an economics major and your professors never told you about it, consider demanding a tuition refund.

Keynes and Hazlitt knew each other but agreed on little. In 1931, in fact, Hazlitt invited Keynes to participate in a series of articles around the theme, “If I Were a Dictator.” You can see the reply from Keynes here.

I knew Hazlitt personally and called him by his nickname, “Harry,” as did others among his many friends. I cherish the letters from him in my personal files. He was so much more than a fine economist—an exceptional journalist, a scholarly but accessible gentleman, and a brilliant moral philosopher as well.

Hazlitt authored more than two dozen books, most notably the classic Economics in One Lesson, available free from FEE. In his 1978 volume, The Inflation Crisis and How To Resolve It, he noted that far from barbarous, gold served many nations extraordinarily well. It was the world’s chosen money for centuries. The unprecedented explosion of economic growth in the 19th Century was accompanied by sound money tied to gold, punctuated by brief calamities when politicians abandoned it. Governments don’t like it because they can’t print it, pure and simple. As Hazlitt wrote in The Inflation Crisis,

It is the outstanding merit of gold as the monetary standard that it makes the supply and the purchasing power of the monetary unit independent of government, of office holders, of political parties, and of pressure groups. The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice. It is precisely the merit of the gold standard, finally, that it puts a limit on credit expansion.

In the long run, just as Keynes predicted, Keynes himself was indeed dead. But gold as a reliable medium of change lasted far longer than he ever did. It may re-emerge one day to replace the barbarous paper inflation his legacy helped to create. Wouldn’t that be ironic, if not entirely predictable?

Americans are once again feeling the pain of runaway expansion of money and credit that a gold standard would never have allowed. We hear almost daily, nonsensical pronouncements about price inflation from the very “barbarous relic” people who are responsible for it.  Jerome Powell, chairman of the inflation factory known as the Federal Reserve, took a short break from the printing press to assure us that the Fed “understands the hardship it is causing” and that his paper money machine is “moving expeditiously” against it. He’s counting on us being sufficiently gullible and miseducated to thank him for his “inflation-fighting” efforts. Count me out, please.

So gold is barbarous but unbacked, inconvertible, irredeemable paper money cranked out by elitist officialdom is not? So sound and stable money is bad but fiat money belched out by political appointees is good? Where did such nonsense come from?

I have a few more questions for Mr. Powell and his barbarous relic associates.

What is government-issued fiat money made from? Angel breath? Divine manna from monetary Heaven? Of course not. Its digital form is composed of ethereal ones and zeroes while its physical and familiar form is made from trees. Trees!

When and where in history did a tree—or any tree derivative—emerge naturally and voluntarily as a reliable medium of exchange? Never and nowhere, except when it was issued as a kind of “receipt” for the real thing.

Opponents of the gold standard want us to believe that gold is old-fashioned, that a more “enlightened” perspective is that money shouldn’t come from a hole in the ground. Think about that. They are telling us that money should instead come from—drum roll—trees! 

Hmmm. Which sounds more dependable—a gold standard or a tree standard? On this important matter, go with your gut feelings.

As price inflation eats away at our savings and livelihoods, it’s time we re-think money and monetary policy. We should compare the record of the gold standard with that of our present tree standard. We ought to take a closer look at all the false promises of the tree standard advocates, from Keynes to Powell. Toward that end, I offer readers a list of excellent FEE articles, below.

Why Experts Get the Gold Standard Wrong by Lawrence H. White

The Gold Standard Didn’t Create the Great Depression by Germinal D. Van

How To Return to the Gold Standard by Bettina Bien Greaves

How the United States Conquered Inflation After the Civil War by Lawrence W. Reed

Toward Radical Monetary Reform by Lawrence W. Reed

When Money Goes Bad edited by Lawrence W. Reed

America’s Money: A History edited by Lawrence W. Reed

A Tale of Two Gold Standards by Lawrence H. White

No Shortage of Gold by Hans F. Sennholz

Gold and Money by Warren C. Gibson

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Tennessee Governor Signs Full Repeal of Sales Taxes on Gold and Silver

Nashville, Tennessee (May 29, 2022) – With Governor Bill Lee’s signature on Friday, Tennessee has officially become the 42nd state in the U.S. to remove sales taxes from constitutional sound money (i.e., gold and silver).

Tennessee’s House Bill 1874 and Senate Bill 1857, introduced by Representative Bud Hulsey (R-2) and Senator Frank Niceley (R-8) passed both chambers of the Tennessee legislature overwhelmingly last month and took effect immediately upon the Governor’s signature at the start of Memorial Day weekend.

Substantial grassroots support tipped the balance. During the Senate floor vote, Senator Janice Bowling (R-16) commented, “I’d just want to thank the senator for bringing forward this bill along with half of the state of Tennessee that contacted all of us!”

The victory puts a capstone on long-running efforts by the Sound Money Defense League, Money Metals Exchange, Campaign for Liberty, and grassroots activists and coin dealers in Tennessee. Tennessee investors, savers, and small businesses can now acquire gold, silver, platinum, and palladium bullion and coins without being slapped with taxes as high as 10%, depending on the purchaser’s specific location.

 Lead sponsor Hulsey said, "I've been working to free gold and silver from sales taxes in Tennessee since my kids were in elementary school. The Sound Money Defense League, in-state dealers, and folks all across Tennessee made their voices heard and helped get this bill across the finish line."

Meanwhile, similar bills have recently been under consideration in Kentucky, Mississippi, Hawaii, Maine, Wisconsin, and New Jersey, as the nation’s inflation problem expands and as the national backlash against taxing constitutional money expands.

Including Tennessee, 42 U.S. states now fully or partially exempt gold and silver from the sales taxes. That leaves 8 just states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note.

States have been removing sales taxes from monetary metals for the following reasons:

*** Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. States do not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments, so it makes no sense to tax monetary metals.

*** Levying sales taxes on precious metals is illogical because gold and silver are inherently held for resale. Sales taxes are typically levied on final consumer goods. Precious metals are inherently held for resale, not “consumption,” making the application of sales taxes on precious metals illogical and especially inappropriate.

*** Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers in states with precious-metals sales taxes often take their business to neighboring states that have eliminated or reduced sales tax on precious metals. Investors can easily avoid paying $136.50 in sales taxes, for example, on a $1,950 purchase of a one-ounce gold bar. Therefore, levying sales tax on precious metals harms in-state businesses, who lose business to out-of-state precious metals dealers. Coin conventions also tend to avoid the sales tax states.

*** Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us—including pensioners, Tennesseans on fixed incomes, wage-earners, savers, and more.

Jp Cortez, policy director for the Sound Money Defense League, noted in his testimony before the Tennessee House Finance, Ways, and Means Committee that “the vast majority of states realize that taxing sound money harms in-state investors, in-state businesses, and even state revenues.”

Cortez continued: “At a time of record high inflation, Tennessee shouldn’t be punishing citizens with sales taxes for choosing to protect the purchasing power of their savings with sound money.”

Having eliminated sales taxes on the monetary metals, Tennessee will rise from 36th in the Sound Money Index to 9th place among the 50 states.

Image by Kjrstie from Pixabay

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Global Financial Elite in Davos Lust for New Powers

As global elites met in Davos this week to discuss their latest plans for a Great Reset, ordinary investors are hoping for a great rebound in their portfolios.

The stock market did finally bounce after suffering several consecutive weeks of losses. Whether it’s a just a short-lived relief rally or the start of something bigger remains to be seen.

The U.S. Dollar Index may also be gearing up for a run, but to the downside. After moving higher against foreign currencies for most the year, the dollar is now declining for a second consecutive week.

Dollar weakness helped support a modest rise in gold and silver prices.

Precious metals, of course, play the unique role of hard money in an investor’s portfolio. They offer the kind of security that no paper or digital assets can ever provide.

Whereas fiat currencies steadily, and sometimes rapidly, depreciate, gold and silver retain value over time. And whereas cryptocurrencies are prone to being pumped and dumped while carrying all the risks inherent in digital transactions, physical bullion is an inherently off the grid asset.

But central bankers and politicians around the world like the idea of marrying fiat currency with the digital blockchain. Many of them gathered this week in Davos for the World Economic Forum’s annual meeting.

Among the items on their agenda was central bank digital currencies. The managing director of the International Monetary Fund along with European central bankers talked about the central bank coins as the solution to instability in Bitcoin and other cryptocurrencies.

Several countries are now planning to issue official digital currencies. They will be circulated into the economy in partnership with large commercial banks. And they may eventually be merged into a single global coin network controlled by the IMF.

Federal Reserve chairman Jerome Powell has acknowledged the Fed is looking into issuing a digital currency. He has been vague about how far along in development the Fedcoin project is and how exactly it would work.

But Federal Reserve Vice Chair Lael Brainard is talking up the potential benefits of a central bank digital currency. She delivered comments to House Financial Services Committee this week.

Brainard seized on the recent carnage that afflicted so-called stablecoins to call for new regulations. She specifically touted the ability of the Fed to provide “safe central bank liability in the digital financial ecosystem.”

Brainard was appointed to her position earlier this year by President Joe Biden. It’s likely her views fully reflect those of the Biden administration, which is moving aggressively on the tax front to raise revenues.

The Treasury Department has singled out cryptocurrency markets in particular as being major sources of tax evasion.

But if Fedcoin ever becomes fully integrated into banking, credit, and payments systems, then the government will be able to generate digital records of each and every transaction in the economy.

A dream come true for the IRS. A nightmare for anyone who values financial privacy.

Unfortunately, privacy in the digital world is cumbersome to pursue and impossible to guarantee. Exchanges can be hacked. Encryption keys can be lost or stolen. And blockchains aren’t as anonymous as they may seem.

By contrast, transactions done in paper cash can still be done in untraceable and undetectable ways. And despite the fearmongering by Biden administration officials about cryptocurrencies facilitating fraud and crime, the vast majority of illicit transactions are conducted in U.S. dollars.

They know that, which is why they are also trying to make it more difficult to engage in large cash transactions. And ultimately, officials would like to phase out physical cash altogether so that every dollar can be tracked digitally.

Systems for tracking every individual’s social credit and carbon footprint might become part of the currency reset. A presenter at the World Economic Forum’s meeting this week actually suggested that.

Those who are eager to integrate surveillance technologies into the monetary system have no use for gold and silver. Metals are barbarous relics to them.

But to individuals who value their privacy as well as retaining their purchasing power, physical precious metals will never become obsolete as money.

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How the United States Conquered Inflation Following the Civil War

According to the most recent polling data, the American public’s approval of Congress stands at a dismal 21 percent. Almost four times as many people disapprove of the job it’s doing.

That’s par for the course in recent decades. It’s the major reason the Washington sausage grinder earns so little praise. To be fair, though, let’s review an occasion when lawmakers got something right. I’m prompted to share this story now because its lessons are especially relevant considering today’s concerns about rising price inflation. The year was 1875.

The Civil War (1861-65) produced a disastrous hyperinflation in the Confederacy and considerable currency depreciation of paper greenbacks in the North as well. A decade after Appomattox, Congress still had not made good on its promise to make its paper money redeemable in gold. But in January 1875, alarmed by the rise of pro-inflation agitators (the “greenbackers,” later to become “silverites”), Congress passed the Specie Payment Resumption Act, which President Ulysses S. Grant later signed into law.

Politicians often break their promises, and this was yet another opportunity to do so. Congress could have declared, “We don’t have the gold necessary to honor our pledge, so we’ll pay gold for greenbacks at 50 cents on the dollar.” But lawmakers chose to be honest for once, and to meet their obligations fully. The Act provided that all paper greenbacks would be redeemable on demand “at par” (100 percent of the earlier promise), beginning on January 1, 1879.

When Rutherford B. Hayes succeeded Grant as President in March 1877, he knew his administration had less than two years to prepare the Treasury and the nation’s banks for redemption. He and his Treasury officials believed the best way to avoid a run on the banks in January 1879 was to shore up the country’s gold reserves. They did so largely by selling bonds to Europeans in exchange for gold.

Redemption Day came amid rumors that people would flood the banks with their paper greenbacks and demand the promised gold, but just the opposite happened. Hardly anybody showed up at bank teller windows asking for the yellow metal. Why? Because the Treasury had accumulated more than enough gold to take care of convertibility, and the public knew it. The lesson? When people have good reason to believe their paper money is “as good as gold,” they prefer the convenience of paper.

Former United States Circuit Judge Randall R. Rader writes,

The year 1879 brought the resumption of the redeemable currency. The consumer price index stabilized at 28 in that year. For more than three decades thereafter (World War I interrupted the price tranquility), the index never rose above 29 or dipped below 25. The index remained at 27 for a decade. Never did it rise or fall more than a single point in a year. The gold standard worked throughout that entire period to keep prices remarkably stable.

Americans today are once again the victims of price inflation brought on by runaway government spending and printing of unbacked paper money. Does the Specie Payment Resumption Act of 1875 offer a model that could solve the problem? Yes and No.

Certainly, tying the dollar to a precious metal would exert a discipline desperately needed in monetary policy. Putting the Federal Reserve out of business would be a meaningful and positive reform as well; since its inception in 1913, it has given us one Great Depression, a bunch of recessions and a currency worth maybe 1/20th of its 1913 value. The Fed is an inflation factory, stumbling and fumbling from one self-inflicted crisis after another. Gold convertibility, as the 1875 act provided, would signify a restoration of integrity and monetary sanity that we haven’t seen in a hundred years.

But two big, fat elephants ensure that an 1875-like reform would immediately collapse unless they are summarily escorted out of the room. One is dishonest politicians. Washington is overrun with them—people who are interested first and foremost in short-term power and re-election and least of all in the long-term economic health of the country. Many are (pardon my bluntness) economic morons, oblivious to the red ink even as they drown in it.

The other elephant—the presence of which is a confirmation and consequence of the first—is a massive, annual budget deficit.

For half a century from 1865 until World War I, the federal government ran an almost unbroken string of budget surpluses. Today, it produces trillion-dollar deficits without batting an eye, and the President demands trillions more in spending and debt. If he announced today that the dollar would henceforth be backed by gold, the world would laugh, and you and I would rush to the banks with our paper before the gold ran out.

In other words, monetary discipline goes hand in hand with fiscal discipline. A return to sound money is impossible without a simultaneous return to sound budget management. In the face of a monstrous budget deficit and an even more frightening $30 trillion national debt, Congress just voted to ship $40 billion to Ukraine without cutting so much as a penny from anything else.

We have neither a Congress nor a President, and perhaps no public consensus either, that would permit anything remotely resembling the 1875 Specie Payment Resumption Act.

And until we do, the dollar is destined for further depreciation. Just as elections have consequences, so do destructive monetary and fiscal policies.

This article originally appeared on FEE.org

Img credit: Flickr - Jeremy Schultz

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The War on Gold Ensures the Dollar’s Downfall

Last month was the 89th anniversary of one of America’s biggest blunders on her descent from honest, sound money into weaponized political money: Executive Order 6102.

Signed on April 5, 1933, U.S. President Franklin Delano Roosevelt required all persons holding more than five ounces of gold to deliver their “gold coin, gold bullion, and gold certificates, now owned by them to a Federal Reserve Bank, branch or agency, or to any member bank of the Federal Reserve System.”

By outlawing the so-called “hoarding” of gold, Roosevelt intended to destroy gold as an everyday currency, transferring the purchasing power of gold to the U.S. government.

In exchange for Americans' gold, the government gave them Federal Reserve Notes at the exchange rate of $20 per ounce.

Soon thereafter, FDR devalued the Federal Reserve Note by 40% by resetting the exchange rate to $35, fleecing citizens who complied with the order.

Myths persist today about the likelihood of another gold nationalization. Given that the U.S. dollar is no longer backed by gold, it seems highly unlikely.

In 1933, the U.S. government was required to have gold in order to expand the volume of currency in circulation. Those days have long since passed, as there is no longer any (non-political) standard tied to the increase of America’s money supply.

In 1965, President Johnson passed the Coinage Act, removing silver from coins and replacing them with clad coins, a mixture of nickel and copper.

And finally, in 1971, President Nixon infamously ditched the Bretton Woods agreement and ended the ability of foreign central banks to convert their dollars back into gold at a fixed rate.

Removing gold backing from our paper currency completed the transition of a monetary system rooted in sound money to a purely fiat system, and this move sparked an explosion of debt and inflation.

The Once Mighty U.S. Dollar Is Coming Undone

It's technically incorrect to refer to the Federal Reserve Note as a dollar – the term “dollar” historically referred to a coin containing 27 grams of silver.

More and more people believe our once-stable medium of exchange to be a ticking time-bomb, fueled by inflationary policies wrought at the federal level.

Public support for reform is increasing, particularly at the state level where legislation has been knocking down barriers to getting out of the moribund Federal Reserve Note and into gold and silver.

This long descent of the dollar has come as no surprise; the federal government has been chipping away at its trust for decades.

Current “economic experts” are seemingly unable or unwilling to diagnose a simple and obvious problem. Jerome Powell, Chairman of the Fed, was rightfully lambasted for telling the nation that inflation was “transitory.”

For the past 100 years, we were assured that those in charge had the necessary tools to keep inflation from becoming a problem. All the while, the currency's purchasing power has fallen by more than 98%.

Today, inflation sits at a 40-year high of 8.3%, according to the latest Consumer Price Index reading. The true inflation rate is likely much higher.

Meanwhile, Bloomberg, one of the nation’s largest financial media conglomerates, recently published an article encouraging Americans to eat more lentils while foregoing medical needs for their pets as a way to combat the ravages of inflation.

In 2020, in classic “cure becomes worse than the disease” fashion, the Federal Reserve created $4 trillion in new currency units.

Since then, the Fed has continued to create money out of thin air to help finance the deficit, including part of President Biden’s latest budget proposal (estimated to cost around $5.8 trillion).

All told, 40% of the dollars currently in circulation were created in the past two years.

As Russia and countries worldwide continue to stockpile gold, and devise alternatives to trading in U.S. dollars, America should reexamine sound money principles.

It’s clear to see that America’s money unit has been dramatically losing value over time. Will the inflation problem become so obvious that Americans clamor to jettison the fiat currency altogether?

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Alabama Passes Sound Money Law, Expands Sales Tax Exemption Involving Gold and Silver

(Montgomery, Alabama - April 14, 2022) – With Governor Kay Ivey’s signature on sound money legislation today, Alabama has become the second state this year to expand its sales tax exemption involving gold and silver.

Alabama Senate Bill 13, championed by Sen. Tim Melson and Rep. Jamie Kiel, passed with unanimous support out of the Alabama Senate and then passed unanimously through the Alabama House before making it to the Governor’s desk.

In 2019, Alabama originally removed sales taxes from most gold, silver, platinum, and palladium coins and bars. This year, SB 13 clarified that the exemption covers all common forms of bullion, removed burdensome reporting requirements, and extended the sales tax exemption until 2028.

Backed by the Sound Money Defense League, Money Metals Exchange, and in-state supporters, SB 13 now fully ensures that Yellowhammer State citizens cannot be penalized with taxation when acquiring the monetary metals for investment, to protect their savings from the ravages of inflation, or any other reason. Stefan Gleason, President of Money Metals Exchange, explained the importance of extending the existing sales tax exemption on precious metals: “Many states surrounding Alabama (Georgia and Florida) have cultivated pro-sound money environments, eliminating sales taxes on gold and silver. Alabama savers and investors are thankful that the legislature expanded and extended the state’s exemption.”

Alabama follows Virginia which had only days earlier expanded and extended its own sales tax exemption involving the monetary metals earlier this month.

Including Alabama, 41 U.S. states now fully or partially exempt gold and silver from the sales taxes. That leaves 9 states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note.

Jp Cortez, policy director for the Sound Money Defense League, noted that SB 13 is part of a growing nation trend. “Tennessee and Mississippi, both states that border Alabama, have been considering the elimination of sales taxes on gold and silver. So are Alaska, Hawaii, and New Jersey.”

States are removing sales taxes from monetary metals for the following reasons:

Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. States do not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments, so it makes no sense to tax monetary metals.

Levying sales taxes on precious metals is illogical because gold and silver are inherently held for resale. Sales taxes are typically levied on final consumer goods. But precious metals are inherently held for resale, not “consumption.”

Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers in states with precious-metals sales taxes often take their business to neighboring states that have eliminated or reduced sales tax on precious metals. Coin conventions also tend to avoid the sales tax states.

Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us – including pensioners, those on fixed incomes, wage-earners, savers, and more.

The Sound Money Defense League, a non-partisan, national public policy group working to restore sound money at the state and federal level and publisher of the Sound Money Index.

Money Metals Exchange is a national precious metals investment company and news service with more than 500,000 readers and 350,000 customers. It also operates Money Metals Depository for vaulting of gold and silver and Money Metals Capital Group, a collateral lending institution.

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Virginia Ends All Taxes on Purchases of Gold and Silver

(Richmond, Virginia - April 12, 2022) - By signing sound money legislation last night, Virginia Governor Glenn Youngkin has ended Virginia’s discriminatory practice of assessing sales taxes on smaller purchases of gold, silver, platinum, and palladium bullion and coins.

Virginia’s House Bill 936, originally introduced by Del. Amanda Batten, was considered by multiple House and Senate committees before passing overwhelmingly out of both chambers and reaching the governor’s desk.

Virginia had been one of only seven states in the United States maintaining merely a partial sales tax exemption on purchases of precious metals. Virginia’s regressive practice of taxing only purchases under $1,000 singled out small-time savers for a tax penalty that larger gold and silver purchases do not face.

By enacting HB 936, Virginia has set an example for legislators in California, Connecticut, Florida, Massachusetts, Maryland, and New York, where smaller-sized purchases (under $500, $1,000, or $1,500) of precious metals are still hit with sales taxes.

The full Virginia sales tax exemption on the monetary metals will take effect on July 1 and remain in effect until at least June 30th, 2025.

Meanwhile, full exemption bills are pending in Alabama, Hawaii, New Jersey, and Tennessee, as the national backlash against taxing constitutional money accelerates in today’s environment of rising inflation and geopolitical conflict.

Including Virginia, 41 U.S. states now fully or partially exempt gold and silver from the sales taxes. That leaves 9 states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note.

Jp Cortez, policy director for the Sound Money Defense League, explained that “by eliminating sales taxes on purchases of precious metals under $1,000, a huge impediment has been removed to storing one’s wealth in gold and silver.”

In her testimony in support of the bill, Del. Batten explained that it doesn’t make sense for someone to make large purchases of gold and silver tax free, but someone who wants to invest a smaller amount is punished with a tax… a tax which targets those who can afford it the least.

“Inflation has become an undeniable problem due to financial mismanagement by the Federal Reserve and by the politicians in Washington DC. Thankfully, both large and small investors in the Old Dominion can now protect the purchasing power of their wealth with sound money without being taxed,” said Money Metals Exchange president Stefan Gleason, whose company has helped lead sound money policy efforts.

States have been removing sales taxes from monetary metals for the following reasons:

Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. States do not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments, so it makes no sense to tax monetary metals.

Levying sales taxes on precious metals is illogical because gold and silver are inherently held for resale. Sales taxes are typically levied on final consumer goods. But precious metals are inherently held for resale, not “consumption.”

Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers in states with precious-metals sales taxes often take their business to neighboring states that have eliminated or reduced sales tax on precious metals. Coin conventions also tend to avoid the sales tax states.

Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us-including pensioners, Virginians on fixed incomes, wage-earners, savers, and more.

The Sound Money Defense League, a non-partisan, national public policy group working to restore sound money at the state and federal level and publisher of the Sound Money Index. Money Metals Exchange is a national precious metals investment company and news service with more than 500,000 readers and 350,000 customers. It also operates Money Metals Depository for vaulting of gold and silver and Money Metals Capital Group, a collateral lending institution.

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Currency Wars Center on Russia’s Gold

In response to Russia’s war on Ukraine, the U.S. and G-7 countries have launched a currency war against the Kremlin. Sanctions imposed on the Russian central bank have effectively blacklisted the country from the U.S. dollar-dominated global financial system.

Now the Biden administration is attempting to prevent Russia from using gold as an alternative medium of exchange.

Last week, the Treasury Department declared, “US persons are prohibited from engaging in any transaction – including gold-related transactions – involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation or the Ministry of Finance of the Russian Federation.”

In recent years, Russia has significantly increased its gold reserves.

It currently possesses the fifth largest stockpile in the world, worth an estimated $140 billion.

U.S. officials want to prevent Russia from selling gold in order to fund its war machine. But Russian officials seem more inclined to take gold in lieu of dollars as payment in international trade.

Russia declared that “unfriendly” countries must now pay for Russian gas and other products in rubles or in gold – a move that boosted the value of the beleaguered currency.

Moscow is even considering adopting Bitcoin as an alternative means of payment in international trade, according to reports.

“If they want to buy, let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us, this is the national currency [Russian rubles],” said Pavel Zavalny, chairman of the Russian Duma Committee on Energy.

Zavalny is also urging China to de-dollarize and switch to settlements in gold, rubles, or yuan.

China, India, and the Far East are pivotal players in the global currency wars. If they opt out of the increasingly expansive U.S. sanctions regime, a new bipolar monetary order could emerge.

Global confidence in the Federal Reserve Note “dollar” as world reserve currency is rapidly eroding.

If the U.S. can suddenly declare that it is freezing the dollar assets of a major foreign central bank and banning their gold from circulation, a lot of other countries will be worried they might be next to get blacklisted. They will naturally want to have a Plan B in place.

It is impossible to predict exactly how the erupting currency wars will reshape the global monetary system.

One possibility is that gold will play a much more prominent role than before.

Ever since the U.S. rescinded gold convertibility in 1971, the fiat “dollar standard” has been in force – backed implicitly by oil and the promise of Saudi Arabia and other OPEC producers to accept dollars as payment.

The petro-dollar is now at risk of losing its hegemony. While the U.S. has historically been able to use its financial and military might to keep Middle Eastern countries in line, it may be overplaying its hand in trying to force the entire world to shun Russia.

As with waging any war, however justified it may be, there will be blowback. The overt weaponization of the financial system against Russia will result in counterattacks directed at the Federal Reserve Note.

A currency’s value cannot be maintained through force alone. Plenty of dictatorships throughout history have gone down the economically ruinous path of hyperinflation.

America’s recent inflation spike may be an ominous sign of what’s to come.

Got gold (and silver)?

[soundmoneydefenseleague]

Washington Enters Full Scapegoat Mode for Brewing Inflation Disaster

First It Was “Transitory,” Then a Sign of Recovery, Then Corporate Greed, Now It’s Vladimir Putin’s Fault!

First, they said inflation was transitory. Then when that line became untenable, they said inflation was a sign of a recovering economy. Then when polls showed most Americans believed they were losing ground financially, the White House blamed corporate greed. Now they’re saying it’s all Vladimir Putin’s fault.

Another volatile week of trading saw precious metals markets rally to new highs for the year on Tuesday before suffering a sharp drawdown on Wednesday and more selling on Friday.

Metals markets are wrestling with the risks of supply disruptions caused by war and sanctions. They are also weighing shifting Fed rate hike expectations and growing inflation pressures.

On Thursday, the government released the latest Consumer Price Index report. And it was another doozy.

News Anchor: The latest report on inflation was released. It was higher than expected. Increases in gasoline, housing and food were the largest contributors to that rise.

Bertha Cooms (CNBCC): We saw inflation hitting a fresh 40-year high, the Consumer Price Index coming up about eight tenths of a percent for the month of February. That puts consumer inflation at 7.9% year over year.

Stuart Varney (Fox Business): Speaking for the president, Jen Psaki blamed it all on Putin, ignoring the fact that gas and oil prices were rising way before Ukraine was invaded. The president blames Putin and the oil companies.

That was Stuart Varney of Fox Business there at the end.

The inflation blame game as played by politicians ignores the root causes of price increases.

First, they said inflation was transitory. Then when that line became untenable, they said inflation was a sign of a recovering economy. Then when polls showed most Americans believed they were losing ground financially, the White House blamed corporate greed. Now they’re saying it’s all Vladimir Putin’s fault.

But Putin didn’t force Uncle Sam to run up an accumulated debt load of over $30 trillion. Nor was it his idea for the Federal Reserve to hold interest rates near zero and launch trillions of dollars’ worth of Quantitative Easing programs.

Years of ultra-loose fiscal and monetary policies are now bearing the ugly fruits of a depreciating currency.

Mainstream economists repeatedly told us not to worry about inflation because money velocity remained low and technology would continue to drive greater cost efficiencies.

Technology has made things like televisions cheaper and better over time. But it hasn’t made essentials like food, fuel, housing, and healthcare more affordable. In fact, these costs are rising faster than average wages.

According to the CPI report, gasoline costs are up 38% over the past year. Meat prices are up 13%. New cars cost 12% more on average. And electricity bills are running 9% higher for the typical household.

And according to some alternative measures of inflation, price increases are even more severe than what’s being reported officially.

The American Institute for Economic Research puts together what it calls the Everyday Price Index. Based on its 24 components, Everyday Prices are up 9.5% from a year ago. The biggest contributors to the higher reading on the index were food and energy.

Meanwhile, the ShadowStats Alternate Inflation Index shows a whopping 16% year-over-year jump in consumer prices. That’s double the headline CPI number!

Even more alarming is that none of these data sets account for the spikes seen in energy and agricultural futures so far this month. When the March data come out, the inflation picture could look even worse.

Until recently, precious metals markets have lagged behind inflation.

The inflation run-up began after the COVID crash of 2020 as Congress and the Fed began flooding the economy with liquidity. In the early stages, there were a lot of disbelievers and a lot of apologists for the Fed’s “transitory” inflation pronouncements.

But now everyone, including even politicians and central bankers, recognize that inflation has become a problem.

We are now also likely entering the recognition stage of a precious metals bull market. More investors now recognize that they need to protect against purchasing power losses – and that stocks, bonds, and cash won’t suffice.

Bullion dealers including Money Metals Exchange are seeing huge buying volumes, including from newcomers to precious metals.

Still to come may be the panic phase, or mania phase, of the gold and silver bull market. That’s when fears of inflation, of shortages, and of just plain missing out on the bull run, drive parabolic price increases.

The last great mania in precious metals began in the late 1970s and peaked in January 1980. While gold has since taken out those highs in nominal terms, it likely has much further to run in real terms – especially when measured against paper assets such as stocks.

Silver remains depressed in both real and nominal terms compared to its former bull market highs. When it starts getting pressured to the upside in a significant way, it could make gold’s percentage gains look modest by comparison.

The biggest moves in these assets typically occur toward the end their bull markets. That can make knowing whether to sell or to keep hanging on after seeing large gains difficult. Getting out at the exact top will be next to impossible.

Prudent investors don’t try to pick tops or bottoms. They average into their positions while prices are attractive. And they consider selling parts of their holdings over time as prices meet their objectives – or as other asset classes start looking more attractive.

Money Metals is happy to buy back from customers at any time. But given how severe, and growing, the inflation threat has become, and given how early gold and silver are in their breakout rallies, investors might be better advised at this time to continue accumulating physical bullion.

[soundmoneydefenseleague]

Meet the World-Famous Astronomer Who Was Also a Wicked Smart Economist

The greatest “Renaissance Man” of the 15th Century was indisputably Leonardo da Vinci (1452-1519). His interests encompassed painting, engineering, architecture, anatomy, sculpture, and more.

Two decades after Leonardo’s birth, another polymath was born who could rightfully lay claim to “Renaissance Man” of the 16th Century. His name was Nicolaus Copernicus (1473-1543). His interests included astronomy, mathematics, theology, medicine, and politics. He is best known for inaugurating the “Copernican Revolution”—a monumental paradigm shift away from the Ptolemaic perspective of the heavens (with Earth at the center) to the heliocentric model.

Copernicus correctly postulated that the Sun was at the core of the solar system, not Earth. Confirmed a century later by the observations of another “Renaissance Man,” Galileo Galilei, the heliocentrism of Copernicus forever transformed astronomical science. It is believed he was also the first to assert that the Earth rotates on its axis once every 24 hours.

This much you might remember from your high school science classes. But did your teachers tell you that Copernicus also made astute contributions to the field of economics, two centuries before it emerged as a science of its own in Adam Smith’s The Wealth of Nations?

German and Polish scholars differ on the nationality of Copernicus. He lived in a German-speaking territory (later to be Prussia) but one that at the time belonged to Poland. The man himself was of mixed Polish-German extraction and spoke both languages.

Polish or German or Polish-German—take your pick—Copernicus authored several treatises on matters economic. Arguably his two most insightful are The Meditata, published in 1517, and On the Principle of Coining Money, published in 1526. He opened the latter with this remarkable paragraph:

Although there are countless scourges which in general debilitate kingdoms, principalities, and republics, the four most important (in my judgment) are dissension, mortality, barren soil, and debasement of the currency. The first three are so obvious that nobody is unaware of their existence. But the fourth, which concerns money, is taken into account by few persons and only the most perspicacious. For it undermines states, not by a single attack all at once, but gradually and in a certain covert manner.

Four centuries later, whether he realized it or not, British economist John Maynard Keynes echoed Copernicus when he famously wrote,

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

The Austrian School economist Murray Rothbard noted that Copernicus became interested in economics when Poland’s King Sigismund I asked him to construct a currency reform. Marcin Chmielowski, vice president of the Foundation for Freedom and Entrepreneurship in Katowice, Poland, tells me that economics likely stirred him much earlier.

“He came from a merchant family and had been dealing with topics of money, bullion prices, and other commodities since he was a child,” says Chmielowski. “He was also the administrator of church properties in Frombork and participated in conventions where economic issues were discussed.”

Soaring prices resulting from the widespread debasement of coins captured the attention of Copernicus in the early 1500s. Governments usurping the market function of providing a medium of exchange (and then ruining it) is an age-old problem. Even the ancient prophet Isaiah had condemned it when he chastised the Israelites with these words: “Thy silver has become dross, thy wine mixed with water” (Isaiah 1:22). All over war-torn Europe in the 16th Century, governments were cheating their people by reducing the precious metal content of their currencies.

“The greatest and most forbidding mistake has to be when a ruler tries to make a profit from the minting of coins by introducing and circulating new coins with an inferior weight and fineness, alongside the originals, and claims that they are of equal value,” Copernicus wrote. “Money loses its value most of all through excessive abundance.”

The problem of soaring prices was not the currency itself, but the rulers who were debauching and multiplying it. In his words,

But if they will have regard for the common good, they will surely be unable to deny that sound money benefits not only the state but also themselves and every class of people, whereas debased coinage is harmful…For we see that those countries flourish the most which have sound money, whereas those which use inferior coinage decline and fall.

He did not identify it as such, but Copernicus observed what later became known as the quantity theory of money—the observation that changes in prices correspond to changes in the money supply. It’s a crude generalization but a useful one, though Austrian economists later pointed out that subjective valuations by consumers play a more significant role in prices and the value of money than the quantity of money alone. “The dearness of everything,” wrote Copernicus, “is the result of the cheapness of money, for prices increase and decrease according to the condition of the money.”

What economists today label “Gresham’s Law” was foreseen by Nicolaus Copernicus decades before it was identified by the financial advisor to Britain’s Queen Elizabeth I, Sir Thomas Gresham. It is commonly expressed as “bad money drives out good money,” a phenomenon that occurs when governments issue a debased coin to circulate alongside a better one. Copernicus pointed out that when Prussia minted two coins of the same face value but with different portions of precious metal, people would spend the overvalued coin and hoard the undervalued one.

Older Americans should know this law of economics from personal experience. Our dimes, quarters and half-dollars were 90 percent silver until 1965, when the silver content was removed from dimes and quarters and cut to just 40 percent in half-dollars (and then removed entirely in 1969). Coins minted in 1964 and before were hoarded or melted down while people spent the debased ones. If you have two quarters in your pocket, a 90 percent silver one dated 1964 and the other dated 1974 containing no silver at all, which one are you going to stick in the vending machine? 

To be fair to the Greeks, Copernicus was not the first to notice that bad money drives out good money. The Athenian playwright Aristophanes wrote about it in Athens in the 5th Century B.C. (See Gresham or Copernicus? by Bernard Ziffer.)

Incidentally, Poland’s King Sigismund I took Copernicus’s advice to heart. He took action to restore sound money and according to Abdullah Bin Abbas, “he recognized and cited Copernicus’ works, earning him widespread repute and acclaim.”

Mikolaj Pisarski is president of Instytut Misesa (Mises Institute-Poland) in Wroclaw. I asked him to assess the historical impact of Copernicus. He responded as follows:

His legacy as an economist is closely tied to Polish history. Not only was his masterful Treatise on Coin drafted under literal fire, while Copernicus himself commanded the defense of besieged Olsztyn during the Polish-Teutonic War, but with it, he achieved what many economists today may never dream of: it was widely read and put into practice both in Prussia and Poland. The memory of Copernicus the economist was preserved even under 20th Century communism when his face was ironically put on a 1,000 złoty bills—one of the symbols of the Polish People’s Republic.

Nicolaus Copernicus lived in an age of government monopolies over money. He may have taken that fact for granted without imagining that free markets and competition could serve mankind’s monetary needs better than politicians. But he certainly grasped some vital points, namely these: Sound money requires limitations on its quantity. Debasing the coinage causes prices to rise and good money to disappear from circulation. And the guilty party in the erosion of money’s value is invariably a dishonest government.

For Additional Information, See:

The Meditata by Nicolaus Copernicus

An Empirical Discussion of Monetary Policy by Abdullah Bin Abbas

Gresham or Copernicus? by Bernard Ziffer

Treatise On the Minting of Coin and Copernicus Views on Economics by Leszek Zigner

Monete Cudende Ratio – Essay on the Coinage of Money by Nicolaus Copernicus

Copernicus’ Secret: How the Scientific Revolution Began by Jack Repcheck

A More Perfect Heaven: How Copernicus Revolutionized the Cosmos by Dava Sobel

This article originally appeared at FEE.org

[soundmoneydefenseleague]

Idaho House Vote for Potential Gold and Silver Allocation to Hedge State Funds

Boise, Idaho (February 17, 2022) -- The Idaho State House today overwhelmingly approved a bill which enables the State Treasurer to protect state reserve funds from inflation and financial risk by holding physical gold and silver.

State representatives voted 55-14 to pass House Bill 522, the Idaho Sound Money Reserves Act, sending the measure introduced by Representative Ron Nate (R-Rexburg) to the Senate for a hearing.

Supported by Idahoans and groups such as Sound Money Defense League, HB 522 would permit – but not require – the State Treasurer to hold some portion of state funds in physical gold and silver to help secure state assets against the risks of inflation and financial turmoil and/or to achieve capital gains as measured in devaluing Federal Reserve Notes.

Speaking on the house floor, Rep. Nate noted, “Idaho’s current investments are comprised almost entirely of debt instruments with a negative real yield, plus they have a default risk. That’s risk without reward. We need to give our Treasurer another tool in the toolbox, the option to hold gold and silver, to protect taxpayer funds.”

The State Treasurer currently has few options for holding, managing, and investing Idaho’s “idle moneys.” Due to statutory constraints, Idaho’s reserves are invested almost exclusively in low-yielding debt paper that carries counterparty risk while its value is diminished by inflation.

In a recent Idaho Statesman column, Stefan Gleason, president of Idaho-based Money Metals Exchange, explained that “the Idaho State Treasurer’s office today has upwards of $10 billion in assets under management – the value of which is rapidly bleeding away through negative real interest rates.”

“That’s because the state reserves are principally invested in low-interest debt paper, e.g., U.S. Treasuries, money market funds, corporate debt, repurchase agreements, and other dollar-denominated debt,” Gleason continued.

Responding to growing concerns about rising government debts and Federal Reserve money printing, Ohio recently followed Texas in acquiring a 5% physical gold holding in its public pension funds. Oklahoma is among other states currently considering bills like HB 522.

Jp Cortez, policy director of the Sound Money Defense League, said, “Inflation has reached every Idaho home to the tune of at least 7%, which means that the real annual rate of return for Idaho taxpayers on its $10 billion in ‘idle moneys’ is deeply negative, perhaps greater than $500 million.”

HB 522 adds the authority to hold physical gold and silver directly and in a manner that does not assume the counterparty and default risks involved with other state holdings. HB 522 bill does not grant any authority to buy stocks, futures contracts, or other gold-based proxies or financial instruments. There are at least four depositories in the region that would be eligible to hold Idaho’s gold and/or silver.

“An allocation to physical gold and silver fits squarely within the objective of protecting Idaho taxpayer funds against financial risks and the monetary metals would logically be included in a list of safe investment options,” said Gleason. “Gold and silver can provide a hedge against inflation, debt default risks, and stock market declines – and have historically boosted investment returns while also reducing volatility.”

House Bill 522 can be heard before the Senate State Affairs Committee as early as next week.

The Sound Money Defense League is a public policy group working nationally to promote sound money policies, including reaffirming the constitutional role of gold and silver as money.

[soundmoneydefenseleague]

SMDL Policy Director Jp Cortez Testifies Before TN Committee on Sound Money Measure

The state of Tennessee has considered sound money legislation in each of the last seven years. Championed by Rep. Bud Hulsey, HB 1874 would finally remove the sales tax on gold and silver coins and bullion currently levied in the Volunteer State.

At a hearing yesterday in Nashville, Jp Cortez, policy director of the Sound Money Defense League, testified on behalf of sound money advocates and precious metals investors across the state, in support of HB 1874.

Written testimony (slightly different from spoken testimony) is below:

Chairman Hicks, members of the Finance, Ways, and Means House Subcommittee, thank you for the opportunity to testify before you today.

My name is Jp Cortez and I am the policy director for the Sound Money Defense League. I ask you to please vote YES on House Bill 1874, a measure that removes sales taxation from gold and silver coins and bullion.

Just two months ago the Tennessee Advisory Commission on Intergovernmental Relations released a report on the feasibility of creating a state gold depository.

While the report concluded that a bullion depository would not be feasible in Tennessee at this time, TACIR pointedly concluded that the state should consider a sales tax exemption from precious metals coins and bullion.

There is a national trend to remove sales taxation from precious metals. According to TACIR’s report, 42 states have already done so in whole or in part. Mississippi, Hawaii, Kentucky, and New Jersey are expected to consider measures to remove sales taxation from precious metals in the upcoming weeks.

Tennessee has considered measures similar to House Bill 1874 for seven years. While it has failed so far to pass this common sense measure, six other states have ended the practice of taxing precious metals over the same amount of time. (WV, OH, LA, NC, KS, AR)

Under current law, Tennessee citizens are discouraged from insuring their savings against the devaluation of the dollar because they are penalized with taxation for doing so. House Bill 1874 removes the disincentives to holding gold and silver for this purpose. Here are a few reasons why I strongly urge you to vote YES on House Bill 1874:

-Taxing gold and silver is a de facto investment penalty on Tennessee citizens (usually of humble means) who seek to hold some of their savings in real assets that are insulated from inflation and financial turmoil. It’s also discriminatory, because purchases of stocks, bonds, mutual funds, ETFs, real estate, and every other financial instrument are not subject to sales tax.

From the TACIR Report:  “Anyone buying and storing precious metals in Tennessee owes Tennessee’s sales tax, and state and local rates combined can be as high as 9.75%”

-Purchasers of precious metals are not “consuming” them, making a sales tax and/or use tax inappropriate in the first place. Precious metals purchasers are holding these metals for resale or exchange, like a currency or investment.

The exchange of one dollar for four quarters is a nontaxable event. Exchanging dollars for the only form of money mentioned in the U.S. Constitution should not be taxed.

Taxing the purchase of monetary metals also undermines Tennessee businesses (and reduce Tennessee state revenues). Many Tennesseans will buy and/or store their precious metals in nearby Alabama, Georgia, Missouri, North Carolina, and Virginia, which do not charge sales tax on precious metals. 

Studies have shown that states actually lose revenue when they tax the purchase of gold and silver. Washington and Nebraska considered repealing longstanding exemptions on precious metals in their states but legislators realized the major policy error this would entail and the measure didn’t make it out of committee in either state.

Louisiana and Ohio both briefly imposed a sales tax on precious metals recently – but the legislatures in both states quickly reversed course after one year when businesses, coin conventions, and state revenues left the state.

That’s why any revenue collected from precious metals sales taxes would almost certainly be surpassed by the tax revenue lost from coin conventions, businesses, and other economic activity leaving the state.

By voting yes on House Bill 1874, you will be following an example set by 42 other states which have already reduced or eliminated sales taxes on precious metals, honoring the only form of money mentioned in the U.S. Constitution, and lowering the tax burden on your constituents.

[soundmoneydefenseleague]

[soundmoneydefenseleague]

State Reserve Funds Are Dangerously Exposed to Inflation

The recent explosion in inflation rates caused by runaway debt-funded federal spending and Fed money printing has sparked renewed interest in state legislatures in the role gold and silver play in hedging against systemic risks.

With expanding concerns about financial leverage, debt defaults, volatility, and an erosion in purchasing power of the Federal Reserve Note “dollar,” Ohio, Arkansas, West Virginia, Wyoming, Louisiana, and Arizona recently joined dozens of other states in removing tax penalties on buying, selling, and holding gold and silver.

Meanwhile, several states are considering an allocation of state funds to the monetary metals – a way to hedge their investments in fixed income and other assets vulnerable to inflation.

Ohio recently followed Texas in making a 3-5% gold allocation in its public pensions, and New Hampshire, Oklahoma, Wyoming, and Idaho are examining legislation right now to empower state treasurers to hold gold and silver as reserve assets.

By way of example, the state treasurers in both Oklahoma and Idaho each have $10 billion in taxpayer funds under management – the value of which is rapidly bleeding away through negative real interest rates.

That’s because these two states – like most states – have invested almost exclusively in low-interest debt paper, e.g., U.S. Treasuries, money market funds, corporate debt, repurchase agreements, and other dollar-denominated debt.

Substantial debt-paper holdings carry both counterparty risk and low nominal yields. With inflation now running at 7% (at least), the real rate of return for taxpayers is deeply negative, perhaps greater than 5% negative.

A reserve fund with the objective of maintaining the value of principal ought to include an allocation to the money actually prescribed to the States in Article 1, Section 10 of the U.S. Constitution, i.e. gold and silver.

The monetary metals help preserve purchasing power over the medium to longer term and have a low correlation to other assets, providing important diversification and financial insurance.

Gold and silver are liquid, traded around the clock at full market value, and don’t suffer from negative interest rates.

The financial security precious metals provide is part of the reason central banks around the world hold them on their balance sheets (with Russia, China, Germany, France, Hungary, Serbia, Thailand all known to have bolstered their holdings in recent months).

Idaho House Bill 522 (introduced by Rep. Ron Nate, who holds a doctorate in economics) and Oklahoma House Bill 3681 (introduced by Rep. Sean Roberts) would permit — but not require — the treasurer to hold a portion of funds in the monetary metals to hedge against the risks of inflation, financial turmoil, and debt default while potentially securing capital gains.

The treasurers’ new authority would be limited to holding gold and silver directly and without the counterparty risks inherent in virtually all other state holdings.

Rep. Ron Nate of Idaho is a leader on the sound money issue.

That’s why both the Idaho and Oklahoma bills do not empower treasurers to invest in electronic instruments, futures contracts, or other gold and silver derivatives. The authority is confined to physical gold and silver, directly owned by the state, insured, unencumbered, and stored in secure bailment.

It’s as prudent as ever to provide state treasurers with options to hedge against the accelerating inflation that’s been foisted upon savers, wage-earners, retirees, and the states themselves by short-sighted politicians and central bankers in Washington, D.C.

States are likely to pay a high price if they fail to diversify into gold and silver. Inflation is the match that threatens to set the states’ big piles of negative-yielding debt paper on fire.

[soundmoneydefenseleague]

Jp Cortez joins Eric Brakey on Free America Now! to discuss sound money legislation

Jp Cortez joins Eric Brakey on Free America Now! to discuss sound money legislation

Jp Cortez, Policy Director for the Sound Money Defense League and lead author for the Sound Money Index, joins Free America Now to discuss the actions state legislatures can take to fight inflation and defeat the Federal Reserve.

https://www.podbean.com/ew/pb-73gch-1197443

Twitter: https://twitter.com/SenatorBrakey

 -----------------------------

TRANSCRIPT:

Eric Brakey:

Lockdowns, mass surveillance, forever war, is this still the land of the free? It will be again. I'm Eric Brakey, and it's time to Free America Now, because an idea whose time has come cannot be stopped by any army or any government. Hello friends. This is what Joe Rogan says. I guess I got to come up with my own opening catchphrase is, "Hello and welcome everyone." That's what I usually say. I don't know. Maybe that works.

Eric Brakey:

Anyway, this is Eric Brakey, your renegade statesman host of Free America Now. Welcome to episode 104. It is Wednesday, February 2nd. I'm so glad to have you here, and I'm looking forward to introducing you to our guest today for today's free-range conversation on how to free America.

Eric Brakey:

Today we're going to be talking about sound money, particularly what can be done on the state level to promote sound money policies, to combat the tyranny of the Federal Reserve and fiat currency with someone who is really established himself as an expert on this. His name is Jp Cortez. He is the policy director of the Sound Money Defense League. He's also the lead author of the Sound Money Index which is an annual report that ranks states on their pro-sound money policies.

Eric Brakey:

He's got over a dozen victories as far as legislation goes in a dozen different states since 2018. So, he's become quite a recognized expert on this and is published in a lot of places from Business Insider to the Huffington Post, Newsweek, Washington Examiner, our friends at the Mises Institute, and the Foundation for Economic Education plus more. Anyway, we're going to have a great conversation today. Hey, Jp. Welcome to Free America Now.

Jp Cortez:

Hey, Eric. Thanks for having me on.

Eric Brakey:

Hey, pleasure's all mine. So, I'm trying to think where to begin here. I know, for myself personally, this is a very important issue. I think it should be an important issue for anyone who cares about the economy, anyone who cares about being able to earn a paycheck, put your savings away, and have the value of your savings still be there rather than inflated away and stolen by those who just print the money and devalue the currency.

Eric Brakey:

And it's always been a hard topic I think. We can talk about so many solutions and things that can be done on the federal level to promote sound currency and sound money. I mean, Ron Paul has advocated in the past for auditing the Federal Reserve and ending the Federal Reserve and legalizing competing currencies and restoring the gold standard.

Eric Brakey:

But these I think on a state level and, of course, with Young Americans for Liberty, we're focused so much on electing state legislators. Sometimes it feels hard to know what you can do from your state capital to make an impact on these issues. We can try to shake Washington DC and get them to do the right thing, but they don't seem inclined to do that. So, what can we do from the state level, and I know you've been doing a lot of work on this over the years.

Jp Cortez:

Yeah. Yeah. And it's been a lot of fun. It's been really fulfilling, and the truth is that there's so much that can be done. Like you just said, the problem largely starts on the federal level, right? The Federal Reserve and unelected bureaucrats largely control and manipulate the value of our money.

Jp Cortez:

But the reality is that states don't have to be a victim to this. They don't have to go along with this, and there are things that they can do to mitigate some of this damage. More generally, this approach, this state-based approach to bringing about change, to me is it's the most effective way to do it. Like you mentioned, the federal process is gridlocked it's assess poll. These are people that largely don't get much done.

Jp Cortez:

And so, to enact change on a state level, I'm a huge supporter of what YAL has done in that regard. And it's the same approach that we use because while we have introduced federal legislation, while we've worked on federal bills, the most change that we've seen, the victories that we've seen largely come from state battles. And so... sorry, go ahead.

Eric Brakey:

No, I was just going to ask you... yeah, it's echoing I think a lot of what you're saying there. Yeah, I think you're absolutely right. I feel like Washington DC and Congress is always, we always think that solutions have to come from there particularly these policy areas that we tend to think. Well, that's not a state responsibility but Congress... I don't know.

Eric Brakey:

Sometimes I wonder how much we really have representative government in Congress. It seems like the elected officials, they are just a sideshow. It's a circus to keep us all just distracted, fighting about the inconsequential issue of the day while the biggest decisions like war and monetary policy are determined by people we never voted for, we never elected-

Jp Cortez:

Exactly right.

Eric Brakey:

... or not accountable to us. And so, we could feel powerless to make change on the federal level, but the states can stand up. What are some of the specific policies that you guys have been advocating for states to enact to promote this?

Jp Cortez:

Yeah. So, the idea in general is that we would like to remonetize constitutional sound money, and that is gold and silver. And the best way to do that, that we have found, is largely by remonetizing it, right? The reason that people don't use gold and silver today, there are obviously convenience factors and there's a digital age element to it. But largely the reason we don't use gold and silver in transaction today is because of the laws that surround its use.

Jp Cortez:

So, in nine states across the country, if you were to buy precious metals, you're hit with a sales tax. And then, on the federal level, when you sell your goods, you'll be charged to capital gains by the Feds. And then, in most states you'll be charged again by the state on that capital gain. So, you're hit with triple taxation in some cases. And so, it becomes unfeasible to use gold and silver in transaction.

Jp Cortez:

And so, what we're trying to do here then is to remove any of the impediments or the obstacles in the way to letting people buy, use, purchase gold and silver to store their wealth, their purchasing power, because inflation is this really insidious process by which hourly workers, people on fixed income, pensioners, savers, anyone trying to save money and plan for the future and plan for the future is harmed by this inflationary practice.

Jp Cortez:

And so, going around and removing all of the obstacles, all of the things that stand in the way of people being able to store their money in an inflation hedge that has served for thousands of years, that's what we strive for. So, the regulations, the taxes are a big one, gold and silver, sales taxes, and capital gains taxes.

Jp Cortez:

But it's not just that. That's how it works on an individual level or that's what's important to individuals. But as far as the states themselves, we've been encouraging states to opt out of this federal system and opt back into a constitutional system, and they can do that by bolstering their state funds in gold and silver, pension funds, taxpayer funds, reserve funds, trust funds. All of these funds are largely held in dollar-denominated debt. This is risky assets, volatile emerging world debt, and many times because of inflation, the real rate of return on these is negative.

Jp Cortez:

And so, it is astounding that many states, most states, 49 of them don't hold a single ounce of gold in any of their taxpayer funds when all of them talk about how the safety of the fund is important and the safety of principle is among the most important things. But here they are investing our money, our future, the livelihood of potentially tax payers for what or on what?

Eric Brakey:

Right. In a paper currency that is, by official numbers, losing 7% of its value in the course of the last year.

Jp Cortez:

That's what makes it... and that's the insane part that we've seen, and it happens slowly at first but then fast and all at once. And we're getting to that point where you can feel it, and it's not just the richer being harmed as I keep seeing the Washington Post or major publications talk about how the poor aren't really harmed by inflation. It's the rich that are. That is absolutely a backwards way to look at this. If you already can't afford food or medicine or rent and these things are going up, you're making it harder for people to live.

Eric Brakey:

Yeah. I've seen that. I've seen that line trotted out by a lot of the corporate press that inflation's actually good for people. It's good for the poor. It's good for the middle class, and actually it hurts the rich. And it's just like, you look at the fact... I know Ron Paul recently released a report. I don't know if you saw that, but I mean he released a really good report detailing the effects of inflation with those who earn less.

Eric Brakey:

Families that earn less than $40,000 a year tend to spend about 40% of their household income on items that have been most heavily hit by inflation, gasoline, groceries, heating oil, where families that make more than a hundred thousand dollars a year tend to spend only 10% of their income on these things. So, the wealthy... and also on top of that, wealthier families tend to have more of their savings in inflation-protected assets-

Jp Cortez:

There it is.

Eric Brakey:

... than poorer families do. And so, this is very much a regressive tax on the American people. It hits the poor and the middle class and even more perversely on top of all that, of course, when inflation is caused by just people running the printing presses, you got to ask, "Who's getting that money? Who's getting that new money?"

Eric Brakey:

And of course it's the wealthy special interest connected to the Washington DC political machine. They get the dollars first. They spend it into the economy. They buy up goods and services at pre-inflation prices, and the rest of us is that money circulates through the economy, when it finally reaches the end of us, we get those newly printed dollars and the prices have gone up on everything. So, it doesn't do us any good-

Jp Cortez:

Exactly.

Eric Brakey:

... and to the regular person.

Jp Cortez:

Exactly right. And it's not even that it doesn't do the regular person any good, it's that it actively harms the regular person. What you're describing here is called the Cantillon effect. I wrote an article about this a while ago that appeared on FEE, on the Foundation for Economic Education about how Richard Cantillon is probably the most important economist that you've never heard of.

Jp Cortez:

I believe it was the 1700s. He wrote a famous economic treaty called Essay. He named it Essay. In France, I think it's Essai of... whatever the French words are, but in English it's commonly known as just Essay. And he described this process that you have illustrated here that in central banks and monetary systems like the ones that... like the one that we live in today, money is printed or made to appear by the central bank, and it trickles out into the economy.

Jp Cortez:

But the first people who get it, the people who are closest to the disseminator of the money, get the most value, receive the most value from this new money. And by the time it reaches you, by the time it reaches me, prices have gone up, right? So, it's a great thing. I mean, I hope that people are happy with the $1,200 pandemic checks that they got, but the bill for that stuff was in the trillions.

Jp Cortez:

So, not only did American people get fleeced on as far as what spending and what the money went to, prices went up. So, even the money that... the little bit of the scraps that the American people did get were devalued and watered down by the price of everything going up.

Eric Brakey:

It is such, I think, such an important point and the shell game that was played with all the COVID, supposed COVID relief funds, right? The American people get $1,200 checks, but the cost to the average American person in taxes and inflation and debt is much more akin to like, it was some $9,000 per person.

Jp Cortez:

I think it was even more than that. And I don't know if you saw, I think it was yesterday, we officially hit $30 trillion in debt. And to be sure, the number is larger than that when you consider unfunded liabilities and all of the things that the promissory debt that is coming, but wow. That is, it is astounding and it's astounding how quickly it happened. A pandemic and a war and suddenly we went from 4 trillion or whatever it was to 30 trillion now.

Eric Brakey:

Yeah. I mean, I remember the Tea Party days back in 2010, that's when I got politically active for the first time. And we felt like the national debt as it approached, it must have been 12 trillion or something back then we thought that was a big number. We thought that was a lot of debt and unsustainable and, yeah, we certainly haven't reversed course. We've continued to pile on and-

Jp Cortez:

No, it's gotten worse. As these numbers get bigger, as the number goes from 4 trillion to 12 trillion to 30 trillion to a hundred trillion, these numbers begin to lose their meaning. They lose their purpose, right? So, when you can endlessly print money, you have no regard for the value of money or how the money is spent. And this moral hazard largely explains why these central banking systems fail or why they're no good.

Jp Cortez:

The people that are printing this money have no incentive to be cautious with it, to be frugal, to be thoughtful about how it's spent. And so, these are just arbitrary numbers and lines on a screen somewhere. So, "Go to town. Print trillions on a war. Print millions to study the effects of toad urine or whatever these wasteful, both foreign and domestic policies, are spent on."

Eric Brakey:

Yeah. Yeah, I mean I think even it is funny to me when I look back at like the 2008 bank bailouts, and that was $800 billion. Of course, the Federal Reserve and there was a lot of other stuff going on, but the package that Congress passed was $800 billion. And at the time in 2008, the American people were just jaws dropped at such a big number. $800 billion in bailing out the big banks. And there was so much uproar about it that the first vote didn't pass Congress. Congress was afraid to vote for it.

Eric Brakey:

And now, it seems quaint that we were flabbergasted by $800 billion. It's like every single spending package now in Washington DC that's proposed from Build Back Better to the supposed Infrastructure Bill, which I guess has just come out that apparently gives Pete Buttigieg the ability to install speed cameras across the United States to find the American people-

Jp Cortez:

Raise revenue.

Eric Brakey:

Yeah, yeah. Apparently, all of these big spending packages are just in the trillions and we've just become, I guess, that even the idea of a trillion dollars, it's just gotten to be so ethereal. So, it just doesn't feel like we're playing with real money anymore.

Jp Cortez:

And we aren't. And that's... you just nailed it on the head right there. We aren't playing with real money. The rules have changed. There is no need to be considerate or to be thoughtful of how money is spent when you have access to the printer.

Eric Brakey:

Yeah. So, I've always... so, I've long thought about... having been in my own state legislature, what are policies that we could do? So, if you look at Washington DC, I always say there's three ways that they get money from us. They steal directly from our paychecks with taxation. They steal from our futures with debt, and they steal from the value of our savings and our retirements and our kids' college funds, and then I guess also our paychecks with inflation.

Eric Brakey:

And I thought there are things we can do to combat the debt. I mean, people have proposed about passing a balanced budget amendment. There's always pros and cons and how you would exactly go about doing that, but that's one idea there. Stop, stop, stop the debt.

Eric Brakey:

I've been increasingly intrigued by ideas of tax nullification, which is basically if you had the states collect the federal dollars rather than sending it directly to the IRS and have the states review the federal budget and say, "You know what, we're going to send you the amount of money you say that we owe you based on what percentage of the federal budget we decide is constitutional." I think that would be very interesting.

Eric Brakey:

But of course, all of that is... if those are the only two problems we address and we do not address the ability of the federal government through the Federal Reserve to just print the money out of thin air and to steal value from our savings, then we might as well do nothing because that is... all three of those together are how they extract wealth from us.

Jp Cortez:

So, to that point, I actually, I heard Tom Woods say something recently about that that I hadn't really considered about how people largely, it doesn't even occur to people that these are problems that can be addressed on the state level. People largely think this is something that happens on the federal level, or it doesn't happen at all. And that doesn't have to be the truth.

Jp Cortez:

The states don't have to be a party to the monetary debasement. The states don't have to be a party to gun grabbing laws or any of these things where the federal government is coercing the states to be the bag holder for its policies that are generally unpopular. And the Feds don't even want to be the ones to enforce them, so they're forcing private businesses to do that on their behalf. The states don't have to put up with this.

Jp Cortez:

And so, the state legislature, and as someone who was as a member of the Maine State Senate, right, this is how change is made. These are the processes that cause change to actually happen, because the federal process is largely a waste of time today.

Eric Brakey:

Right. I think, we have parallel issue war. People had regarded for a long time that, "What do the states have? The states don't have any power. The states don't have any the influence. What can the state legislatures do?" All right. So, Congress keeps getting us into wars overseas that go on. They aren't following the constitution.

Eric Brakey:

So, we're just going to keep asking Congress to do the right thing, and 20 years in we're like, "Well, that hasn't worked." And so, you see a growing popularity across the country have Defend the Guard legislation which is sponsored in a whole slew of states over this past year movements of local people, local veterans standing up and saying, "If Congress isn't going to declare the wars, then the states are going to exercise their constitutional authority over the state National Guards to bring the troops home," which count for 50% of the troops serving overseas today. So, that would be a big deal.

Jp Cortez:

Yeah. That would be... yeah. That would be awesome. Excellent.

Eric Brakey:

Yeah. And so, that's a movement that's growing in popularity. That is something that is being done and fought for on the state level on an issue that people until recently generally regarded as something the states just mind their own business on and let Washington DC do their own thing or complain about what they're doing and how illegal it is what they're doing.

Jp Cortez:

Exactly. It doesn't even occur to people that these problems can be solved in places other than the federal level. And so, changing that opinion is a huge part of the success that we've had here. It sounds like Defend the Guard, and I know that there are other state-minded policy initiatives that are going state to state because they largely see the ineptitude and the lack of results from the Feds.

Jp Cortez:

But I think you touched on something here that I thought was super interesting. And I think... so, this idea that we've been told at least with things like money and war, that the experts know, that the experts are the ones making these decisions. They are highly educated. They are highly credentialed. And so, these are the people that should be making the decisions, and largely these are the only people that should have an opinion on these decisions. And that's not true.

Jp Cortez:

You can look around. You don't have to be a PhD in monetary econ to look around and look at how inflation over the last 10, 20 years has completely changed upside down the way Americans save, the way Americans spend, and so the effect that this has on the populous. Because, right, we can talk about this in monetary econ, and we can look at supply and demand curves, and we can look at Cantillon effects and all of that.

Jp Cortez:

But we also don't have look that closely at the esoteric quote, unquote science behind this. Just look around you, look at the world around you, look at what happens when you go to the grocery store and try to pick up meat, or when you go to the gas station and try to get gas, right?

Jp Cortez:

This is something that is affecting all of us and we're being gaslight largely into being told that it doesn't exist. So, at first there was no inflation, and then inflation was transitory. And now, we're being told that, "It's here to stay. But don't worry, it's good for you." It is insane what these people are doing.

Eric Brakey:

I think it is such an important, I guess, a much larger conversation this idea of how should we think of experts? And I'll say I'm all for experts. I think that, especially in the world that we live in today, we can't all be experts on everything. Specialization in fields of knowledge is very important, but when it comes to the experts who are selected and promoted by the government, there's a problem there, right?

Eric Brakey:

The experts who are promoted by the government are always going to... there's always going to be a selection bias. They're going to select experts who have a bias towards promoting government power. Of course, why would the government promote people who promote government power? Well, for obvious reasons.

Jp Cortez:

And there's the gatekeeping that comes with that, because it's not just that the experts are there. It's that no other experts are allowed either.

Eric Brakey:

Right, right. When you see what... I mean, when we look at... I guess, in the past this has been called like we think of the court historians. You go back into the 1500, and who wrote the histories? Well, tended to be the historians who the monarchy commissioned to write the history.

Eric Brakey:

And it's always a version of history where the monarchy is... the king is the hero and the government does all of the great things. And obviously there's a bias there when they're being commissioned by their employer to write a history that promotes the narrative that their employer wants.

Eric Brakey:

Well, of course, today we have that with court epidemiologists like Anthony Fauci. There's a reason why Anthony Fauci is the person we're told to listen to but not highly-credentialed experts like the authors of the Great Barrington Declaration, epidemiologists at Oxford and Stanford and Harvard who have just all the credentials, but they're not the ones promoted by the government because their solutions do not promote government power.

Eric Brakey:

Or of course, back into the realm that we're really talking about is the court economists are all the Keynesians, right? The whole Keynesians school of economics promotes a view on economics that requires robust government power essentially centrally planning the economy, centrally planning at least aspects of the economy, major aspects of the economy particularly the monetary supply which is half of every economic transaction that we ever participate in.

Eric Brakey:

But of course, the Keynesians are promoted by government because for obvious reasons, when the Austrian school is dismissed. Because the Austrian school says, "We don't need government centrally planning the money supply. We don't need government tinkering around in the economy. People are better at planning for themselves than central planners are at planning for us." And so, of course the government doesn't want the Austrians to be listened to.

Jp Cortez:

Of course not. And so, like you said, they have invested interest in making sure that the Austrian and the free marketers largely aren't listened to. And I think part of that, part of it I think is that I'm not sure that the money managers, the people in charge today understand, well, obviously they don't understand what money is and where it derives its value. But they don't understand the level that money impacts the world we live in and the way it takes shape, right

Jp Cortez:

So, outside of language, money is the single biggest communicative tool that we have between human beings, and there are people largely, and recklessly and irresponsibly manipulating and changing the value of this communicative tool to serve their needs, to serve their desires.

Jp Cortez:

And so, I think as wrong as that is morally, ethically, just as far as actual feasibility and how that plays out in political systems, the answer isn't to... the primary answer is not to make sure that you elect good politicians or even to make sure that you elect or that you pass good legislation. The answer I think is to remove the trust that's inherent in these institutions.

Jp Cortez:

Even good guys do... even good people do bad things. And the reality is that even if your person in office today is doing good things, there's a really strong chance that one day the person holding that office and holding that power won't do good things. And so, to create trustless institutions is going to be ultimately the larger answer, and gold and silver do that because there is no counterparty risk here.

Jp Cortez:

Gold has its value not based on what the government says, not based on Janet Yellen or Jerome Powell or Mnuchin or whoever is in charge. Gold is money. It's sound money because it's chosen by the market, not because some monetary wizard came and waved the wand declared something legal tender and now suddenly it has value.

Eric Brakey:

Yeah. And I just always find it fascinating the way in so many state and federal laws the way gold and silver are treated when you can open up the constitution and you can see like... I'm going to paraphrase this. I don't have the exact language in front of me, but the states are prohibited from issuing their own currency except for gold and silver. It's specifically there.

Eric Brakey:

It's like gold and silver have a special status in the constitution because they are. They have been for thousands of years, they have been used as currency. In fact, when we were under the Gold Standard in America, we had some of the most... it was one of the most prosperous times in our country with the fastest economic growth when people could count on the money being honest and not just devalued. And you didn't have to gamble everything in the stock market in order to try to preserve your wealth.

Jp Cortez:

Exactly right. And that introduces, that hits on something that I wrote about a while ago on what is the Keynesian trilemma, right? So, in inflationary systems like the one we exist... like the one we live in today, you're set with... you have three options ultimately. You can spend the money that you are being given today and try to get as much value out of it, because you know that it's being devalued so you're going to spend it immediately. That's option one.

Jp Cortez:

Option two is to save. You're taking a tax for that. There's a penalty for that because inflation is withering away your savings. So, you can save but have it come at a cost, or you can invest it in risky assets, try to play the casino, the stock market casino, and hope that you do well. All of these options are bad options.

Jp Cortez:

And this trilemma exists because this inflationary system forces people to spend. And when you have this monetary system that's predicated on money velocity and aggregate demand, you lose the fact that the amount of money's changing hands or the rate at which it change hands is not necessarily the important part here, right? There's infrastructure that has to take place. There's capital accumulation. There's saving.

Jp Cortez:

That is what raises levels of living, standards of living. That's what grows people out of prosperity, not debt-laden, credit-laden systems where money's being printed out of nowhere. You don't have to look far to see examples of how that has gone disastrously wrong. Today, even in the United States, that has gone wrong. There's a reason. It's not worth a Continental as the saying. America has hyperinflated a currency before, right? So, it isn't even to say that it can't happen here.

Eric Brakey:

Yeah. Have you ever read Brave New World?

Jp Cortez:

I haven't read Brave New World, but I've heard that it's great and that I should.

Eric Brakey:

I just think... I remember reading Brave New World and just feeling like, "This is the end of Keynesianism." It is weird to me how we... Keynesianism is treated like a form of capitalism, or it's treated or it's often thought of as, "This is what capitalism is." But really it's a form of hyper-consumerism. It's a form of or hyper... yeah.

Eric Brakey:

I mean, it is basically that we are manipulated through what they're doing to our money to put us on this consumer-hamster world where we've always got to be consuming more and more and more. I mean, you hear it today. Even when so many proposals are issued out there, it's like, "Well, yeah, we got to give money out to people, but those people are going to spend the money. And that's good for the economy. We want people spending the money and buying things and going shopping."

Eric Brakey:

And it's like, "Hey, I'm having access to all these great things in the world and consumer goods. I think that's wonderful." But the way that savings is discouraged. I think as you point out like, "This is how those in the lower class rise to the lower middle class and rise to the upper middle class. It's savings. If you don't save you can't accumulate wealth and you remain stuck."

Jp Cortez:

And then, you've got these yoo-hoos, your Paul Krugmans of the world that are pushing policies like that, that are going on the New York Times, talking about how disaster is good for an economy, that this stimulates spending. It's a good thing when towns are destroyed by natural disasters, or if an alien invasion would come, this would be good. This would stimulate spending. So, all of the destruction is ultimately a good thing.

Jp Cortez:

And Krugman and these yoo-hoos have obviously not read their Bastiat, have not been reading the Austrian literature, right, and then the broken window fallacy. It's staring at them right in the face, and they're unable to take off those Keynesian goggles and view the situation for what it is.

Eric Brakey:

Yeah. Yeah. And I look at not just our national debt as a country, but you look at all the credit card that exists. We've been manipulated by the monetary system to not save, to consume everything we have, and then some. And it's turning us into economic serfs.

Jp Cortez:

Exactly right. And that's why Mises, he obviously said it best on so many things, but Mises was so good on sound money specifically in that he categorized it as important as any of the other first 10 Amendments, right? So, sound money should exist in the Bill of Rights. The need for sound money, the way it affects society, a civilization living under that monetary system, that is just as important as the ability, the right to own guns, the right to freely express yourself.

Jp Cortez:

All of those things, because sound money fits right in the center of this protection. Because ultimately the Bill of Rights is a protection against the government. The founders knew that that the bill of rights doesn't apply to individuals or businesses. This is a list of things that the government is not allowed to do to you or to do to the country.

Jp Cortez:

And sound money, Mises said, should be among that list, because sound money, the reason it was desired, the reason it was devised, its whole purpose is to act as a defense, as a bulwark against big government.

Eric Brakey:

Yeah. Yeah. Well, so tell me you've had about a... you said you've had about a dozen policy or legislative victories in about a dozen states. Tell me about some of those. What have those entailed?

Jp Cortez:

Yeah. So, several of them, many of them, we focus a lot of our efforts on the tax issue. So, all across the country in the last couple years, we've seen a lot of states eliminate taxes on gold and silver. Arkansas saw recently did this. Ohio recently did this. Wyoming, West Virginia, Alabama, Louisiana, these are all states in the last couple years that have eliminated sales tax or eliminated income tax from precious metals. And it's not just those, that's not an exhaustive list. There are others that have done this as well.

Jp Cortez:

We've also worked with states to introduce measures in states to allow them to establish their own bullion depository like the one that we saw in Texas 10 years ago. We've seen and we've worked with-

Eric Brakey:

What does that mean exactly, their own bullion depository? I've heard that Texas did this, but what does that mean exactly?

Jp Cortez:

In the case of Texas, it was about 10 years ago, they established a bullion depository that was run privately but it was governed by the state. The reason that worked is because Texas already had a billion dollars' worth of physical gold in the Texas teacher pension fund. And so, Texas decided they would rather hold the gold in their own state out of the clutches of federal banking systems hundreds of miles away when they can't even confirm their our gold is in there, right?

Jp Cortez:

There's obviously a lot of question about whether or not gold is in the US vaults. I don't know what's in Fort Knox. I don't know what's in the US, the New York Federal Reserve bank as far as the gold that they claim to have, but Texas decided, "We don't want to take that chance, so we'd rather have our own gold in our own depository." So, they brought it home, stored it in their own building. And at least in theory, that acts as a defense against a federal confiscation.

Jp Cortez:

In 1933, FDR came through with Executive Order 6102 and told everyone by executive order through pen, through decree that owning gold is illegal in the United States, and they went through and confiscated all of it. There was a buyback where the people who were fooled into doing the buyback got a massive haircut. And so, the idea is that if the gold is stored within our own state, the Feds aren't going to come to take it. Or if they are going to come to take it, they're going to have to physically come in and do it, because we're not giving it to them.

Eric Brakey:

All right. And hopefully in Texas, they've got enough guns to defend it.

Jp Cortez:

Yeah. I don't think there's any shortage of guns there or gold for that matter. So, good, it should be defended. And so, those are some of the projects that we've been working on, and as inflation becomes more of a hot button topic, the interest in these measures both from elected officials and people in the state have grown tremendously. As you know, we've worked on in Maine to eliminate some taxes on gold and silver there. We haven't quite gotten it across the finish line, but we're hoping to be able to do that.

Eric Brakey:

Yeah. I remember I sponsored a bill on that my first term in the 2015, and it didn't get very far. I was sponsoring 20 different bills that year, and I don't think I gave it the amount of attention that I gave like constitutional carry. So, it's something that needs to be done, because especially I looked at your index. Let me pull that up here, and it actually might be fun to go through.

Eric Brakey:

So, this is the Sound Money Index. You're the lead author of this. This is @moneymetals.com, and you've ranked all of the different states. And I was going through this just before we got this, and I want to see, "Oh, okay. Where is my state?" I see at the top of the list, "Oh, there's Wyoming. Wyoming, number one. Texas, number two, South Dakota, Alaska, New Hampshire. All right, well Maine can't be too far down, right?"

Eric Brakey:

I'm scrolling all the way down, and I'm starting to get nervous as I get past 20 and getting especially nervous as I get past 30. 30 is Illinois. And I'm thinking, "Oh, my God, Illinois' ahead of us." I'm getting down to 40, "Maryland. We're not even there. Maryland's ahead of us." Get all the way down to number 48 and there's Maine with New Jersey and the absolute worst is Vermont. So, I got to ask. What's so bad about Vermont, and what's so good about Wyoming?

Jp Cortez:

Well, so to be sure, this ranking is only based on sound money policies, so which states offer the most pro and anti-sound money environment in the country? As far as regular environment, Maine is a beautiful place. Vermont is beautiful. There's a lot to like there, but unfortunately-

Eric Brakey:

Just not beautiful for sound money.

Jp Cortez:

The sound money policies are not among the things to like or appreciate about Maine and Vermont. And I wish I could say it was one thing but honestly just top to bottom, Maine, Vermont, New Jersey, Kentucky, Wisconsin, the states at the bottom of the list are just top-to-bottom bad on this issue.

Jp Cortez:

They charge sales tax on precious metals. Their sales tax rates are tend to be high. They charge income tax. Their income tax rates tend to be high. They haven't made any legislative effort to affirm that gold and silver are constitutional money. There is no gold or state bullion depository. They don't protect their taxpayer funds with gold.

Jp Cortez:

So, I'm sorry to tell you, Maine. Maine and a lot of these states here at the bottom just are not faring well, which isn't to say we aren't trying. And we're hopeful, we introduced a bill the last year there that died unfortunately, and we're hopeful we might get that one done in the upcoming year. But if you have any pull in Maine, I encourage you to start blowing up the phones because this is something we've been working on, and we haven't had a ton of traction unfortunately.

Eric Brakey:

Well, it'll be a new legislature next around. We'll see. I know we've got a growing Hazlitt Coalition in Maine and of course, New Hampshire. New Hampshire's blowing everyone away. I am getting jealous.

Jp Cortez:

I heard recently that New Hampshire has the third largest governing body in the world. Are you familiar with that?

Eric Brakey:

Their state legislature is 400 members.

Jp Cortez:

Yeah, just like India. India and the US Congress are the only governments in the world, bigger or legislative bodies in the world, bigger than New Hampshire.

Eric Brakey:

Yeah. It's like every little neighborhood has their own state representative.

Jp Cortez:

Yeah. It's almost like a one-to-one representative ratio.

Eric Brakey:

I often joke with... and so, my father-in-law was a state legislator in New Hampshire for several years, but I always joke that, "You go to New Hampshire and you're more likely to meet someone who was in state legislature than not in the state legislature." It's such a big legislative body but amazing. Amazing. And I think that actually... I hear some people who are advocates of limited government say, "Oh no, we need to shrink. We need to have fewer legislators is where we spend too much money on the legislature."

Eric Brakey:

And at least in New Hampshire, they've got a huge house, but they pay them $200 a year plus polls. So, no one gets into the New Hampshire legislature to get rich and-

Jp Cortez:

Good.

Eric Brakey:

... and it's also really... I think it's really a clear example, this is a citizen legislature, regular people. You don't have to be some political hotshot with connection, all the special interests to get elected, you're just some guy in your neighborhood, and you're like, "This is crazy. What's going on in the state capital? I'm going to run."

Eric Brakey:

Regular people get elected all the time there. It's beautiful I think more so there than in any other state. Of course, I am always proud of Maine and other many states where we have representative bodies that are very much composed of regular people. That's not true in every state. Certainly not true in Congress.

Jp Cortez:

Sure. And so, I think what you mentioned there, the Hazlitt Coalition that's been building over the last couple of years, and I believe that is a project of YAL. Is that accurate?

Eric Brakey:

Yep, yeah. It's a part of Young Americans for Liberty. It's our Hazlitt Coalition is state legislators, mostly folks who we have helped get elected through our activist programs like Operation Win at the Door. But there's also a number of legislators who are just very much aligned with us philosophically, and they already got elected on their own initiative. So, so we've included them, brought them into that as well.

Eric Brakey:

So, it's been a great... I love the Hazlitt Coalition because it didn't exist when I was there and I really wish it had. Because when I was in the state legislature, I was alone fighting the establishment in my own state and not having a lot of guidance or examples from other state legislators or people who I could turn to and ask for advice when things got tough.

Jp Cortez:

Yeah. Just allies. It's lonely being the only... and so, I've worked... I'm glad to say that we work closely with the Hazlitt Coalition. We've worked with several members to introduce and to pass legislation across the country, and that's exactly it. It's lonely being the only Liberty-minded legislature or legislator in a legislature made up of largely big government people or people that don't relate or resonate with these ideas of personal liberty and small government and such.

Jp Cortez:

And so, being able... having a resource to turn to for model legislation, for talking points, or just for a buildup, for a gas up, this is really hard and draining to promote Liberty on this level is difficult. And to share and have things in common and be able to share in victories or to ask for advice from others that are currently there that have been there is invaluable. And so, the Hazlitt Coalition has been super helpful to our projects. I'm sure that they're carrying a bunch of good legislation across the country.

Eric Brakey:

What I love about it is it's not just... it's one thing to be alone in your own state capital, but most of these states now we got a good coalition there within the states. We were in like, we have presence in 37 states now. So, people are or legislators are less alone within their own state capitals than they had been in the past when maybe there were 10 Ron Paul-inspired state legislators in the country. Now, we've got approaching 200.

Eric Brakey:

But what I love too is not just the support structures that exist for people to be able to push back in their own states, but that it crosses state borders. We have a whole interstate network now of legislators. And if we want to talk about combating federal tyranny, oftentimes one state standing up by itself isn't enough.

Eric Brakey:

One state standing up by itself, especially if it's a small state, like if Maine stood up to Washington DC by itself, what do Washington DC do? Washington DC would crush Maine. It'd be like, "Oh, you want to... we're going to cut off your federal funds. We're just going to make an example out of you."

Eric Brakey:

But you get 10 states, 20 states, 30 states standing up together against... let's say 30 states passed the tax nullification and said, "We're going to start collecting the federal taxpayer dollars, evaluating whether your spending projects are constitutional and sending you what we think is appropriate."

Eric Brakey:

What does the federal government do to something like that? They can't. They can't defeat 30 states acting in unison together on something like that. In that way I think the state legislators can combat federal tier any more effectively than anyone in Washington DC and the Congress can.

Jp Cortez:

Absolutely. Yeah, I absolutely agree, and I think they largely don't know the power that they have but they're starting to. And the Hazlitt Coalition is a really good example of how people are waking up to these ideas that the problems don't... these problems largely stem from the federal level, but they don't have to be addressed from that level.

Eric Brakey:

Right. The problems come from the federal level, but the solutions are not going to come from the federal level.

Jp Cortez:

Exactly right.

Eric Brakey:

Yeah. One thing we haven't talked about in all this, we've talked about gold and silver but of course in the 21st century, a lot of people who are interested in sound money are also looking at these new digital assets, cryptocurrencies like Bitcoin that have really become a big part of a lot of people's portfolios.

Eric Brakey:

Though I know many people who are gold bugs who I have tremendous respect for like Peter Schiff who are very down on cryptocurrencies and say, "No, gold and silver is... these hard metals are the only way." And I personally, I own gold and silver and Bitcoin and other cryptocurrencies. I like to be diversified in all of these non-fiat currencies.

Eric Brakey:

I try to hold as few dollars as possible, because why would you want to hold your savings in something that is losing value every single year? But how does cryptocurrency fit into your overall mission through the organizations you with, is this something you touch on at all? Is this something you see as a part of the bigger picture, or is it something you're ambivalent on or agnostic on?

Eric Brakey:

Because I know your number one state, Wyoming, on your list there is not just [crosstalk 00:47:12] gold and silver. You got Senator Cynthia Lummis there who is the number one advocate for cryptocurrency in the US Senate. You've got Tyler Lindholm who's your policy director now, who's from our Hazlitt Coalition who wrote the pro-cryptocurrency laws in Wyoming, particularly I think of things like special depository institutions basically banks for cryptocurrency. They're still trying to get Federal Reserve approval on that. For some reason, the Federal Reserve missed all the deadlines that they're supposed to approve that by.

Jp Cortez:

Weird how that happened. An oversight, I'm sure.

Eric Brakey:

It's weird how when you have a competing currency and you got to go to your competitor to ask for permission to exist, they're not so inclined to give you permission-

Jp Cortez:

Yeah. Strange, right?

Eric Brakey:

It feels like there's a parallel there with Certificate of Need laws and healthcare-

Jp Cortez:

Oh, yeah. Absolutely.

Eric Brakey:

That's a whole other story. So, anyway, what's your attitude towards cryptocurrencies as they fit into all of this?

Jp Cortez:

As a question of the organization, the Sound Money Defense League, most of the legislation, most of the projects that we do are going to be gold and silver or precious metals mined. We have worked on legislation that does include some crypto language, some Bitcoin language. None of those have passed.

Jp Cortez:

But in general, sound money is this idea that it's a money that can't be manipulated by people who might act recklessly or irresponsibly with the power to control that money, and Bitcoin fits that definition, right? So, the volatility that happens today to me can be explained away by a fixed supply schedule. So, that will even out as more Bitcoin continue to be mined.

Jp Cortez:

But in general, yeah, I think that alternative currencies are always going to be a good thing. Competition in money is a good thing. And Bitcoin has... Bitcoin introduces a new decentralized currency that, I don't know, that the Feds are up for fighting against. I'm not sure what the answer is going to be from them. I guess the answer is the digital-backed central bank currencies. But ultimately, those don't stand a chance for the same reason that the dollar didn't stand a chance. There's a centralized power getting to make these decisions, and largely we're interested in removing those trust-based systems.

Jp Cortez:

So, Bitcoin is a really good example. This doesn't require trust. It's all math. It's an algorithm. You can look at the code if you don't believe it. I can audit Bitcoin right now if I wanted to. I can audit a gold bar right now if I wanted to. We haven't audited the Fed or audited America's gold in decades.

Jp Cortez:

So, as a question of like, which money serves as a better store of value? Which money serves as a better unit of measure? Which money serves as a better... anything really. Gold, silver Bitcoin, all of those are going to beat the Federal Reserve note.

Eric Brakey:

Yeah. I increasingly wonder if it would be wise in moving forward on policy on sound money. Because I certainly know whenever I talk about Bitcoin or cryptocurrency in general, of course, if I've mentioned just Bitcoin. There's a lot of cryptocurrency people who get on me, because everyone's got their favorite or everyone thinks the reasons why they think Bitcoin is the be-all, end-all or something else is the be-all, end-all. That's fine. I'm I guess I'm agnostic on that. I'm not... who knows what works out best in the end? People can debate that.

Eric Brakey:

But then, I also get, when I talk about cryptocurrency, I get a lot of people who are very skeptical of these digital currencies, and they're hard gold, silver people. And so, I just feel like, "Let's put it all in the same basket. Anything that truly meets these standards of..."

Eric Brakey:

I guess, I wonder if it would... I think that in this day and age, it might be wise for legislators to move forward with efforts that seek to do gold, silver, Bitcoin, maybe other... I guess, you have to be clear because not all digital currencies are decentralized in the same way as Bitcoin is but maybe other cryptocurrencies that are similar.

Eric Brakey:

You should maybe move forward on getting rid of the sales tax and the capital gains taxes on all of these, treating them like currencies like the US dollar is at the same time so that we don't have this factionalism where people feel like, well, their favorite one is being left out or what have you.

Jp Cortez:

Yeah. I think in some cases, the problem with Bitcoin as far as the hard money people go is the tangibility of it. These are people that have their entire lives held silver in their hands, held gold in their hands. And there's the real digital disconnect that comes with like, "Wait, what do you mean that I have money but I can't touch it, and it's stored on the internet somewhere?"

Jp Cortez:

But I think generally, your larger point is right. These are complimentary to each other. There doesn't have to be factionalism among the sound money, amongst sound money advocates or fans. Ultimately, all of these things work or aim to take the power away from a cabal of unelected bureaucrats who are making these decisions without any accountability and without any input from anyone other than their PhD circles.

Jp Cortez:

And so, I think all of these things are generally a good thing. And so, working to legalize, quote, unquote, them to make sure that there aren't disincentives in the way to or for smart people or smart entrepreneurs to start businesses or to create these different avenues by which we can transact or through which we can transact, all of that is a good thing.

Jp Cortez:

So, as far as sound money goes, yeah, Bitcoin, gold, silver, any legislation that frees these things up and allow market processes to determine which money is best is going to be a good thing. It's going to be something that I'll go to bat for.

Eric Brakey:

Awesome. Well, hey, we are arriving at the end of the hour. Are there any final thoughts you want to share with folks before we wrap up here today?

Jp Cortez:

I don't think so. Maybe the importance of sound money and the importance of actively being part... being an active participant in your state's legislature, right? We work hard on a dozen bills across more than a dozen states throughout the year, and what we hear most is that when you're blowing up a Capitol switchboard... because states aren't used to grassroots organized movements.

Jp Cortez:

So, when you hear several people calling your line, blowing up your email, this is what helps people make decisions. In Arkansas, I can tell you that we passed a bill last year, the bill wasn't going to be heard. It wasn't scheduled to be heard before a committee, and I got a call from the chairman of that committee upset at me, blasting me like, "Why are you sending all these people our way? Stop sending these people."

Jp Cortez:

And I talked to my boss here, the director of the Sound Money Defense League and the president of Money Metals Exchange, and the way we responded to that was, "Okay, let's double down. If we're ticking these guys off, if we're getting their attention, then we're doing something right."

Eric Brakey:

That's absolutely what it takes. There's the old rule I guess we teach everyone, all of our activists in the school of confrontational politics. When the political class tells you, "This is how you should be doing it, or this is how it should be done," you have an immediate red flag go off and say, "How does it benefit them if I believe them on this?"

Eric Brakey:

Because at the end of the day, the political class does not want to go on record on controversial issues. They do not want to hear from their constituents. They don't want to be held accountable. They want to stay away from taking tough votes.

Jp Cortez:

Exactly.

Eric Brakey:

So, we have to make it very clear to them that there are voters in their districts, and a lot of them who are ready to vote them out of office and to organize to get them out of there if they do not do the right thing and restore whether it's sound money or gun rights or any issues of basic constitutional liberty. We got to hold them accountable to that.

Jp Cortez:

Exactly right. There hasn't been enough holding of feet to the fire. There hasn't been enough accountability and organizations like ours, organizations across the country that are fighting these small government advocacy projects, these are the organizations that are pointing a laser beam at these politicians and forcing them to stand true to their word, forcing them to understand that the people of their states are waking up to this idea the sound money is super important.

Jp Cortez:

And being able to take them to task on these issues when they don't hold a hearing when they said they were going to, when they do a bad vote, when they generally speak nonsense during committee hearings, holding politicians to task on this stuff is what we aim to do. And it's what we have done so far, and we've achieved great results so far.

Eric Brakey:

Awesome. It's like Thomas Jefferson said, "When the people fear the government, there is tyranny. When the government fears the people, there is liberty." If we want our liberties back, we should make the government afraid for their reelections, these politicians afraid for their reelections.

Jp Cortez:

Just make them uncomfortable.

Eric Brakey:

Yeah, absolutely. Well, hey, Jp, it's been an absolute pleasure. Thank you so much for coming on today. It's pleasure talking with you. Thank you for the work that you're doing. I think that it's very important. And so, thank you for that. To our audience, appreciate having you tune in today.

Eric Brakey:

Tomorrow, we're going to be releasing the audio version of the recent interview I did with Mahgdalen Rose of the Rose Report. You may have seen this... we released this as a video cast on the Facebook on YAL's Facebook page and our YouTube page last Sunday. So, you can go and see that if you want to see the video cast version, but tomorrow you can also tune in to the audio podcast that'll be up.

Eric Brakey:

And then, Friday I haven't decided what we're doing on Friday yet. I guess that'll be a mystery. So, thank you everyone. Furthermore, my opinion is, the Federal Reserve should be destroyed. And boy, I've never done an episode where that closing tagline made was as appropriate to the topic we were talking about as it is today. So, well, one more time, furthermore, my opinion is the Federal Reserve should be destroyed. Talk with you all-

Jp Cortez:

Cheers.

Eric Brakey:

... tomorrow. Yes, cheers to that.

[soundmoneydefenseleague]

“Sound Money Is Making a Comeback” - SMDL Director Stefan Gleason joins The Gold Newsletter

“Sound Money Is Making a Comeback” - Stefan Gleason, President of Money Metals Exchange and Director of the Sound Money Defense League, joins The Gold Newsletter Podcast to discuss sound money, state legislation, and cryptocurrencies.

Gold Newsletter website: https://ift.tt/byOfcWB

Twitter: https://twitter.com/GoldNewsletter/status/1488265706990886918?s=20&t=-5Kgyc0Br4TCOM3tqmkrug

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TRANSCRIPT:

Fergus Hodgson:

This is the Gold Newsletter Podcast. Fergus Hodgson, your host. Thank you for tuning in. And if you would like more on mining, metals, the broader economy, please do consider subscribing on whatever platform you're listening on, be that BitChute, SoundCloud, YouTube, wherever you happen to be. And we have the director of the Sound Money Defense League today, Stefan Gleason, he's also the CEO and president of Money Metals Exchange. So if you want to know anything about sound money, precious metals, Stefan is your man. So thank you for joining us today.

Stefan Gleason:

Thanks, Fergus. It's great to be on your podcast. I've been listening to your podcast for at least a year, if not longer, when I'm out running on the trails. So it's nice to meet you face to face and actually speak to you and your listeners.

Fergus Hodgson:

Great, mate. I'm fortunate to meet lots of fascinating people who are doing the best they can while being proactive about seeking to, in your case, establish sound money. Now I've been following, let's say, the problems with central banks for 20 odd years now. And do you think we're closer now than we were 20 years ago to actually getting out of the central banking system?

Stefan Gleason:

I do. Because, I mean, there's been just more and more problems coming to light starting with the 2008 crisis and then over the last several years. And I think there's been a reawakening on the sound money issue as a result of that. You saw that with the Ron Paul Revolution and the actual discussion around the Federal Reserve System and the dollar and all those issues that were really big issues a hundred years ago. Some of the most dominant issues in politics in public policy in the US were the debate over sound money, the gold standard, the bimetallic standard. And with the Federal Reserve coming into play, over a hundred years ago, a lot of these discussions kind of went away. Particularly, after The Great Depression when they tried to discredit the gold standard and move full on into keynesian economics.

Stefan Gleason:

But I think we are in a better position. Part of it is because we're in a worse position where things are kind of coming off the rails in the financial system. I think that's becoming more evident, but at the same time, we're seeing more discussion about sound money, the Federal Reserve, the role of precious metals. And of course, you're seeing an explosion in other currencies coming to fore with crypto. So I think all of that is positive, even though I think, ultimately, we're going to see a lot worse of a situation before we really have the opportunity to reimpose some form of sound money.

Fergus Hodgson:

Well, that's my key question that I'd like to explore with you today, how we can make that path right. Of course, not only, let's say, is there more awareness now than there was 20 years ago, but there's also more technology at our fingertips.

Stefan Gleason:

Right.

Fergus Hodgson:

Do you foresee... I mean, there doesn't have to be one path, but will private currencies go the cryptocurrency route or do you really believe that gold and silver will have an important role to play?

Stefan Gleason:

Well, gold and silver have the tangible aspect that a lot of cryptos don't. And I know you can have a link between cryptos and actual physical metal. And there is a value in all these cryptocurrencies, there's utility around them... Not all of them, but many of them. So I think they all play a role. Gold and silver have a history. They have their money, they're considered money, they're held as money, they're a reserve asset on bank balance sheets. They don't talk about it as money, but they know it's money. And in fact, it may be part of the... It is part of the solution to the problem down the road to remonetize gold at a much higher price. It's actually part of the solution to bring solvency back into the system.

Stefan Gleason:

But I think all of these things are working together to give people more options in a free market to choose a currency in a payment medium. Of course, governments are pressing on that. The IRS and other governments around the world are really trying to get into the business and trying to regulate that, trying to tax it. It seems like it's taken on a life of its own. And I think they may not be successful as much as they'll try, but I think all of these things are complimentary and it's really about a non-government currency. And people should have that ability to choose and let the free market decide what the best currency is or the best currencies.

Fergus Hodgson:

Yeah. No, I agree. We don't really dictating what the proper currency must be and whether it has to be coins or some kind of 100% backed representation. Right now though, of course, and I try to pay people in cryptocurrencies and it's been an uphill task. An uphill path. So what are the most promising shoots of hope or promising news tidbits of late that suggests we're actually making progress towards escaping the central bank fear currency system? And like you said, it seems like it can be one step forward, two steps back because, of course, the central bank digital currency development, it's a specter, right? It's looming, and not in a positive sense.

Stefan Gleason:

Well, I think you can look, first of all, just the number of people that are owning gold and silver, for example. I mean, there's been a very, very big increase in that in the last two or three years. Really, the last 15. There was a huge wave of it around 2008 to 2013. Kind of simmered down for a few years. But basically, since 2019 and certainly when the pandemic hit in 2020, the number of people that got involved in precious metals has gone up multiples across the globe. And so I think that's one positive thing. I agree with you on the technology and on the cryptos and making payment. And that's even the case with gold and silver. I mean, I don't personally have a desire to make payment currently in gold and silver or even crypto because although I'm not a huge crypto person, I would rather just hold that. There are other more convenient ways to make payment.

Stefan Gleason:

It usually means in Federal Reserve denominated financial transactions, but I don't save in those things. I don't hold large amounts of Federal Reserve dollars because that's not a good store value, but it's a convenient payment mechanism currently. And I do think that on the crypto side, there's definitely a lot of progress that needs to be made in terms of the enabling of these technologies to be more practical and understandable. I mean, I know just kind of thinking about the whole wallets and treasure and all the different things. It's very scary. It's kind of clunky. Obviously, tech savvy people can handle it, but in terms of the common person, it's a long way before that kind of technology is really comfortable for people. And I think that will develop over time, but I think that's one of the problems right now.

Fergus Hodgson:

Yeah. So we're going through these teething pains, even though people want, they want an alternative, we see inflation. And maybe you were right about the fact that the alternative is almost benefiting from the found or the poor performance of the status quo, because I always think of other countries that struggle with inflation and what do they do? They dollarize, right? They start to use the US dollar. But what happens when the US dollar goes under?

Stefan Gleason:

Well, and that's the thing.

Fergus Hodgson:

What do you do then?

Stefan Gleason:

Right, right. It's Gresham's law, the bad money forces out the good money. So the good money goes into hoards, private hoards, or they're just not used as circulating payment media necessarily, but there may be a point where that's necessary. And to have these alternative mechanisms in place, have people have precious metals in their home safe or stored somewhere, both in small denomination, large denomination to have crypto access and the ability to make payments that way if things really start to go off the rails. And like you said, in Venezuela, the US dollar all of a sudden became the hard money. I mean, that's kind of the worst case scenario is that the US dollar system falls apart and you have to go to something else. But that could happen.

Stefan Gleason:

I mean, I think that they're trying to manage that and basically just paper over the problems by continual devaluation. Slow, but steady devaluation. And prevent that total route. But maybe they won't be successful and it will be a rocky transition for people, but I think we're better prepared for that today than 20 years ago. Way better. Like you said, people are more informed, there's more technology, and there's also more actual alternatives than there were.

Fergus Hodgson:

Yeah. I mean, I've read The Creature From Jekyll Island. I mean, like I said, I've been following this for a long time and if someone hasn't read that book, please do. But aside from holding precious metals, physical precious metals, what can people do to facilitate this peaceful transition, right? This peaceful transition away from fear currencies to private money. And do you see any cryptocurrencies that you like the look of? You said you're not that much a fan of them. Why not?

Stefan Gleason:

Well, it's mainly because I don't see the business case yet. I mean, I'm looking at it partly as a retailer. And we do accept Bitcoin and many other cryptos on our website. Very few people use them. We're happy. We're one of the few that will directly accept it and we'll directly pay it. If people sell us gold, we will directly pay you Bitcoin cash. I've been to some of these conferences, I've seen there's a tremendous amount of speculative fever. There's very little discussion about how to make this practical. It's all about the next big ICO. To me, it's just very, very, very early. And so I think there's real value there, and I'm in favor of it as an alternative. And I think that the market will hopefully be allowed to let that develop. But it doesn't have the credibility yet, I think, that precious metals have. But, again, they coexist and there is some overlap between our customers for precious metals and people that buy or are involved in crypto.

Stefan Gleason:

But it's not a huge overlap. And I think part of it is because the reason that people buy gold and silver, typically, is because they don't trust having any other counterparties or third parties or not having their actual assets in their possession. And they're not necessarily technology savvy people. And there's a trust involved in having that technology sort of be the barrier between you and your money. And so a lot of folks are not interested who are precious metals people because they want to hold and know they have the actual payment medium and money in and of itself in their hands. But they have the same philosophy though. And that's where there's a lot of consistency between the two. And that is that they're in favor of limited government and government, or freedom of action with respect to money. And it's the same kind of people, maybe a little bit more libertarian leading in general than the general public on both fronts. And I think it's a positive thing, but it's definitely a different group of people about 85% of the time between the two.

Speaker 5:

The Gold Newsletter is proudly sponsored by Inventa Capital Corporation. A venture capital advisory firm dedicated to the acquisition and development of assets in the natural resource sector. Today, Inventa is one of the premier mining groups with a first rate portfolio of companies and a world class team.

Fergus Hodgson:

This is the inventor mining update on the Gold Newsletter Podcast. I'm pleased to have Mike Konnert. He is the CEO of Vizsla Silver Corp. That's Vizslasilvercorp.ca. Now I know that's a little bit awkward spelling. So I would like the editor to put that up there in the video and we'll also have it in the show notes. The ticker is VZLA, that's on the TSX Venture and on the New York Stock Exchange American. So Michael, welcome to the show. I see on your website you've got plenty of action going. Do you want to talk about what it means to now be on the American Exchange?

Mike Konnert:

Yeah, absolutely. So that was a huge amount of work from our team to be listed on the NYCE here. So we're very happy about that. Very excited about that. And it was one of our internal goals for quite some time as well. So that was a great accomplishment by the team. And for us, the reason we wanted to do that and why we're excited about this is that it opens us up to a broader group of investors, more eyeballs on the company. I think that we have great story to tell, and our focus will be to tell that to a larger audience that generally likes to invest on the New York Stock Exchange.

Fergus Hodgson:

Okay. And do you mind me asking? How much of a bump does that actually give to a share price being listed on multiple exchanges like that? Does it give you a boost?

Mike Konnert:

Well, I think it does over time. It's not an immediate thing. But there's a couple of things that obviously shows that there's been a more thorough diligence on the company and on our reporting and things like that. So it gives a little bit of credibility, I would think, to the company. Sometimes Canadian juniors have a little bit of a poor reputation compared to US listed stock. So that's a great reason. And then also, it allows for more trading terminals, more programs and things like that to access the stock and not have to pay currency conversions and things like that.

Fergus Hodgson:

Right, right. And the other press release you've got out is about a new discovery in your Panuco projects in Mexico. Do you want to clarify what the latest details are?

Mike Konnert:

Well, that discovery is really exciting. We were drilling into the Tajitos Vein and unexpectedly hit this discovery here in the hanging wall. So it's called the Copala Vein. It's a new vein that we've discovered in and around the Tajitos area. And reason why that it's exciting is because it's extremely high grade, over two meters of 3.7 kilo silver equivalent. So it's a very high grade silver and gold. But it's in area that we were expecting just to drill through and didn't expect to see that high grade interval in a larger, broader interval of about 200 grams silver. So these are great grades. It's excellent for an underground mining operation. And it's a bit of a surprise. And the reason I think that's important is because this district is full of surprises. Tajitos was actually a little bit of a surprise as well too. And I think that we're going to make more discoveries like this across the district.

Fergus Hodgson:

Right. And do you want to give people a sense for the timeline for upcoming events for the company? What's next in the pipeline?

Mike Konnert:

Well, it's going to be a very busy first half of the year. We have our main resource coming out in this quarter, in Q1, of this year. We're also flying the property with airborne electromagnetics, and that will help us factor into new discoveries, I believe, in the district. And so this year can really be categorized as one of growth around the existing resource area, as well as new discoveries throughout the district. And so what's new for 2022 is that we're dividing the district up into thirds, focusing on the Western portion, resource drilling around Napoleon and Tajitos. And then other follow ups discoveries in the central area, and then brand new discoveries, ideally, in the East with some great prospects that we've worked up over the last year. So it's going to be a lot of joy and a lot of excitement around that. And then, of course, in the background, we're doing everything that we need to, to basically de-risk the project and move it towards production.

Fergus Hodgson:

Excellent. Okay. So folks, go to vizslasilvercorp. That's V-I-Z-S-L-A silvercorp.ca to get more details. The ticker symbol is VZLA on both the TSX-V and the New York Stock Exchange American. So, Michael, thanks for your time.

Mike Konnert:

Thank you.

Fergus Hodgson:

Yeah. One of the weird elements of cryptocurrency is that it's a bit like in the internet or communications online that, of course, initially the presence of the internet allowed for decentralized information sharing. But then suddenly, everyone seemed to cluster around Google and around Facebook and Twitter and we're right back to where we started, almost more centralized than we were before. And then this happened with the cryptocurrency space, with everyone jumping in with Coinbase. And one of the reasons why is just the fact that Coinbase has had the fanciest lawyers to get them to jump through the regulatory hoops. Now I hope that they do not just [inaudible 00:18:35] monopoly advantages to some degree, they're so dominant. But it is true that, people, because of their lack of trust or lack of understanding have preferred to have some kind of custodian, to have an exchange handle their cryptocurrencies. I don't know. You didn't necessarily take on my first question, which is, okay, you've got the Ferguses of the world who are every week advocating sound money, basically like you. What can I do on a day to day basis to actually facilitate this change?

Stefan Gleason:

Well, so this is kind of getting into what we're doing on behalf of the precious metals industry and the precious metals owners and buyers and really just the cause of sound money. And there are impediments right now in both the purchase and the sale and the use of precious metals that are erected by both the federal government and by states. And so in a very practical sense, we have been working actively in many states and that's where most of the success has been in recent years. The federal side is much more troublesome and we're involved there, but the promising side is really the state level. And that is in particular on removal of taxes. So right now, if you buy cryptocurrency, you're not paying a sales tax when you make that purchase. But in eight states in the US, you pay 100% sales tax. Not a hundred percent rate, but you buy gold and silver, you're paying 7, 8, 9% on all gold and silver purchases in those states.

Stefan Gleason:

And then there's another handful of maybe 5 to 10 states that partially tax or tax certain types of transactions or under certain thresholds. So removal of the sales tax, we feel, is one very practical way to free gold and silver up a little bit as a viable currency because there's friction on buying. And then there's friction on selling and that's the tax on income. And both at the state and federal level, you have income tax, which currently because the US treasury feels that gold and silver is not money and they treat it like property or other financial assets. If you have a gain, which might be driven or derived largely from inflation, but it's a nominal gain when measured in Federal Reserve, no dollars, you have to pay an income tax on that at the federal level. And you actually pay it at a higher discriminatory 28% capital gains tax rate, which is not even assessed against cryptocurrencies.

Fergus Hodgson:

You mean that's higher than you'd pay just for gains on stocks?

Stefan Gleason:

Right. Stocks are 15 or 20% for long term capital gains. And so the IRS has done this unilaterally. It's not even backed by a statute. And it's more a regulatory approach. They had called gold bullion a collectible. And there is a 28% tax on collectibles for long term capital gains. If you have a stock or a bond or a piece of real estate or even cryptocurrency and you have a gain, you would pay 15 or 20% federally. And it depends on your income if you have over maybe 450,000 in taxable income, it's higher, it's the 20%. But it's not 28. So gold and silver have a discriminatory high federal income tax when you sell. And then states follow that federal income reported number that you have when you do your state tax return. So they inherently are taxing your precious metals income as well.

Stefan Gleason:

And this is where some states have stepped in, in recent years with our help and other activists and people around the country have actually removed or backed out the gold and silver gains or losses even, from your federal income number or I should say from the number that's reported as state income. And so it's like a subtraction out. So we have Arizona in particular and Utah have passed these laws on the income tax side to remove gold and silver from the income tax at the state level. And there's a bill currently today in Oklahoma. There will be one in Iowa and there will be one in South Carolina in the next few weeks that will do just that in those states. And so there's progress on the sales tax side. I mentioned that there are eight states that currently charge a sales tax, still full sales tax.

Stefan Gleason:

There are five of those states that actually already have bills this January to repeal the income, the sales tax on gold and silver. Those states are Hawaii, Kentucky, Mississippi, Tennessee, and New Jersey. So there's five bills to repeal sales tax. That would take it down to just three states if we pass all three of those or all five of those. And then there's several on the income tax. So those are the two, I'd say, most practically meaningful things that states can do right now, would be to remove taxes on the buying and selling of gold and silver. There's things beyond that that we're working on as well. But that's kind of a, maybe 50% to 75% of really where we're focused.

Fergus Hodgson:

Yeah. And it seems like it's a situation of regulation via taxation in that the taxation is really more as a punitive measure than as a revenue generator.

Stefan Gleason:

Well, in fact, even in the sales tax case, it's a revenue negative for those states in the context of it driving business out of the state. So if you're in Tennessee and you're a dealer in Tennessee, first of all, people are going to go to Arkansas to buy gold and not pay tax because we passed an exemption there last year. And then they might drive it back into Tennessee. And maybe the tax bureaucrats will eventually say, "You owe a use tax on that because you imported gold or whatever." But the bottom line is that Tennessee businesses are harmed. And as a result, there's less income tax from general business activity. Investment knowledge are leaving to go to other states. Conventions. It's not a big thing in the bullion area, but in the collectible coin area. Coin conventions are kind of a big thing in the big events and dealers come in and customers come in and people travel long distances.

Stefan Gleason:

Well, the states that have sales tax, they don't get these conventions anymore. You have the tax bureaucrat milling around harassing people at their booths, asking for their certificates, taking down names of who's there, seeing if they can figure out if they filed their reports. So a lot of these conventions are not in these states, that's business activity that's left the state. So the whole idea of taxing the exchange of Federal Reserve notes for another form of money is... I mean, it's a tax on money. It's a tax on making change. And then the other idea of sales tax. I mean, sales tax is really ridiculous when it comes to precious metals. There's no basis.

Stefan Gleason:

I mean, the other thing is it's an investment. It's an asset. It's not being consumed. And the idea of a sales tax, if there's any validity to a sales tax, it was always about taxing the final user of a good who consumes it. A person who buys the clothing or eats the food. But I mean, gold and silver is inherently held for resale. So the idea of taxing something that's continuously being sold and resold like a money, because it is a money, or an asset at least, is ridiculous. I mean, these arguments are resonating at the state level, and we've been successful in getting that number up to 42 states. And we're hoping to push it further in the next session.

Fergus Hodgson:

I mean, I'm all for these initiatives, and I wonder whether there will be a nullification scenario. What would nullification look like in the case of sound money from the states?

Stefan Gleason:

That's a good question. So I think the state holding gold as a reserve asset, and it's not even nullification, literally, it's prerogative to both hold gold as a reserve asset, but also to make... The US Constitution article one, section 10, actually prohibits states from making payment in anything other than gold and silver coin. And that's kind of become a dead letter. It used to be that while they were paying in dollars and dollars were backed by gold, so they were still compliant. Well, now that that has been broken. So I think really just the states going back to first principles, which is gold and silver is money. It's really the money of the states under the US Constitution. In fact, they're only supposed to use gold and silver. And getting the state back in the business of, number one, not taxing it on both the buying and the selling. Getting the state to hold it as a reserve asset, so it insulates the state from financial turbulence at the federal level.

Stefan Gleason:

Get money out of the Federal Reserve System, hold it in a depository with no encumbrances, imbailment, without segregated physically from other holdings, possibly held within the actual state, if they have the capability of doing that. And then getting comfortable with the idea of using gold as people want to pay their taxes in gold or if they want to be paid in gold, coming up with a system. And there's been bills in certain states. There's one that passed in Utah, there's one being proposed in Wyoming that sort of get the state treasurer into the business of dealing in gold and silver as a form of money in the state. And those are very early efforts. But I think that those are the kinds of things that states should be doing and looking at beyond just re removing the taxes.

Fergus Hodgson:

Yeah. So if they remove the taxes and then start making their own investments in gold and silver, at least that's scaling the market, it's giving some momentum. Maybe you do this because it's so difficult, but what about on the individual level, just in our own lives?

Stefan Gleason:

Well, I think everybody can go on their own gold standard or silver standard on their own. I mean, at least in the sense of actually accumulating these things and opting out of the federal reserve system to some extent, I think everybody should do that. It starts with that. That's one of the things that my company Money Metals Exchange is doing every day is helping people do that. We even have a monthly savings plan where you can put it on autopilot. So I think that's probably the first most practical thing. Another would be to talk to other people about it. I've found that putting an ounce of silver in somebody's hands is one of the best ways to kind of open their mind to what is money. And it's beautiful, it's heavy, it's weighty, and there's history.

Stefan Gleason:

And it often gets the wheels turning and then people start looking at this whole system, the Federal Reserves. That's actually what got me interested 15 to 20 years ago. I hadn't given it a whole lot of thought until 20 years ago. And then the more I learned about how the Federal Reserve System works and really that it's a confidence game. There's nothing backing it. The Federal Reserve note is not worth the paper it's not printed on. I love that expression. I didn't come up with that. But you don't necessarily think about that. Most people don't still. So I think it starts with people becoming aware of themselves, taking action themselves, talking to others, and not being overly reliant on the financial system, not having a huge amount of cash in the bank. Making sure that you're diversified out of financial assets. I think that's probably the basic start.

Fergus Hodgson:

Yeah. So initially, we don't even... Well, I mean, the focus is not so much on the medium of exchange, but on just making the holding of gold and silver normal again.

Stefan Gleason:

Right. And you can go beyond that. And this isn't something we're really focused on, although I'm sure many of our customers do. But I mean, I sometimes will pay somebody in silver if they'll accept it. I took my kids skiing and I was staying at a bed and breakfast and the guy wanted cash and I actually didn't have enough cash, but I had some silver and he happily took it. He actually gave me a discount. He understood what it was. I mean, I don't do that very often, but it was kind a neat experience, a reminder that inherently many people get it, and given the opportunity would accept it as payment. Right now, you don't have to. Tendered as payment. There may be a point where somebody says, "I don't want Federal Reserve notes. I want only silver." Or, "I'll give you a discount if you give me silver or gold." That kind of thing can happen. It does happen in some local areas.

Stefan Gleason:

But there's another thing that's interesting. I don't know if you've seen this, the gold back yet. But the there's the spendable gold bullion that's infused into a polymer bill shaped unit. And it's a very small denomination form of gold. And that's kind of a neat innovation that I think has some promise at the local level, because it is gold and it's gold bullion, and it's not very high premium considering what you're getting. I wouldn't put all my money in that. Gold coins and bars are much more efficient, but it's another mechanism and a way of using gold and silver in very small increments or gold in this case. Again, like you said, I think it starts with people just kind of reinforcing their own situation. And then beyond that maybe there will be a situation where you will need to use it. Hopefully, it doesn't come to that, but it could. And in the meantime, you're probably going to do certainly better than inflation.

Fergus Hodgson:

So you're saying there are basically notes that are in limited circulation that actually are [inaudible 00:32:42] back. The gold is actually built into them.

Stefan Gleason:

Literally, in the thing. Silver is already a small increment. 10 pounds of silver is $2.20. So that's dime sized. But gold, there's no small increment gold, really. I mean, you have a gram bar or a 1/10th ounce or a 1/20th ounce gold coin. But those are 50 to 100 to $200. So this is something called the gold back, which has a little niche in the market for being the only real practical, small denomination gold. I like that idea too, because even though it's just one type of gold that you can own, but it also, for some reason, I think that it connects with people psychologically because we've all been sort of trained over the last hundred years or during our lifetimes, the last 30, 40, 50 years that this is what money looks like. It's a piece of paper kind of thing. And so people see the gold back and they go, "This is money. Okay, I get it. This is money, but it's actually worth what it is worth. Instead of being..."

Fergus Hodgson:

Right. It's face value means something. Yeah.

Stefan Gleason:

Yeah. So it's almost like a gateway in a way. It's another way of reaching people on sound money. And that's one of the reasons I like it in the certain situations.

Fergus Hodgson:

Do you foresee then mass, let's say non-compliance with the tax impediment? So it seems like you said right now, the sales taxes in some states, but even if we do away with those, the Federal Government or the IRS has basically put this tax impediment. So does it mean that there's going to have to be mass non-compliance because it seems... How would we turn that around? Is there any law at the federal level in the United States to pull that back?

Stefan Gleason:

Okay. Congressman Mooney has a bill on the income tax that would remove the gold and silver bullion coins, bars, and rounds from the income tax. It would literally take them out. You wouldn't report gains, you wouldn't deduct losses. It would be just like the Federal Reserve note where it's transparent. It's not an entity. There's no gains, no losses.

Fergus Hodgson:

It's purely medium of exchange. Yeah.

Stefan Gleason:

Right. And so that would be very significant because that's 28%. That's huge. Way more than the sales tax. So that bill is sitting in the House Ways and Means Committee. I think that's Maxine Waters, so that's not necessarily a friend of anything free market or sound money. But in a situation, again, these bills are there, they exist as a repeal of income tax, there's a bill to audit the Federal Reserve or actually audit all US gold that he has as well. Which hasn't been done in any meaningful way for about 70 years. And that that is credible. And so these things are there. I think in a crisis or in a situation, those things are written, they're there. We might see them grabbed by the right people and pushed forward.

Stefan Gleason:

There is a sound money caucus developing in the house. So that's a little bit of a positive development. Ron Paul is no longer there, but there are others like Mooney and there's a few others that are very pro sound money. And of course, with inflation becoming one of the big issues now, you're hearing a lot more people talk about it. They don't necessarily understand where the inflation's coming from totally, but there's a lot more discussion around the topic. So I think that after future election cycles, we might have a shot.

Fergus Hodgson:

So if there were actually the will, sufficient will... I mean, I'm not sure how much you'd need, but substantial because, of course, a move away from the Federal Reserve notes would tremendously reduce the power of the Federal Government. Do you any comments on that?

Stefan Gleason:

Yeah. Well, I think that as more and more people opt out of using the Federal Reserve note for savings or just in general, find other ways, I think that it lowers the demand for the Federal Reserve note and it hastens the potential demise of the Federal Reserve note or moving to another system. Some people think that's not patriotic. King dollar. I don't want to be against king dollar because that's being against America. But I mean, honestly, this Federal Reserve System is anathema to everything that America stands for. It's about central government control of the economy through monetary policy. And it's totally opposite what the founders intended when they set up the US Constitution and established the coinage act in the early days of the Republic. And we've gotten so far away from that.

Stefan Gleason:

So I think people have a civic due to prepare themselves, understand, and then move away to the extent they can from this. That said, on the tax subject, I would never encourage somebody to not comply with income tax. I report everything that I'm required to report. But I do think that... On the sales tax, that's why they go up to the businesses. They want the businesses to be the bagman for-

Fergus Hodgson:

They're easier targets.

Stefan Gleason:

They want me, my company, Money Metals or the other dealers across the country, we've now had to comply because of the Supreme Court's Wayfair decision, which basically allowed us to be forced into this every state sales tax collection scheme even though we had no presence. A massive burden on our businesses.

Fergus Hodgson:

It's crazy. Yeah.

Stefan Gleason:

So that's where it is. And then the individuals though, I mean, do you know that if you go to the grocery store and they accidentally don't charge you sales tax on something that you are supposed to file a use tax return with the state of Colorado? I think that's where you are.

Fergus Hodgson:

Yes. Yeah.

Stefan Gleason:

I think you might have that obligation and you probably don't even know it. And most people don't.

Fergus Hodgson:

I don't know. And my assumption, basically, is that's already a huge untaxed portion of the economy that even state officials know this, but they don't really know what to do about it. We just live in this kind of limbo of some portion untaxed. I just suspect, and I know this is the case with cryptocurrencies, that there's a great deal of cryptocurrency activity. Or there was, I'm not sure the latest rules on this, which basically just did not comply with tax requirements. So obviously, I'm a big fan of what you do, Stefan. I would love for Americans to have a renaissance in their thinking that understanding that sound money matters, that having actual intrinsic value matters and the way, like you said, that it's a very un-American thing to prop up the Federal Government contrary to the US constitution of who's there to limit its powers. So he is with the Sound Money Defense League. That's Soundmoneydefense.org, and his company is Money Metals Exchange, which is just Moneymetals.com. Any other place we should go to, to follow your work?

Stefan Gleason:

I would go to moneymetals.com, get on our email list because we will be able to send people alerts about pending legislation in their area and alert them. We just sent out an alert to three states today about contact the chairman of this committee to urge him to have a hearing on HB whatever. And that actually makes a difference. I mean, at the state level, people are not in the legislatures. They're not used to seeing much organization or grassroots. And so when they start hearing from people, they see it, they pay attention. I can tell you, we would not have passed the sales tax exemption on precious metals in Arkansas last year, if it weren't for the grassroots people on our email list who reached out to the committee and the committee chairman. He even called us up angry, because he was being bothered by so many people.

Stefan Gleason:

And I talked to Jp our guy, I said, "Well, let's just double what we're doing," because that's obviously making an impact and then he had the hearing and it passed out. And it was because of the grassroots. So go to Moneymetals.com, get on our email list. We also have the Sound Money Index at the Money Metals website. And if you go to the resources tab, you'll see it. And basically, we've ranked all 50 states on 12 policies that we believe are important on the Sound Money front, about half of it's related to taxes. And then it's related to other things like gold reserves, golden pension funds, the privacy, dealer harassment, customer harassment laws, things like gold bonds, other things that states can do reaffirming that gold and silver is money in that state. So if you go to the Sound Money Index, you'll literally be able to look at the laws of your state and see where they stack up among all 50 states.

Fergus Hodgson:

Yeah. That's a useful index because even the best state, Wyoming, as you noticed has about 40% left to go.

Stefan Gleason:

To do. Yeah.

Fergus Hodgson:

There's still a lot more it could do. Yeah. So Stefan, thanks for your time. Best of luck with your work. And I look forward to next time we can have you on, okay?

Stefan Gleason:

Thank you. Thank a lot, Fergus. Thank you very much.

[soundmoneydefenseleague]

“Sound Money Is Making a Comeback” - SMDL Director Stefan Gleason joins The Gold Newsletter

“Sound Money Is Making a Comeback” - Stefan Gleason, President of Money Metals Exchange and Director of the Sound Money Defense League, joins The Gold Newsletter Podcast to discuss sound money, state legislation, and cryptocurrencies.

Gold Newsletter website: https://goldnewsletter.com/podcast/sound-money-is-making-a-comeback/

Twitter: https://twitter.com/GoldNewsletter/status/1488265706990886918?s=20&t=-5Kgyc0Br4TCOM3tqmkrug

Linkedin: https://www.linkedin.com/posts/gold-newsletter_sound-money-is-making-a-comeback-gold-newsletter-activity-6894030307121844224-JAJ_

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TRANSCRIPT:

Fergus Hodgson:

This is the Gold Newsletter Podcast. Fergus Hodgson, your host. Thank you for tuning in. And if you would like more on mining, metals, the broader economy, please do consider subscribing on whatever platform you're listening on, be that BitChute, SoundCloud, YouTube, wherever you happen to be. And we have the director of the Sound Money Defense League today, Stefan Gleason, he's also the CEO and president of Money Metals Exchange. So if you want to know anything about sound money, precious metals, Stefan is your man. So thank you for joining us today.

Stefan Gleason:

Thanks, Fergus. It's great to be on your podcast. I've been listening to your podcast for at least a year, if not longer, when I'm out running on the trails. So it's nice to meet you face to face and actually speak to you and your listeners.

Fergus Hodgson:

Great, mate. I'm fortunate to meet lots of fascinating people who are doing the best they can while being proactive about seeking to, in your case, establish sound money. Now I've been following, let's say, the problems with central banks for 20 odd years now. And do you think we're closer now than we were 20 years ago to actually getting out of the central banking system?

Stefan Gleason:

I do. Because, I mean, there's been just more and more problems coming to light starting with the 2008 crisis and then over the last several years. And I think there's been a reawakening on the sound money issue as a result of that. You saw that with the Ron Paul Revolution and the actual discussion around the Federal Reserve System and the dollar and all those issues that were really big issues a hundred years ago. Some of the most dominant issues in politics in public policy in the US were the debate over sound money, the gold standard, the bimetallic standard. And with the Federal Reserve coming into play, over a hundred years ago, a lot of these discussions kind of went away. Particularly, after The Great Depression when they tried to discredit the gold standard and move full on into keynesian economics.

Stefan Gleason:

But I think we are in a better position. Part of it is because we're in a worse position where things are kind of coming off the rails in the financial system. I think that's becoming more evident, but at the same time, we're seeing more discussion about sound money, the Federal Reserve, the role of precious metals. And of course, you're seeing an explosion in other currencies coming to fore with crypto. So I think all of that is positive, even though I think, ultimately, we're going to see a lot worse of a situation before we really have the opportunity to reimpose some form of sound money.

Fergus Hodgson:

Well, that's my key question that I'd like to explore with you today, how we can make that path right. Of course, not only, let's say, is there more awareness now than there was 20 years ago, but there's also more technology at our fingertips.

Stefan Gleason:

Right.

Fergus Hodgson:

Do you foresee... I mean, there doesn't have to be one path, but will private currencies go the cryptocurrency route or do you really believe that gold and silver will have an important role to play?

Stefan Gleason:

Well, gold and silver have the tangible aspect that a lot of cryptos don't. And I know you can have a link between cryptos and actual physical metal. And there is a value in all these cryptocurrencies, there's utility around them... Not all of them, but many of them. So I think they all play a role. Gold and silver have a history. They have their money, they're considered money, they're held as money, they're a reserve asset on bank balance sheets. They don't talk about it as money, but they know it's money. And in fact, it may be part of the... It is part of the solution to the problem down the road to remonetize gold at a much higher price. It's actually part of the solution to bring solvency back into the system.

Stefan Gleason:

But I think all of these things are working together to give people more options in a free market to choose a currency in a payment medium. Of course, governments are pressing on that. The IRS and other governments around the world are really trying to get into the business and trying to regulate that, trying to tax it. It seems like it's taken on a life of its own. And I think they may not be successful as much as they'll try, but I think all of these things are complimentary and it's really about a non-government currency. And people should have that ability to choose and let the free market decide what the best currency is or the best currencies.

Fergus Hodgson:

Yeah. No, I agree. We don't really dictating what the proper currency must be and whether it has to be coins or some kind of 100% backed representation. Right now though, of course, and I try to pay people in cryptocurrencies and it's been an uphill task. An uphill path. So what are the most promising shoots of hope or promising news tidbits of late that suggests we're actually making progress towards escaping the central bank fear currency system? And like you said, it seems like it can be one step forward, two steps back because, of course, the central bank digital currency development, it's a specter, right? It's looming, and not in a positive sense.

Stefan Gleason:

Well, I think you can look, first of all, just the number of people that are owning gold and silver, for example. I mean, there's been a very, very big increase in that in the last two or three years. Really, the last 15. There was a huge wave of it around 2008 to 2013. Kind of simmered down for a few years. But basically, since 2019 and certainly when the pandemic hit in 2020, the number of people that got involved in precious metals has gone up multiples across the globe. And so I think that's one positive thing. I agree with you on the technology and on the cryptos and making payment. And that's even the case with gold and silver. I mean, I don't personally have a desire to make payment currently in gold and silver or even crypto because although I'm not a huge crypto person, I would rather just hold that. There are other more convenient ways to make payment.

Stefan Gleason:

It usually means in Federal Reserve denominated financial transactions, but I don't save in those things. I don't hold large amounts of Federal Reserve dollars because that's not a good store value, but it's a convenient payment mechanism currently. And I do think that on the crypto side, there's definitely a lot of progress that needs to be made in terms of the enabling of these technologies to be more practical and understandable. I mean, I know just kind of thinking about the whole wallets and treasure and all the different things. It's very scary. It's kind of clunky. Obviously, tech savvy people can handle it, but in terms of the common person, it's a long way before that kind of technology is really comfortable for people. And I think that will develop over time, but I think that's one of the problems right now.

Fergus Hodgson:

Yeah. So we're going through these teething pains, even though people want, they want an alternative, we see inflation. And maybe you were right about the fact that the alternative is almost benefiting from the found or the poor performance of the status quo, because I always think of other countries that struggle with inflation and what do they do? They dollarize, right? They start to use the US dollar. But what happens when the US dollar goes under?

Stefan Gleason:

Well, and that's the thing.

Fergus Hodgson:

What do you do then?

Stefan Gleason:

Right, right. It's Gresham's law, the bad money forces out the good money. So the good money goes into hoards, private hoards, or they're just not used as circulating payment media necessarily, but there may be a point where that's necessary. And to have these alternative mechanisms in place, have people have precious metals in their home safe or stored somewhere, both in small denomination, large denomination to have crypto access and the ability to make payments that way if things really start to go off the rails. And like you said, in Venezuela, the US dollar all of a sudden became the hard money. I mean, that's kind of the worst case scenario is that the US dollar system falls apart and you have to go to something else. But that could happen.

Stefan Gleason:

I mean, I think that they're trying to manage that and basically just paper over the problems by continual devaluation. Slow, but steady devaluation. And prevent that total route. But maybe they won't be successful and it will be a rocky transition for people, but I think we're better prepared for that today than 20 years ago. Way better. Like you said, people are more informed, there's more technology, and there's also more actual alternatives than there were.

Fergus Hodgson:

Yeah. I mean, I've read The Creature From Jekyll Island. I mean, like I said, I've been following this for a long time and if someone hasn't read that book, please do. But aside from holding precious metals, physical precious metals, what can people do to facilitate this peaceful transition, right? This peaceful transition away from fear currencies to private money. And do you see any cryptocurrencies that you like the look of? You said you're not that much a fan of them. Why not?

Stefan Gleason:

Well, it's mainly because I don't see the business case yet. I mean, I'm looking at it partly as a retailer. And we do accept Bitcoin and many other cryptos on our website. Very few people use them. We're happy. We're one of the few that will directly accept it and we'll directly pay it. If people sell us gold, we will directly pay you Bitcoin cash. I've been to some of these conferences, I've seen there's a tremendous amount of speculative fever. There's very little discussion about how to make this practical. It's all about the next big ICO. To me, it's just very, very, very early. And so I think there's real value there, and I'm in favor of it as an alternative. And I think that the market will hopefully be allowed to let that develop. But it doesn't have the credibility yet, I think, that precious metals have. But, again, they coexist and there is some overlap between our customers for precious metals and people that buy or are involved in crypto.

Stefan Gleason:

But it's not a huge overlap. And I think part of it is because the reason that people buy gold and silver, typically, is because they don't trust having any other counterparties or third parties or not having their actual assets in their possession. And they're not necessarily technology savvy people. And there's a trust involved in having that technology sort of be the barrier between you and your money. And so a lot of folks are not interested who are precious metals people because they want to hold and know they have the actual payment medium and money in and of itself in their hands. But they have the same philosophy though. And that's where there's a lot of consistency between the two. And that is that they're in favor of limited government and government, or freedom of action with respect to money. And it's the same kind of people, maybe a little bit more libertarian leading in general than the general public on both fronts. And I think it's a positive thing, but it's definitely a different group of people about 85% of the time between the two.

Speaker 5:

The Gold Newsletter is proudly sponsored by Inventa Capital Corporation. A venture capital advisory firm dedicated to the acquisition and development of assets in the natural resource sector. Today, Inventa is one of the premier mining groups with a first rate portfolio of companies and a world class team.

Fergus Hodgson:

This is the inventor mining update on the Gold Newsletter Podcast. I'm pleased to have Mike Konnert. He is the CEO of Vizsla Silver Corp. That's Vizslasilvercorp.ca. Now I know that's a little bit awkward spelling. So I would like the editor to put that up there in the video and we'll also have it in the show notes. The ticker is VZLA, that's on the TSX Venture and on the New York Stock Exchange American. So Michael, welcome to the show. I see on your website you've got plenty of action going. Do you want to talk about what it means to now be on the American Exchange?

Mike Konnert:

Yeah, absolutely. So that was a huge amount of work from our team to be listed on the NYCE here. So we're very happy about that. Very excited about that. And it was one of our internal goals for quite some time as well. So that was a great accomplishment by the team. And for us, the reason we wanted to do that and why we're excited about this is that it opens us up to a broader group of investors, more eyeballs on the company. I think that we have great story to tell, and our focus will be to tell that to a larger audience that generally likes to invest on the New York Stock Exchange.

Fergus Hodgson:

Okay. And do you mind me asking? How much of a bump does that actually give to a share price being listed on multiple exchanges like that? Does it give you a boost?

Mike Konnert:

Well, I think it does over time. It's not an immediate thing. But there's a couple of things that obviously shows that there's been a more thorough diligence on the company and on our reporting and things like that. So it gives a little bit of credibility, I would think, to the company. Sometimes Canadian juniors have a little bit of a poor reputation compared to US listed stock. So that's a great reason. And then also, it allows for more trading terminals, more programs and things like that to access the stock and not have to pay currency conversions and things like that.

Fergus Hodgson:

Right, right. And the other press release you've got out is about a new discovery in your Panuco projects in Mexico. Do you want to clarify what the latest details are?

Mike Konnert:

Well, that discovery is really exciting. We were drilling into the Tajitos Vein and unexpectedly hit this discovery here in the hanging wall. So it's called the Copala Vein. It's a new vein that we've discovered in and around the Tajitos area. And reason why that it's exciting is because it's extremely high grade, over two meters of 3.7 kilo silver equivalent. So it's a very high grade silver and gold. But it's in area that we were expecting just to drill through and didn't expect to see that high grade interval in a larger, broader interval of about 200 grams silver. So these are great grades. It's excellent for an underground mining operation. And it's a bit of a surprise. And the reason I think that's important is because this district is full of surprises. Tajitos was actually a little bit of a surprise as well too. And I think that we're going to make more discoveries like this across the district.

Fergus Hodgson:

Right. And do you want to give people a sense for the timeline for upcoming events for the company? What's next in the pipeline?

Mike Konnert:

Well, it's going to be a very busy first half of the year. We have our main resource coming out in this quarter, in Q1, of this year. We're also flying the property with airborne electromagnetics, and that will help us factor into new discoveries, I believe, in the district. And so this year can really be categorized as one of growth around the existing resource area, as well as new discoveries throughout the district. And so what's new for 2022 is that we're dividing the district up into thirds, focusing on the Western portion, resource drilling around Napoleon and Tajitos. And then other follow ups discoveries in the central area, and then brand new discoveries, ideally, in the East with some great prospects that we've worked up over the last year. So it's going to be a lot of joy and a lot of excitement around that. And then, of course, in the background, we're doing everything that we need to, to basically de-risk the project and move it towards production.

Fergus Hodgson:

Excellent. Okay. So folks, go to vizslasilvercorp. That's V-I-Z-S-L-A silvercorp.ca to get more details. The ticker symbol is VZLA on both the TSX-V and the New York Stock Exchange American. So, Michael, thanks for your time.

Mike Konnert:

Thank you.

Fergus Hodgson:

Yeah. One of the weird elements of cryptocurrency is that it's a bit like in the internet or communications online that, of course, initially the presence of the internet allowed for decentralized information sharing. But then suddenly, everyone seemed to cluster around Google and around Facebook and Twitter and we're right back to where we started, almost more centralized than we were before. And then this happened with the cryptocurrency space, with everyone jumping in with Coinbase. And one of the reasons why is just the fact that Coinbase has had the fanciest lawyers to get them to jump through the regulatory hoops. Now I hope that they do not just [inaudible 00:18:35] monopoly advantages to some degree, they're so dominant. But it is true that, people, because of their lack of trust or lack of understanding have preferred to have some kind of custodian, to have an exchange handle their cryptocurrencies. I don't know. You didn't necessarily take on my first question, which is, okay, you've got the Ferguses of the world who are every week advocating sound money, basically like you. What can I do on a day to day basis to actually facilitate this change?

Stefan Gleason:

Well, so this is kind of getting into what we're doing on behalf of the precious metals industry and the precious metals owners and buyers and really just the cause of sound money. And there are impediments right now in both the purchase and the sale and the use of precious metals that are erected by both the federal government and by states. And so in a very practical sense, we have been working actively in many states and that's where most of the success has been in recent years. The federal side is much more troublesome and we're involved there, but the promising side is really the state level. And that is in particular on removal of taxes. So right now, if you buy cryptocurrency, you're not paying a sales tax when you make that purchase. But in eight states in the US, you pay 100% sales tax. Not a hundred percent rate, but you buy gold and silver, you're paying 7, 8, 9% on all gold and silver purchases in those states.

Stefan Gleason:

And then there's another handful of maybe 5 to 10 states that partially tax or tax certain types of transactions or under certain thresholds. So removal of the sales tax, we feel, is one very practical way to free gold and silver up a little bit as a viable currency because there's friction on buying. And then there's friction on selling and that's the tax on income. And both at the state and federal level, you have income tax, which currently because the US treasury feels that gold and silver is not money and they treat it like property or other financial assets. If you have a gain, which might be driven or derived largely from inflation, but it's a nominal gain when measured in Federal Reserve, no dollars, you have to pay an income tax on that at the federal level. And you actually pay it at a higher discriminatory 28% capital gains tax rate, which is not even assessed against cryptocurrencies.

Fergus Hodgson:

You mean that's higher than you'd pay just for gains on stocks?

Stefan Gleason:

Right. Stocks are 15 or 20% for long term capital gains. And so the IRS has done this unilaterally. It's not even backed by a statute. And it's more a regulatory approach. They had called gold bullion a collectible. And there is a 28% tax on collectibles for long term capital gains. If you have a stock or a bond or a piece of real estate or even cryptocurrency and you have a gain, you would pay 15 or 20% federally. And it depends on your income if you have over maybe 450,000 in taxable income, it's higher, it's the 20%. But it's not 28. So gold and silver have a discriminatory high federal income tax when you sell. And then states follow that federal income reported number that you have when you do your state tax return. So they inherently are taxing your precious metals income as well.

Stefan Gleason:

And this is where some states have stepped in, in recent years with our help and other activists and people around the country have actually removed or backed out the gold and silver gains or losses even, from your federal income number or I should say from the number that's reported as state income. And so it's like a subtraction out. So we have Arizona in particular and Utah have passed these laws on the income tax side to remove gold and silver from the income tax at the state level. And there's a bill currently today in Oklahoma. There will be one in Iowa and there will be one in South Carolina in the next few weeks that will do just that in those states. And so there's progress on the sales tax side. I mentioned that there are eight states that currently charge a sales tax, still full sales tax.

Stefan Gleason:

There are five of those states that actually already have bills this January to repeal the income, the sales tax on gold and silver. Those states are Hawaii, Kentucky, Mississippi, Tennessee, and New Jersey. So there's five bills to repeal sales tax. That would take it down to just three states if we pass all three of those or all five of those. And then there's several on the income tax. So those are the two, I'd say, most practically meaningful things that states can do right now, would be to remove taxes on the buying and selling of gold and silver. There's things beyond that that we're working on as well. But that's kind of a, maybe 50% to 75% of really where we're focused.

Fergus Hodgson:

Yeah. And it seems like it's a situation of regulation via taxation in that the taxation is really more as a punitive measure than as a revenue generator.

Stefan Gleason:

Well, in fact, even in the sales tax case, it's a revenue negative for those states in the context of it driving business out of the state. So if you're in Tennessee and you're a dealer in Tennessee, first of all, people are going to go to Arkansas to buy gold and not pay tax because we passed an exemption there last year. And then they might drive it back into Tennessee. And maybe the tax bureaucrats will eventually say, "You owe a use tax on that because you imported gold or whatever." But the bottom line is that Tennessee businesses are harmed. And as a result, there's less income tax from general business activity. Investment knowledge are leaving to go to other states. Conventions. It's not a big thing in the bullion area, but in the collectible coin area. Coin conventions are kind of a big thing in the big events and dealers come in and customers come in and people travel long distances.

Stefan Gleason:

Well, the states that have sales tax, they don't get these conventions anymore. You have the tax bureaucrat milling around harassing people at their booths, asking for their certificates, taking down names of who's there, seeing if they can figure out if they filed their reports. So a lot of these conventions are not in these states, that's business activity that's left the state. So the whole idea of taxing the exchange of Federal Reserve notes for another form of money is... I mean, it's a tax on money. It's a tax on making change. And then the other idea of sales tax. I mean, sales tax is really ridiculous when it comes to precious metals. There's no basis.

Stefan Gleason:

I mean, the other thing is it's an investment. It's an asset. It's not being consumed. And the idea of a sales tax, if there's any validity to a sales tax, it was always about taxing the final user of a good who consumes it. A person who buys the clothing or eats the food. But I mean, gold and silver is inherently held for resale. So the idea of taxing something that's continuously being sold and resold like a money, because it is a money, or an asset at least, is ridiculous. I mean, these arguments are resonating at the state level, and we've been successful in getting that number up to 42 states. And we're hoping to push it further in the next session.

Fergus Hodgson:

I mean, I'm all for these initiatives, and I wonder whether there will be a nullification scenario. What would nullification look like in the case of sound money from the states?

Stefan Gleason:

That's a good question. So I think the state holding gold as a reserve asset, and it's not even nullification, literally, it's prerogative to both hold gold as a reserve asset, but also to make... The US Constitution article one, section 10, actually prohibits states from making payment in anything other than gold and silver coin. And that's kind of become a dead letter. It used to be that while they were paying in dollars and dollars were backed by gold, so they were still compliant. Well, now that that has been broken. So I think really just the states going back to first principles, which is gold and silver is money. It's really the money of the states under the US Constitution. In fact, they're only supposed to use gold and silver. And getting the state back in the business of, number one, not taxing it on both the buying and the selling. Getting the state to hold it as a reserve asset, so it insulates the state from financial turbulence at the federal level.

Stefan Gleason:

Get money out of the Federal Reserve System, hold it in a depository with no encumbrances, imbailment, without segregated physically from other holdings, possibly held within the actual state, if they have the capability of doing that. And then getting comfortable with the idea of using gold as people want to pay their taxes in gold or if they want to be paid in gold, coming up with a system. And there's been bills in certain states. There's one that passed in Utah, there's one being proposed in Wyoming that sort of get the state treasurer into the business of dealing in gold and silver as a form of money in the state. And those are very early efforts. But I think that those are the kinds of things that states should be doing and looking at beyond just re removing the taxes.

Fergus Hodgson:

Yeah. So if they remove the taxes and then start making their own investments in gold and silver, at least that's scaling the market, it's giving some momentum. Maybe you do this because it's so difficult, but what about on the individual level, just in our own lives?

Stefan Gleason:

Well, I think everybody can go on their own gold standard or silver standard on their own. I mean, at least in the sense of actually accumulating these things and opting out of the federal reserve system to some extent, I think everybody should do that. It starts with that. That's one of the things that my company Money Metals Exchange is doing every day is helping people do that. We even have a monthly savings plan where you can put it on autopilot. So I think that's probably the first most practical thing. Another would be to talk to other people about it. I've found that putting an ounce of silver in somebody's hands is one of the best ways to kind of open their mind to what is money. And it's beautiful, it's heavy, it's weighty, and there's history.

Stefan Gleason:

And it often gets the wheels turning and then people start looking at this whole system, the Federal Reserves. That's actually what got me interested 15 to 20 years ago. I hadn't given it a whole lot of thought until 20 years ago. And then the more I learned about how the Federal Reserve System works and really that it's a confidence game. There's nothing backing it. The Federal Reserve note is not worth the paper it's not printed on. I love that expression. I didn't come up with that. But you don't necessarily think about that. Most people don't still. So I think it starts with people becoming aware of themselves, taking action themselves, talking to others, and not being overly reliant on the financial system, not having a huge amount of cash in the bank. Making sure that you're diversified out of financial assets. I think that's probably the basic start.

Fergus Hodgson:

Yeah. So initially, we don't even... Well, I mean, the focus is not so much on the medium of exchange, but on just making the holding of gold and silver normal again.

Stefan Gleason:

Right. And you can go beyond that. And this isn't something we're really focused on, although I'm sure many of our customers do. But I mean, I sometimes will pay somebody in silver if they'll accept it. I took my kids skiing and I was staying at a bed and breakfast and the guy wanted cash and I actually didn't have enough cash, but I had some silver and he happily took it. He actually gave me a discount. He understood what it was. I mean, I don't do that very often, but it was kind a neat experience, a reminder that inherently many people get it, and given the opportunity would accept it as payment. Right now, you don't have to. Tendered as payment. There may be a point where somebody says, "I don't want Federal Reserve notes. I want only silver." Or, "I'll give you a discount if you give me silver or gold." That kind of thing can happen. It does happen in some local areas.

Stefan Gleason:

But there's another thing that's interesting. I don't know if you've seen this, the gold back yet. But the there's the spendable gold bullion that's infused into a polymer bill shaped unit. And it's a very small denomination form of gold. And that's kind of a neat innovation that I think has some promise at the local level, because it is gold and it's gold bullion, and it's not very high premium considering what you're getting. I wouldn't put all my money in that. Gold coins and bars are much more efficient, but it's another mechanism and a way of using gold and silver in very small increments or gold in this case. Again, like you said, I think it starts with people just kind of reinforcing their own situation. And then beyond that maybe there will be a situation where you will need to use it. Hopefully, it doesn't come to that, but it could. And in the meantime, you're probably going to do certainly better than inflation.

Fergus Hodgson:

So you're saying there are basically notes that are in limited circulation that actually are [inaudible 00:32:42] back. The gold is actually built into them.

Stefan Gleason:

Literally, in the thing. Silver is already a small increment. 10 pounds of silver is $2.20. So that's dime sized. But gold, there's no small increment gold, really. I mean, you have a gram bar or a 1/10th ounce or a 1/20th ounce gold coin. But those are 50 to 100 to $200. So this is something called the gold back, which has a little niche in the market for being the only real practical, small denomination gold. I like that idea too, because even though it's just one type of gold that you can own, but it also, for some reason, I think that it connects with people psychologically because we've all been sort of trained over the last hundred years or during our lifetimes, the last 30, 40, 50 years that this is what money looks like. It's a piece of paper kind of thing. And so people see the gold back and they go, "This is money. Okay, I get it. This is money, but it's actually worth what it is worth. Instead of being..."

Fergus Hodgson:

Right. It's face value means something. Yeah.

Stefan Gleason:

Yeah. So it's almost like a gateway in a way. It's another way of reaching people on sound money. And that's one of the reasons I like it in the certain situations.

Fergus Hodgson:

Do you foresee then mass, let's say non-compliance with the tax impediment? So it seems like you said right now, the sales taxes in some states, but even if we do away with those, the Federal Government or the IRS has basically put this tax impediment. So does it mean that there's going to have to be mass non-compliance because it seems... How would we turn that around? Is there any law at the federal level in the United States to pull that back?

Stefan Gleason:

Okay. Congressman Mooney has a bill on the income tax that would remove the gold and silver bullion coins, bars, and rounds from the income tax. It would literally take them out. You wouldn't report gains, you wouldn't deduct losses. It would be just like the Federal Reserve note where it's transparent. It's not an entity. There's no gains, no losses.

Fergus Hodgson:

It's purely medium of exchange. Yeah.

Stefan Gleason:

Right. And so that would be very significant because that's 28%. That's huge. Way more than the sales tax. So that bill is sitting in the House Ways and Means Committee. I think that's Maxine Waters, so that's not necessarily a friend of anything free market or sound money. But in a situation, again, these bills are there, they exist as a repeal of income tax, there's a bill to audit the Federal Reserve or actually audit all US gold that he has as well. Which hasn't been done in any meaningful way for about 70 years. And that that is credible. And so these things are there. I think in a crisis or in a situation, those things are written, they're there. We might see them grabbed by the right people and pushed forward.

Stefan Gleason:

There is a sound money caucus developing in the house. So that's a little bit of a positive development. Ron Paul is no longer there, but there are others like Mooney and there's a few others that are very pro sound money. And of course, with inflation becoming one of the big issues now, you're hearing a lot more people talk about it. They don't necessarily understand where the inflation's coming from totally, but there's a lot more discussion around the topic. So I think that after future election cycles, we might have a shot.

Fergus Hodgson:

So if there were actually the will, sufficient will... I mean, I'm not sure how much you'd need, but substantial because, of course, a move away from the Federal Reserve notes would tremendously reduce the power of the Federal Government. Do you any comments on that?

Stefan Gleason:

Yeah. Well, I think that as more and more people opt out of using the Federal Reserve note for savings or just in general, find other ways, I think that it lowers the demand for the Federal Reserve note and it hastens the potential demise of the Federal Reserve note or moving to another system. Some people think that's not patriotic. King dollar. I don't want to be against king dollar because that's being against America. But I mean, honestly, this Federal Reserve System is anathema to everything that America stands for. It's about central government control of the economy through monetary policy. And it's totally opposite what the founders intended when they set up the US Constitution and established the coinage act in the early days of the Republic. And we've gotten so far away from that.

Stefan Gleason:

So I think people have a civic due to prepare themselves, understand, and then move away to the extent they can from this. That said, on the tax subject, I would never encourage somebody to not comply with income tax. I report everything that I'm required to report. But I do think that... On the sales tax, that's why they go up to the businesses. They want the businesses to be the bagman for-

Fergus Hodgson:

They're easier targets.

Stefan Gleason:

They want me, my company, Money Metals or the other dealers across the country, we've now had to comply because of the Supreme Court's Wayfair decision, which basically allowed us to be forced into this every state sales tax collection scheme even though we had no presence. A massive burden on our businesses.

Fergus Hodgson:

It's crazy. Yeah.

Stefan Gleason:

So that's where it is. And then the individuals though, I mean, do you know that if you go to the grocery store and they accidentally don't charge you sales tax on something that you are supposed to file a use tax return with the state of Colorado? I think that's where you are.

Fergus Hodgson:

Yes. Yeah.

Stefan Gleason:

I think you might have that obligation and you probably don't even know it. And most people don't.

Fergus Hodgson:

I don't know. And my assumption, basically, is that's already a huge untaxed portion of the economy that even state officials know this, but they don't really know what to do about it. We just live in this kind of limbo of some portion untaxed. I just suspect, and I know this is the case with cryptocurrencies, that there's a great deal of cryptocurrency activity. Or there was, I'm not sure the latest rules on this, which basically just did not comply with tax requirements. So obviously, I'm a big fan of what you do, Stefan. I would love for Americans to have a renaissance in their thinking that understanding that sound money matters, that having actual intrinsic value matters and the way, like you said, that it's a very un-American thing to prop up the Federal Government contrary to the US constitution of who's there to limit its powers. So he is with the Sound Money Defense League. That's Soundmoneydefense.org, and his company is Money Metals Exchange, which is just Moneymetals.com. Any other place we should go to, to follow your work?

Stefan Gleason:

I would go to moneymetals.com, get on our email list because we will be able to send people alerts about pending legislation in their area and alert them. We just sent out an alert to three states today about contact the chairman of this committee to urge him to have a hearing on HB whatever. And that actually makes a difference. I mean, at the state level, people are not in the legislatures. They're not used to seeing much organization or grassroots. And so when they start hearing from people, they see it, they pay attention. I can tell you, we would not have passed the sales tax exemption on precious metals in Arkansas last year, if it weren't for the grassroots people on our email list who reached out to the committee and the committee chairman. He even called us up angry, because he was being bothered by so many people.

Stefan Gleason:

And I talked to Jp our guy, I said, "Well, let's just double what we're doing," because that's obviously making an impact and then he had the hearing and it passed out. And it was because of the grassroots. So go to Moneymetals.com, get on our email list. We also have the Sound Money Index at the Money Metals website. And if you go to the resources tab, you'll see it. And basically, we've ranked all 50 states on 12 policies that we believe are important on the Sound Money front, about half of it's related to taxes. And then it's related to other things like gold reserves, golden pension funds, the privacy, dealer harassment, customer harassment laws, things like gold bonds, other things that states can do reaffirming that gold and silver is money in that state. So if you go to the Sound Money Index, you'll literally be able to look at the laws of your state and see where they stack up among all 50 states.

Fergus Hodgson:

Yeah. That's a useful index because even the best state, Wyoming, as you noticed has about 40% left to go.

Stefan Gleason:

To do. Yeah.

Fergus Hodgson:

There's still a lot more it could do. Yeah. So Stefan, thanks for your time. Best of luck with your work. And I look forward to next time we can have you on, okay?

Stefan Gleason:

Thank you. Thank a lot, Fergus. Thank you very much.