Two serious questions about a "currency reset"...

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tankerfirstofficer
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Two serious questions about a "currency reset"...

I would like to solicit other views about an issue that I'm grappling with for the past several weeks. This is probably the best place of all to ask. ;-)

First, some pertinent background for perspective: I've followed the metal markets since 1985, and have followed it pretty much on a daily basis since 1998. I use the term "followed" in both cases in the passive sense. I never traded metals... I only maintained a close awareness of them. Furthermore, I never actually owned any metal until 2008, when I finally "woke up" and stopped defending this miserable system in which we find ourselves today. I say this as someone who had "Gone Galt" back in 2001. I shut down a consulting firm I ran and retired (went on strike) because of the massive amounts of horse manure that I would have to wade through in order to get anything accomplished -- courtesy of our friendly Imperial Federal and State Governments.

My aversion to metals was the result of buying into the notion that metals were "dangerous investment vehicles." While I understood some of the aspects of how government can literally sap the desire to create jobs and wealth in favor of pursuing leisure, I remained so utterly ignorant of the importance and role of precious metals until many years later.

At present, I hold "physical" metal in allocated depositories in several locations in the United States and abroad, and a small portion of REAL physical metal where I can easily access it if needed. I'm under no illusions about the metal held in depositories. While I can and have audited these holdings, I believe it may very well disappear in a SHTF scenario. Right now though, this stuff stays in depositories.

As the situation in the United States plays out, things must -- by necessity -- get worse. The fundamentals of the situation are deteriorating, and the insanity increases daily. This government-supported fascistic feeding frenzy on our freedom, liberty, and purchasing power are ever-growing, and will never be sated... no matter how high the debt ceiling might be raised. But with this said, I don't believe that a SHTF scenario is a likely one. It is a possibility most certainly, I just don't believe it will be a likely possibility, that's all. Also, I don't hold metal today under any illusion that it is any kind of "investment," but rather a store of value of my past productive effort and creativity. Nothing more. (Furthermore, I have never looked at any home I've lived in as an investment either... it was an asset that provided UTILITY, nothing more. The longer I used it, the less it costs over time.)

Okay... with that said, I have a hard time envisioning some transformation to the use of silver bullion to buy groceries, gas, or other necessities. I don't believe bartering metal for goods is something that is going to transpire, as it is horribly inefficient. Yes, I believe metal is money, but I just don't see how it's going to take hold as an accepted medium of exchange in this brain-dead environment.

One idea posited by some is that a new currency will be required when the FRNs lose their purchasing power completely -- when nobody wants to hold it any longer. This is an inevitable conclusion to fiat money, but it is also a situation that TPTB probably have also anticipated. I don't believe they're stupid... filthy, lying, scumbags YES; stupid NO.

Let's assume a new currency arises from the ashes of the FRN, but this time it is backed by precious metal -- say it is gold for the sake of argument. In order to conduct commerce, the "currency du jour" is going to be needed -- much as FRNs are now. In order to obtain these, metal would have to be redeemed -- and capital gains taxes would have to be paid at the rate of exchange, given how this metal is priced with respect to the old currency. (By the way, I don't know how the typical brain-dead American without any metal is going to manage to function... this is a mystery to me, but I must assume that people wake up at some point).

Governments don't "just forget" about taxes... especially capital gains taxes on monetary metals. I also expect these taxes to rise to stratospheric proportions in the coming months (or years?) as this system continues to fail.

So here's my question, which I believe I have answered -- but don't fully feel confident about it. This is why I ask the two questions here:

1. If metals are used to protect our savings from the ravages of inflation, isn't a capital gains tax on our metal holdings a guaranteed way to shoot that plan in the foot? I must assume that buying metal and being abused on the tax issue is better than not buying metal at all (basically, having 50% of your metal holdings after tax must be better than having 100% of worthless currency following a reset, right)?

2. Is there anyone from Argentina following these forums who can shed light on precisely what occurred in that nation when they went through these spasms of "government run amok"?

Without a model, I'm pretty much guessing as much as the next person... but action must be taken with the best available information at the time -- and this has been done. I just want to ensure I get it right, and share that knowledge with others for their benefit as well, if possible.

Thanks for hanging in there and reading this... it's very much appreciated in advance! :)
tanker1st.

Edited by admin on 11/08/2014 - 06:06
Know More
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Documentary on Argentina's Economic Collapse -2001

This may have some useful information:

Argentina's Economic Collapse - Part 1 of 12 (see all 12 parts)

I did a little research into the Russian economic collapse v2.0 (late 1990's and into early 21st century) and one notable aspect of that was the general attitude on taxation. At that time the Russian Federation had adopted and was using the US-style graduated taxation system. That was total failure as most people (particularly the more productive) saw it as unfair and simply found ways around it or opted out all together, hence major government revenue shortfalls.

The Solution (introduced around 2003(?))  was to scrap the US-style graduated system and adopt a flat tax (I believe at 12%) for all, very few to no loop holes, which resulted in the first time ever - post soviet union collapse of filling up the government coffers (and if I recall correctly in 2005 - a first time ever surplus in the 14 year history of the re-established Russian Federation).

I can see a trend where more people in USA find ways around and out of taxation as happened in Russia (when it comes down to survival - one can choose starvation, loss of some property,  or going to prison). Hopefully though - people in USA will demand and get something similar in the way of real tax reform- although, given the mess it is now in and has been in for at least 100 years - particularly politically and socially - I don't see that happening - without some drastic changes (e.g. large scale refusal to pay unfair taxes).

How are "American(s) without any metal going to manage to function..."

Apologies if this does not pertain to your question, but there are now many US communities issuing and using their own "money" -which are currently based mostly on the dollar, with some using PMs, so these may transition more easily to PM based money. 

All States should re-establish their own money systems and  a few months ago Utah state government did this when it authorized PMs as money. A number of other states are ready to do the same (interesting lack of reporting on this movement in controlled media). 

There are also tens of thousands of businesses -nation wide- that accept PMs for  a wide range of products and services (3 years ago, an organization had a website with a regularly updated list of (then) up to 21,000 businesses; about a year ago -that list and website went away). These may continue to function even without exchanges for some  form of fiat (depending on taxation schemes that will be cooked up).

Barter organizations, though inefficient as you say,  are also setting up - and more rapidly now and are now attempting to network - via internet - nation wide.  

tankerfirstofficer
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Know More, many thanks for this information.

I was indeed aware of the growing trend of states (such as Utah) to make bullion valid for payment -- but I thought that was only for taxes, and were I a resident of the State of Utah, I would continue to pay those taxes in dollars. What I would REALLY like to see is payment for services I render in silver or gold. This isn't going to happen anytime soon though.

I'll give that video series a look shortly... this is exactly what I love about this community. It took no time at all for some excellent discussion and exposure to links about which I was completely ignorant to materialize.

Many thanks, once again!

ohiometalman
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@tankerfirstofficer

tankerfirstofficer wrote:

Governments don't "just forget" about taxes... especially capital gains taxes on monetary metals. I also expect these taxes to rise to stratospheric proportions in the coming months (or years?) as this system continues to fail.

I have recently unplugged from the matrix and it feels wonderful.  I cashed in my chips, paid my tax bill and flipped the bird at the banks.  Also had a lot of fun making the bank cough up the cash once all the transactions cleared and then closing accounts, you would be amazed at the shit you get for asking for your money from your account in CASH.  This only further enforces my belief.

My 2 cents on this, your question about capital gains is because you play in the "system", all that "allocated" metal is also very trackable.  This is why  the government/bankers would rather you NOT hold physical metal.    If I go to a coin dealer to convert metal to fiat, then NO track and trace and even if there was I can claim I bought what I had for a much higher amount with NO track and trace.  Further more I can trade or exchange for things I want with a private party with metal or fiat with no track and trace.  Unless you unplug completely and only utilize  the system for a minimal set of transactions, there is no way to avoid this, no different then if you play the stock market...

Know More
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Utah Sound Money Act 2011 PDF

tankerfirstofficer: you're welcome and you're right about the website - it's about spreading useful information in order to survive the coming calamities.

RE Utah's PM use as specie - here's some excerpts direct from the Utah Sound Money Act of 2011 - the state does now allow PMs (and a wide range of PMs, exchange for FRN fiat units (a.k.a. dollars) based on spot prices) for all transactions - including paying taxes (but I'm with you - and wouldn't turn over even a gram of PM to any government representatives): 

"59-28-201. Standing Specie Offer. All Utah Governmental Entities are hereby deemed to have made a standing offer to each other as well as to each and every Utah Taxpayer to use Registered Specie as a medium of exchange not only with respect to the collection or return of taxes and fees, but also in connection with any other transaction within the course and scope of Utah Intrastate Commerce, ..."

Also - PMs to be exempted from state capital gains tax, but still subject to the DC gangs' capital gains taxation.

59-28-601. Capital Gains Tax Inapplicable...  

59-28-602. Sales/Use Tax Exemptions. ..., no sales or use taxes shall apply to the the sale or purchase of Registered Specie ... "

Here's the full PDF of the Utah Sound Money Act 2011 (9 pages)

http://connorboyack.com/drop/SoundMoneyAct.pdf

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