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View Full Version : South Carolina's Silver and Gold House Bill - serious discussion



Gene Daniels
8th February 2010, 08:33
OK, let's start collectively thinking about this.

On the one hand I liked what aequitas said,

"Instead of fixing silver and gold weights to the dollar just repeal legal tender laws and allow gold and silver to compete as currency. See how long people keep using money that constantly loses value."

I think the very best case would be for states to treat PMs as currency and let people decide which one they wanted to use (however hard that is to imagine actually happening). This would be what we call a "push" approach to the issue, trying to push people toward PM usage.

On the other hand, I can appreciate the SC house wanting to connect their bill to constitutional definitions of money. There is great value in crafting the bill so that it touches back to the constitution - it is harder for critics to bash. But by fixing the value PMs, they are starting the process of pulling people toward having a paradigm shift toward seeing gold and silver as monetary instruments.

I think this is probably the best way to go, but it might be hard for some on this forum to see that because we have already had the paradigm shift. However, short of a complete collapse and return to barter, something no one really wants to see happen, fixing the value of PMs is probably the best way to moving the population in that direction.

Now I am curious to see the reaction on this forum to my attempt at a real discussion. Some people here are so focused on arguing and bashing others that I have begun to dispair of such without more adult supervision on this site

aequitas
8th February 2010, 12:42
The problem is that if one state pegs a dollar amount to weights of gold and or silver so they can be used to pay taxes, then whenever it went above the value set by the state everyone would cash in their gold and silver and use FRN's to pay taxes. I suppose they could set it so the state offers taxpayers a slight premium over spot, but then the state would be even more subject to the volatiltity of the silver market.

I agree though that it is a step in the right direction, a step back towards the founding principles and the constitution and it sends a strong message that people are becoming increasingly aware of the evils of our current monetary system under the FED.

I'd like to see some silver coins minted by states for ciculation that would compete with FRN's, Ben Bernake might have to bust out his helicopter if that ever happened.

digger
8th February 2010, 13:09
Hugo Salinas Price put out the proposition that for silver to be monitized the silver coin can have no denomination stamped on it.

See his essay on this here:

http://www.plata.com.mx/mplata/documentos/images/Hugo%20Salinas%20Price%20Gold%20&%20Silver%202009%20English.pdf

He describes his example of how to monitize silver in Euros in Section II.

The second indispensable condition for successfully carrying
out the conversion of the silver ounce into currency which will
circulate in parallel with the euro is: the last monetary quote given
to the ounce by the issuer must not be reducible...

The reason for this unusual condition is that ever since silver
ceased to have monetary value according to weight, the monetary
value of all silver coins was always and everywhere a fixed value;
it was a fixed value because all these coins bore an engraved or
stamped value.
In order for the silver ounce to cease being a commodity and be
currency it is indispensable that its nominal monetary value be a
fixed value which cannot be reduced – just as is the condition of
present euro coins and bank notes – along with which the ounce
is to circulate in parallel.
If the quote is allowed to fluctuate in value downward, according
to the price of silver, then the ounce will not be currency: it will
continue existing as a commodity...

Even if silver’s price were to fall to the value of copper – and we
cannot visualize a worse case – the monetized silver coin would
continue to be currency at whatever was the last quote. If a
paper can be worth € 500, surely a silver coin can represent the
quote given to it by the issuer, independently of the value of the
silver it contains.

Sakata
8th February 2010, 14:25
The problem is that if one state pegs a dollar amount to weights of gold and or silver so they can be used to pay taxes, then whenever it went above the value set by the state everyone would cash in their gold and silver and use FRN's to pay taxes.

I think the Georgia bill had it set up so that you had to have a gold or silver account from which payments were taken. I assume that you would put in a certain amount of gold at some point and when your taxes were due you would have an amount of gold taken out as the current spot price. Presumably the idea is that you could put, say, $3000 worth of gold in at the beginning of the year to cover your property taxes and when taxes are due at the end of the year then only $3000 at the current spot would be taken out and you would, hopefully, be left with a balance to carry forward. If you put gold in the same day you paid your taxes when there would be no benefit in paying in gold over FRNs.

If my interpretation is correct then this is very different from the SC proposal and makes more sense. I still see it as a weakness though because it is still paper gold they are talking about. I don't expect that they will require you to maintain physical gold in your state account.

aequitas
8th February 2010, 15:08
Presumably the idea is that you could put, say, $3000 worth of gold in at the beginning of the year to cover your property taxes and when taxes are due at the end of the year then only $3000 at the current spot would be taken out and you would, hopefully, be left with a balance to carry forward.

So it would exempt you from the capitol gains tax? Otherwise how is the account different from just holding it yourself?

AgShaman
8th February 2010, 16:54
Discussions about this wil never enter into the realm of serious, but rather devolve into tit for tat meaningless banter and semantics. It ends up being like Keynesians discussing "sticky" prices with the New Keynesians and whether whose methodology has more relevance in this new millenium world.

Gold and silver bugs are just as out of touch as their counterparts that remain clueless as to the history of fiat money. Discussing things like grains content and conversion rates make it obvious to me these PM bugs cannot see the forest or the trees on this issue. Caught up in the moment with figuring out how gold and silver may or may not work within a system of debts and liabilities regarding the state of South Carolina is just silly IMO.

This issue is about power and one state's realization towards it's obligation to it's own people and their lack of any safety net. Gold and silver certainly have a better track record throughout history when compared with the paper fiat alternative. How people (within 100 years time) could have lost their cognitive connection with gold and silver as being honest weights legal tender and a tangible asset that deserves once again the primary role of money is what the primary objective of this bill is all about.

Gold and silver bugs have been "crying wolf" for years with regard to the federal reserve's fractional banking system and it's printing press debauchery. These bugs are their own worst enemies and real issues are always lost within the noise that ensues. They are so concerned with waking up the less enlightened about fiat currencies and the history of the FED that they've forgotten about the first chapter of the story. Gold and silver were first....before paper(funny) money, and they will fail to gain their relevance once again in today's society before the fact. Perhaps after the fact, when financial armageddon unfold's entirely into total destruction. But that's not the point of this thread......to wait for the destructive inevitability.....what kind of plan is that?

Without offering any viable alternatives to fiat currencies and their rates of debasement....nobody should expect the people to awaken from their slumber. South Carolina is way more enlightened than any gold or silver bug....they have seen the forest and the trees.....and have upped the ante by doing more than complaining about the FED and it's corruptive practices. They have attempted to provide an avenue for gold and silver to enter into the picture once again and be in direct competition with a private cartel's monopoly. They seem like a bit of a beacon in these dark times....and I would think the other 49 states should feel ashamed at this point in time for not taking a more proactive stance with looking out for the people of their own states. The enemies will see this as sedition and any proponents will be dismissed as "quack fringe" types.....certainly key to undermining the education process of South Carolina's population and to shift focus away from their own fiat's ineptness at providing long term stability.

Curiosity will not kill the C/Kats of SS Nation!

realmoney
8th February 2010, 19:55
Civil discussion, love it.

I thought about this bill (or actually returning to PMs as legal tender) a lot lately, just mulling over potential issues that would need to be addressed.

Problem 1: One problem I think would be dealing with the return to physical forms of money. If I wanted to pay for a car in silver, that might be ok back in the day when a few hundred oz would do the trick, but I would literally need to back up the dump truck to do this with physical. Even small purchases would add up, and would be a burden to merchants.

Possible solution: Use a goldmoney type system that is run by the state. People would deposit physical in a safe holding with the state, and use goldgrams or silvergrams to make purchases. See goldmoney site for more info about this type of system.

Problem 2: Interstate commerce. If SC passes such a bill but GA does not recognize it, might be issues when a SC company tries to pay the logistics/trucking company in PMs (the goods are shipped across state lines). Fed govt would probably want to jump on this also.

Possible solution: I'm honestly not smart enough to tackle this can of worms, but may be as easy as forbidding the use of PMs in payment in any way involving services/goods in any other state.

Problem 3: Constitution states (Article I Section 10):
No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

Accepting PMs as legal tender might be construed as "coining money" since it is the state's law that gives the coins the status of "money" in daily transactions. Again, the fed govt will probably use this as an excuse to stop any bill that has a chance of passing.

Solution: This will be the battle lines IMO for any bill like this. If such a bill actually gets passed, this will be its biggest fight.

RM

DaBrownsRPhat
8th February 2010, 19:59
We can have a serious discussion about this.

U.S. Constitution
Article I, Section 10
"No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility."

The several states which signed the contract known as the U.S. Constitution are not allowed to "make anything but gold and silver coin a tender in payment of debts".

One thing I love about the Constitution is it's engineering. It says so much, but so simply in a very small amount of words.

DaBrownsRPhat
8th February 2010, 20:20
"Accepting PMs as legal tender might be construed as "coining money" since it is the state's law that gives the coins the status of "money" in daily transactions. Again, the fed govt will probably use this as an excuse to stop any bill that has a chance of passing."

:confused:

Legal tender is payment of debt. It not only is constitutional, but using gold and silver as payment of debts is the ONLY thing specifically stated that is legal tender in the Constitution.

It is not the state's law, it is the U.S. Constitution.

I would think the sticky spot for it to be passed would be more of the fact that Congress is given the power of weights and measures.

The thing is technically, the state doesn't even need to pass this as a law, because it already is law, the law of the land. They do not have the power to fix any pricing due to Congress having that power.

This may sound weird to this welfare state generation, but guess what? People can just work that out for themselves. If people want to base things off of the spot price and the market goes that route then fine. If the market develops its own way of doing it then fine, because it will have to, and it will work out naturally and be something stable, not artificial. Truly, we would need Congress to set any price fixing of dollars and pm's.

We have been used to and only really have known everything priced in terms of dollars (for most of us). If the market ends up being based off of pm's, dollars would end up being more difficult to work out. Instead of thinking in terms of dollars, think in terms of gold and silver. How many grains or oz's are you willing to part with for the product or service and how many will it take for the other party to be satisfied and agree?

Obviously the weight of the physical metal can be challenging for some transactions, but really, if the system was based on that, it wouldn't be a problem.

People need to know what real money is, and it isn't a piece of paper. Also, people need to understand what a federal reserve note really is, and it is not a payment to satisfy a debt, it is another debt obligation passed around, it doesn't really satisfy the real debt.

The problem is that we allowed the government to do this to us. We have kept quiet while they steal wealth through inflation, and so now when you think about handing over gold and silver for let's say a house, the amounts seem so grand. If we didn't have the inflation, it wouldn't be like that because prices would be based off of real money, not exchanging of monopoly money. The dollars, or federal reserve notes have never ever been the real money. We need to get back to real money. Right now people can not simply work and retire due to inflation because you can not hold onto your buying power over time. If it is YOUR wealth, why do you need to RISK it at all just to be able to retire, or JUST TO KEEP YOUR BUYING POWER?

I guess you never really had it then did you?

/end rant lol

realmoney
8th February 2010, 21:55
"Accepting PMs as legal tender might be construed as "coining money" since it is the state's law that gives the coins the status of "money" in daily transactions. Again, the fed govt will probably use this as an excuse to stop any bill that has a chance of passing."

:confused:

Legal tender is payment of debt. It not only is constitutional, but using gold and silver as payment of debts is the ONLY thing specifically stated that is legal tender in the Constitution.

It is not the state's law, it is the U.S. Constitution.

I would think the sticky spot for it to be passed would be more of the fact that Congress is given the power of weights and measures.

The thing is technically, the state doesn't even need to pass this as a law, because it already is law, the law of the land. They do not have the power to fix any pricing due to Congress having that power.

This may sound weird to this welfare state generation, but guess what? People can just work that out for themselves. If people want to base things off of the spot price and the market goes that route then fine. If the market develops its own way of doing it then fine, because it will have to, and it will work out naturally and be something stable, not artificial. Truly, we would need Congress to set any price fixing of dollars and pm's.

We have been used to and only really have known everything priced in terms of dollars (for most of us). If the market ends up being based off of pm's, dollars would end up being more difficult to work out. Instead of thinking in terms of dollars, think in terms of gold and silver. How many grains or oz's are you willing to part with for the product or service and how many will it take for the other party to be satisfied and agree?

Obviously the weight of the physical metal can be challenging for some transactions, but really, if the system was based on that, it wouldn't be a problem.

People need to know what real money is, and it isn't a piece of paper. Also, people need to understand what a federal reserve note really is, and it is not a payment to satisfy a debt, it is another debt obligation passed around, it doesn't really satisfy the real debt.

The problem is that we allowed the government to do this to us. We have kept quiet while they steal wealth through inflation, and so now when you think about handing over gold and silver for let's say a house, the amounts seem so grand. If we didn't have the inflation, it wouldn't be like that because prices would be based off of real money, not exchanging of monopoly money. The dollars, or federal reserve notes have never ever been the real money. We need to get back to real money. Right now people can not simply work and retire due to inflation because you can not hold onto your buying power over time. If it is YOUR wealth, why do you need to RISK it at all just to be able to retire, or JUST TO KEEP YOUR BUYING POWER?

I guess you never really had it then did you?

/end rant lol

Great rant. I agree with much of what you say here. I was also trying to lay out some of the arguments that would be used against any serious bill to implement gold/silver as legal tender, not taking a side against such a bill.

"...Legal tender is payment of debt. It not only is constitutional, but using gold and silver as payment of debts is the ONLY thing specifically stated that is legal tender in the Constitution."

True, my point was merely that the Federal govt apparently doesn't see it this way, and so a state's (serious) effort to follow the Constitution in this way will be fought tooth and nail.

"If the market ends up being based off of pm's, dollars would end up being more difficult to work out. Instead of thinking in terms of dollars, think in terms of gold and silver. How many grains or oz's are you willing to part with for the product or service and how many will it take for the other party to be satisfied and agree?"

I definitely agree with the spirit of this argument, but this would essentially be a barter system. I would think that as long as the official currency is the dollar, some conversion would need to be done back to the dollar. Otherwise, I'm not sure how you would even do accounting, declare revenue and expenses, pay taxes, etc.

Again, I'm not trying to put the idea of such a bill down, I think its a great start. I'm just fishing for the major issues of such a system and proposed solutions.

RM

tim
8th February 2010, 22:38
in summation here ill bring back my prior post............the state can determine the price{ or value} of an ounce of silver by backstopping its barter value... example dmv renewals will be three ounces per vehicle per year..registrtions . license and and business tax can be paid in metel ounces
.
now one negative i can see will be the arbitrage opportunties that traders will try and exploit from such a system .. right now i cant think of one , but ill assume one will exist and the bill will need to addres it.

ill propose eliminating the dollar value approach to a state run metel system as there will be arbitrage galore with the pm markets and other states

Sakata
8th February 2010, 22:49
I really think that the only way this would work would be if the ONLY way to pay the state was in gold or silver. You would have to physically take the metal and hand it over. Some provision would have to be made for being able to buy it at the current market value for those who did not have it.

As much as I like this idea and would like to see it come to pass, I don't see it as very practical. For one thing, there would not be enough physical metal to go around unless prices went up 100-fold. After all, there is only enough in the whole world for each person in the USA to own one ounce of silver each. For another, the exclusion of FRNs would cause problems at the Federal level because of the "legal for all debts".

It is a great idea, whose time will surely come, but maybe not in the foreseeable future.

argent_pur
8th February 2010, 23:09
As much as I like this idea and would like to see it come to pass, I don't see it as very practical. For one thing, there would not be enough physical metal to go around unless prices went up 100-fold. After all, there is only enough in the whole world for each person in the USA to own one ounce of silver each.

Murray Rothbard in What Has Government Done to Our Money addresses this seeming problem. He argues that it is not the quantity of money that matters, but rather the quality of the money commodity. Paper could in practice work if the gov't exercised restraint in its issuance, but alas...

AgShaman
8th February 2010, 23:13
Quibbling about how it would most assuredly produce speed bumps along the road of transition will fail in validating the real scope of the problems America currently faces.

This same fear of change could in fact be what the "loyalists" felt during the revolutionary times. Fear of meeting tyranny on the battlefield would be a more truthful description. That fear left unchecked and unchallenged will not provide any future health of the american citizen. This fear of questioning authority and the designs for the so called "status quo" will be the undoing of the American spirit.

Those that refuse to acknowledge this reality should relegate themselves to passively discussing the thread addressing the debt that is mathematically impossible to overcome.

Curiosity will not kill the C/Kats of SS Nation!

Gene Daniels
9th February 2010, 06:37
Great discussion!

I have just sent an email to the senate Pro Tempre of my state legislature about the South Carolina bill, asking that they do the same here to protect the citizens of this state from the ravages of inflation. I suggest we all do the same.

I have no idea what to expect, but I do know that such a campaign would begin raising PM awareness among a key segment of the population if we want to see change come.

Lets all do it!

PS - the copy of the South Carolina bill is at
http://www.scstatehouse.gov/sess118_2009-2010/bills/4501.htm

Gene Daniels
9th February 2010, 07:04
Honorable Senator XXXX,

My name is XXXX XXXXXX, I am a citizen of XXXX. Considering the fact that the Arkansas Senate is in financial session right now I would like to ask you, and the other honorable Senators to consider something.

The Senate of South Carolina is considering a bill to again recognize gold and silver as money in accordance with the US constitutional requirement for money only of precious metals. The bill can be found at http://www.scstatehouse.gov/sess118_2009-2010/bills/4501.htm

The reason they have taken this action is because of the ruinous practices of the large national banks in our country at this time, and the inflationary policies of their cartel, the privately owned institution called the "Federal Reserve Bank."

Therefore I request that you introduce such a bill in the Arkansas Legislative session in order to protect the good citizens of our state from the ruin being enacted against them by the thefts of the banking industry.

Although I am sure a course of action will not be without serious obstacles for you, if you have the foresight and courage to do this, future generations across America will thank God for you and remember you with deep appreciation.

Sincerely

Sakata
9th February 2010, 07:52
You might also consider providing a links to similar bills in other states. last I read there were about a dozen of them in total, although I cannot remember which ones. Someone here probably knows.

AgShaman
9th February 2010, 09:03
Nice work Gene! many thanks. I like your style...Arkansas should be thankful for Cats like you. I hope you keep us posted on this endeavor.

I would like to copycat your formula here in Idaho.

Maybe states don't need as much of a push in the right direction as one might of thought.....only the knowledge that they are not alone and other states will bring strength and unity to a cause that deserves as much traction as any banking regulation proposition.

Curiosity will not kill the C/Kats of SS Nation!