United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”

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An Arizona bill that would eliminate state capital gains taxes on gold and silver specie, and encourage its use as currency, passed an important House committee this week. Final approval of the legislation would help undermine the Federal Reserve’s monopoly on money.

Rep. Mark Finchem (R-Tucson) introduced House Bill 2014 (HB2014) on Jan. 9. The legislation would eliminate state capital gains taxes on income “derived from the exchange of one kind of legal tender for another kind of legal tender.” The bill defines legal tender as “a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.” “Specie” means coins having precious metal content.

In effect, passage of the bill would “legalize the Constitution” by treating gold and silver specie as money.

HB2014 passed the House Ways and Means Committee by a 5-0 vote, with four members abstaining.

Under current Arizona law, gold and silver are subject to capital gains tax when exchanged for Federal Reserve notes, or when used in barter transactions. If the purchasing power of the Federal Reserve note has decreased due to inflation, the metals’ nominal dollar value generally rises and that triggers a “gain.” In most cases, of course, the capital gain is purely fictional. But these “gains” are still taxed — thus unfairly punishing people using precious metals as money.

A STEP FORWARD

Passage of HB2014 would allow Arizonans to deduct the amount of any net capital gain derived from the exchange of one kind of legal tender for another kind of legal tender or specie (gold and silver coins) from their gross income on their state income tax. In other words, individuals buying gold or silver bullion, or utilizing gold and silver in a transaction, would no longer be subject to state taxes on the exchange.

Passage into law would mark an important step towards currency competition. If sound money gains a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by HB2014 would allow Arizona residents to secure the purchasing power of their money.

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

BACKGROUND INFORMATION

Currently, all debts and taxes in Arizona must be paid with either Federal Reserve Notes (dollars), authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.

But the United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”

The Arizona bills take a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly or the Federal Reserve by introducing competition into the monetary system.

Professor William Greene is an expert on constitutional tender and said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.

Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.

Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.

UP NEXT

HB2014 now moves to the House Rules Committee where it must pass by a majority vote before moving forward in the legislative process.


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Are You “Living In A Death Spiral”? These 6 States Will Collapse During The Next Recession

Submitted by Mac Slavo via SHTFPlan.com,

Being on the hook is not going to be pretty when interest rates are raised back up, and debts come due. At a personal level, it will mean more stress and juggling to make ends meet. For the larger economy, it will mean cities and states unable to meet obligations or balance their budgets – ending in bankruptcy, and bailouts. Meanwhile, millions of people are relying on that money to keep coming in order to survive. Something is going to go very wrong.

Relying upon government to function and send you money is not a secure plan.

The mathematics are terrifying and dismal, and so is being caught up in these collapsing states.

In the next phase of the financial crisis, the debt supercycle will become the most defining feature of the big hurt that will fall on nearly everyone.

That’s the dire warning that Goldman Sachs issued about what they termed the Third Wave of the global collapse. But it hasn’t come, at least not yet:

This wave is characterised by rock-bottom commodities prices, stalling growth in China and other emerging-markets economies, and low global inflation, Goldman Sachs analysts led by Peter Oppenheimer said in a big-picture note.

 

This triple whammy has its roots in the response to the first two waves of crisis — the banking collapse and European sovereign-debt crisis — and it is all part of the so-called debt supercycle of the past few decades.

Unfunded liabilities for pensions and other state benefits are threatening the security and future of an entire generation of retiring, hardworking Americans.

The debt will be shifted for as long as possible… but eventually, someone will have to come to terms with it. The black hole totals up to huge sums of money; no one can pay; and the system is bankrupted, or services rendered become inadequate and farcical.

Forbes contributor William Baldwin describes the acute problem of “death spiral states,” which could actually be as bad as it sounds. It affects dozens of cities and municipalities as well.

Does your state have more takers than makers? Check it out.

 

California has a powerful economy, with 14 million private-sector jobs. It also has burdens: welfare recipients (12.6 million), generously paid government employees (2.1 million) and people collecting government pensions (1.3 million).

 

Add up the numbers. There are 114 clients drawing from the government for every 100 people chipping in by working outside the government and paying taxes. We’re calling this the Feedme Ratio. Six states have a number over 100.

 

These states are at risk of going into a downward spiral in the next recession. The burdens will remain but too many of the providers—employers in the private sector—might shrink or decamp.

Right now, the biggest risks for a bankruptcy or collapse is in the these states, based upon the ratio between what Baldwin terms “makers” and “takers.” Basically, the socialist state is enveloping all prosperity:

• New Mexico – 148 dependents per 100 private sector workers

• West Virginia – 116 dependents per 100 private sector workers

• California – 114 dependents per 100 private sector workers

• Mississippi – 111 dependents per 100 private sector workers

• New York – 108 dependents per 100 private sector workers

• Arkansas – 103 dependents per 100 private sector workers

Detroit and Chicago top the lists of cities who wouldn’t be healthy in the ratio of makers/takers either, and would crumble in a debt crunch.

You can check on your state via this interactive map, though it is dated slightly to 2015.

A score under 100 means that the state has a net number of providers, and is theoretically on more solid ground. However, the pressures are endemic in the system, and no state is immune. For instance, Texas has a healthy score of 66.7; yet, the city of Dallas just announced that it is suspending pensions payments to city rescue workers and employees. There’s a serious disconnect.

Once things go downhill, violence, crime, looting, riots and the like become chronic problems. The police state presence is also an issue, and society goes on edge.

Everyone can feel the sinking depths, and order is about to implode. When things go primal, you do not want to be around to get caught up in it.

Being inside a major city on the day that the ATMs stop spitting out cash, or EBT cards don’t work will be an incredibly dangerous day. Relying upon government bureaucracy and functioning technology to meet your vital needs is never a good position to be in during an emergency situation – be it economic crisis, hurricane, power grid failure or something else.

Joel Skousen described in great detail how to avoid the urban areas that will become completely dysfunctional nightmares at the first sign of a major emergency.

Your retreat should be strategically chosen to lay outside of certain regions, military targets and fragile climates. Knowledge of the back roads is essential to planning a route that won’t leave you stranded on the highway in endless gridlock.

Above all, it is advisable to avoid mass populated areas, especially big cities on the East and West Coast. People that are prone to panic, and will be easily cut off from essential services become desperate. There are far too many bad apples in that ratio for any good to result.

Avoidance is key – and that is why living in a “death spiral” state like California or New York could be a major liability during a crisis, or alternately a prolonged collapse.

CalPers pension… a massive black hole that is merely carving a path for many failed states to come.

The future is austere if this equation isn’t balanced out:

Tom Chatham warns about the abrupt change that is coming home to roost in America. Things can get really bad, really quick.

But really, most of us don’t know how bad it will get:

Americans that have only known the post WWII prosperity are ill equipped and educated to deal with depression level living. Easy credit and instant gratification have created a nation of whining, self absorbed, entitlement minded people with no moral or mental toughness.

Doug Casey believes we are headed for what he calls a super depression created by the ending of a debt super cycle. The bigger the debt cycle the bigger the depression that follows. That’s how reality works and most people are not prepared for reality.

When this depression, which has already started, gets momentum, it will overwhelm the plans of a society that is expecting to get things like social security, pensions and payouts from retirement plans they have paid into for many years. All of those things will disappear almost overnight and leave society gasping and stupefied over what to do.

The big reveal is coming: inside that great big old lock box… is just another I.O.U.

Are you prepared for the future, and all the economic uncertainty it could bring?


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