I will try to do this in as measured and correct words as I can. If you think my words are disingenuous, I apologize in advance - I'm very serious here.

When fiat currency exists, inflation is sure to follow. The detrimental effects are numerous. We are in the death throes of the dollar as a result, as sure as night follows day, of taking it off of the gold standard 40 years ago. That the Fed has been able to keep up the charade for this long shows both how wealthy we were in 1971 and how good the Fed has been at keeping the deck chairs arranged on our ill-fated ship.

One way for individuals to get off the ship (but still live in the USA) is to use an alternative form of money, whether it be metal-backed or not (e.g. gold, silver, the Swiss Franc, the Chinese Yuan). Folks who use such a stable form of money are better off - savers don't see the purchasing power destroyed, long term lending is financially responsible, long term contracts are much more secure, etc.

So how do we get to the place where I can start a business in the USA and only offer to transact business in Currency X? It would seem to be easy - just do it! But it's not. The most important impediment is the fact the any money I hold in my checking account denominated in Currency X must be translated back and forth to dollars (much like inventory - not sure if LIFO or FIFO is required) for every transaction, and if someone (not sure who) decides that I had a gain on my holdings in terms of dollars, I must pay an income tax of at least 28% on such ephemeral gain (in case I'm using gold). That's why the world reserve currency is dollars - it's simply too expensive to hold money used to do transactions in anything other than the dollar.

One solution is to simply make holding any other form of money be treated for taxes purposes in the same manner as if it were dollars. Sales taxes, VAT taxes, income taxes, etc. would still apply, but gains would not. The result would be a much healthier economy, free of artificial gimmicks that try to avoid the most insidious tax of all - inflation.

To put it into a headline, here's my try -

***

Everyone should be free to engage in economic activity using whatever form of money they desire without negative tax consequences. Individuals and businesses should have the freedom to buy and sell goods and services using any other form of money they desire, and such transactions should be treated the same as transactions done in any other form of money, including the US dollar. That is, there would be no taxes on the "gain" made due to fluctuations in the value of the alternative money with respect to the US dollar.

***

I really don't see why this is so controversial to a few. It's about freedom. It doesn't do away with transaction taxes, it just does away with taxes on holding money in a form other than the US dollar. Which is exactly what the Fed wants - no competition. And that's why we're in such dire straits with nothing but a bleak future on the horizon.

I'll start with the last first:

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I really don't see why this is so controversial to a few. It's about freedom. It doesn't do away with transaction taxes, it just does away with taxes on holding money in a form other than the US dollar.

Define "money".

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When fiat currency exists, inflation is sure to follow. The detrimental effects are numerous. We are in the death throes of the dollar as a result, as sure as night follows day, of taking it off of the gold standard 40 years ago. That the Fed has been able to keep up the charade for this long shows both how wealthy we were in 1971 and how good the Fed has been at keeping the deck chairs arranged on our ill-fated ship.

Oh, so it's all fiat currency eh? Well, I suppose you can explain this then:


Seems there's an awful lot of inflation in there here and there.... much of it while on a metallic currency. Never mind the deflation.

But more importantly is the fact that there appears to be little ability to control this for the common man, and the violence of the swings. This is extraordinarily damaging to anyone who doesn't have a "heads up" - and of course, the only people who do are the people causing it.

Finally, metallic currency means you need to bribe only a very small number of people, never mind the obvious ridiculous divisor that would have to be imposed to meet the current money supply. Of course those people don't care about what happens to everyone else so long as they get theirs, right?

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One way for individuals to get off the ship (but still live in the USA) is to use an alternative form of money, whether it be metal-backed or not (e.g. gold, silver, the Swiss Franc, the Chinese Yuan). Folks who use such a stable form of money are better off - savers don't see the purchasing power destroyed, long term lending is financially responsible, long term contracts are much more secure, etc.

Oh, so Swiss Francs and Yuan are not fiat currencies? Oh yes they are! They're "stable"? Hmmm..... well, if they're stable and fiat, there goes your top assertion and with it the rest of your argument goes down the bowl.

Remember, you said "When fiat currencies exist inflation is sure to follow." Then you destroy your own argument just a paragraph or two down, wondering why this is "controversial." It might be due to the contradiction right in front of everyone's face.

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So how do we get to the place where I can start a business in the USA and only offer to transact business in Currency X? It would seem to be easy - just do it! But it's not. The most important impediment is the fact the any money I hold in my checking account denominated in Currency X must be translated back and forth to dollars (much like inventory - not sure if LIFO or FIFO is required) for every transaction, and if someone (not sure who) decides that I had a gain on my holdings in terms of dollars, I must pay an income tax of at least 28% on such ephemeral gain (in case I'm using gold). That's why the world reserve currency is dollars - it's simply too expensive to hold money used to do transactions in anything other than the dollar.

Nonsense. People transact in other currencies all the time. Further, we are treated to earnings reports every quarter where currency translation effects are discussed and dealt with. Finally there are trading institutions that permit holding your free cash in other than dollars, even for US residents. There's nothing illegal about it any more than there is on changing money between forms. It's perfectly fine.

Yes, you pay taxes on gains, and have losses you accrue against gains if you take them, but this is true for anything you hold as an asset of value that goes up or down in price. And "money" is an asset with a value.

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One solution is to simply make holding any other form of money be treated for taxes purposes in the same manner as if it were dollars. Sales taxes, VAT taxes, income taxes, etc. would still apply, but gains would not. The result would be a much healthier economy, free of artificial gimmicks that try to avoid the most insidious tax of all - inflation.

Solution to.... what?

Again, you just got done telling us that you wanted to move money from one fiat currency to another but think this shouldn't result in taxable investment gains. Well, ok, why should then buying a stock that goes up in price be a taxable event? Five days a week there's a public exchange with quoted prices on these assets, and I can trade and out of them as I wish. Sounds a lot like a currency and in fact companies treat their stock as "currency" all the time. You only need to read financial newspapers for a couple of days to see a reference to it. Same with foreign currencies. Same with oil, gold, platinum, copper, wheat, corn, soy and other things, many of which have been used as "money" at some point.

Why should only what you particularly favor be exempt?

More specifically, given that the platform already includes a statement that taxation should not be on earnings or income, what you seek in the platform is already present in form and substance. Ergo it would appear there's nothing needed.

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To put it into a headline, here's my try -

***

Everyone should be free to engage in economic activity using whatever form of money they desire without negative tax consequences. Individuals and businesses should have the freedom to buy and sell goods and services using any other form of money they desire, and such transactions should be treated the same as transactions done in any other form of money, including the US dollar. That is, there would be no taxes on the "gain" made due to fluctuations in the value of the alternative money with respect to the US dollar.

***

There is no "negative tax consequence", other than the obvious one - the government denominates its taxes in dollars. Therefore, you must acquire them to pay taxes. When you transact in some other currency than dollars you can choose to immediately translate the tax liability on the transaction or the entire thing to dollars if you wish, but you're not required to. The risk of loss or gain, however, remains yours until you do so.

That would be freedom of choice, right?

Further, the platform already says:

Platform wrote..

Likewise, taxation predicated upon income is a declaration that one receives more value from government based on their earnings. History, however, shows that what actually happens is that the wealthy effectively buy government. Therefore, taxation should be predicated on the voluntary act of consumption.

What you seek is already present in form, substance and function.

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I really don't see why this is so controversial to a few. It's about freedom. It doesn't do away with transaction taxes, it just does away with taxes on holding money in a form other than the US dollar. Which is exactly what the Fed wants - no competition. And that's why we're in such dire straits with nothing but a bleak future on the horizon.

Its "controversial" because your premise is false and your own example makes clear that this is the case, as you assert, in your own text, that other fiat currencies are "more desirable" - after saying they ALL fail and they ALL bring inflation and debasement.

Incidentally, it is a ridiculous lack of understanding of exactly how "money" and "credit" actually work that leads to the (false) belief that one can escape perdition with "hard money."

I've written on this many times in The Ticker and spent an hour-long Blogtalk on it as well; the fundamental reality is that as soon as lending of capital occurs you have an inevitable need for recession. And as soon as unbacked lending occurs you create a naked short on the currency involved.

Since a naked short is identical in effect to counterfeiting it puts in motion the dynamic you're speaking of. It is NOT the existence of fiat currency that causes this problem. Rather, it is the attempt to void the fundamental mathematical relationships between exponential (compound) functions, which is doomed to fail simply because the mathematics make what's being attempted, over long periods of time, impossible.

Karl,

I appreciate your engagement in this discussion. My premise, which you believe is false, is that fiat currencies inevitably result in inflation. Although anecdotal, IMO the chart you inserted backs up my premise. You will note there is no counterbalancing green from 1950 on. How do you explain that anomaly?

You wrote -

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Why should only what you particularly favor be exempt?

I never proposed that. I proposed that all forms of money be exempt from gains taxes. And yep, I didn't define money. I assume readers know what I'm talking about. If it walks and quacks like a duck...

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There is no "negative tax consequence", other than the obvious one - the government denominates its taxes in dollars. Therefore, you must acquire them to pay taxes. When you transact in some other currency than dollars you can choose to immediately translate the tax liability on the transaction or the entire thing to dollars if you wish, but you're not required to. The risk of loss or gain, however, remains yours until you do so.

Your logic equates taxes on transactions with taxes on gains. They couldn't be more different than a Balance Sheet vs. a P&L. In each case, the former is based on a snapshot in time and the latter is based on a period of time measured in months and years. I have no problem with translating sales taxes collected in ounces of gold to dollars at the instance the transaction occurs. My concern is with the imputed increase in wealth that I am taxed on when I have a checking account denominated in gold that can't buy any more gasoline or automobile after being held there for a couple of years, but when I convert back to dollars, I pay a "gain" tax. Boo hiss.

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More specifically, given that the platform already includes a statement that taxation should not be on earnings or income, what you seek in the platform is already present in form and substance. Ergo it would appear there's nothing needed.

I agree, but it certainly isn't clear to me, because you don't even think my idea is a good idea ... and yet you say my idea is subsumed by the platform. So what are we arguing about again?

Hey it's your ball, your game and you're the referee.

Hopefully you can get a candidate for elective office to embrace your platform so that the effort won't be yet another waste of time by keyboard cowboys kibitzing about good ideas that exists only in the ether, and which comes to naught.

Karl,

I missed your second post before I responded.

To reiterate - I am not a proponent of hard money, per se.

Rather, I am a proponent of a free market in money - private money, metal money, money made out of giant round stones, doesn't matter to me. My point is that I wish for no government mandates or favoritism, other than they get to tell me what kind of money I must use to pay their transaction taxes with. You can continue to use FRNs, I'll use gold. It's called freedom.

To reiterate my understanding:

Don doesn't want to pay capital gains taxes.

Is this correct?

No need to complicate it any further, this is about principles.

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I appreciate your engagement in this discussion. My premise, which you believe is false, is that fiat currencies inevitably result in inflation. Although anecdotal, IMO the chart you inserted backs up my premise. You will note there is no counterbalancing green from 1950 on. How do you explain that anomaly?

I'm about out of patience. You're now putting words in my mouth.

YOU are the one who claimed that "Swiss Francs" or "Yuan" were "stable", not I. Yet YOU in the first sentence made the all-inclusive statement.

I will NOT have a conversation with you on this if we're going to play games. You have a DUTY if we're going to have a fair discussion and debate to revise and drop your original position.

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I never proposed that. I proposed that all forms of money be exempt from gains taxes. And yep, I didn't define money. I assume readers know what I'm talking about. If it walks and quacks like a duck...

An undefined law is no law at all. We're done if this is going to be the level of dishonesty that you're going to resort to, and further, your time here is finished too. My time is valuable and I don't have it to waste.

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My concern is with the imputed increase in wealth that I am taxed on when I have a checking account denominated in gold that can't buy any more gasoline or automobile after being held there for a couple of years, but when I convert back to dollars, I pay a "gain" tax. Boo hiss.

Ok, so you convert back to HOUSES. You want that gain free too, right? Of course you do!

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More specifically, given that the platform already includes a statement that taxation should not be on earnings or income, what you seek in the platform is already present in form and substance. Ergo it would appear there's nothing needed.

I agree, but it certainly isn't clear to me, because you don't even think my idea is a good idea ... and yet you say my idea is subsumed by the platform. So what are we arguing about again?

That you're trying to argue for something that's factually false, has nothing to do with the genesis of the problem, won't fix it, and will simply empower the banksters to steal all the assets.

In other words your view on this (and Ron Paul's, for that matter) is a crock. The problem lies elsewhere and I have repeatedly shown this in both written and verbal form. If you wish to argue with that then let's have the debate, but (1) this is not the place for it, "Monetary" is, and (2) until you can PROVE that the violent swings prior to the current system will not occur going back simply makes things WORSE.

The bottom line is that the issue in question is not caused by fiat currency. It is caused by unbacked credit emission. All "hard money" does is make the swings MUCH more violent and quick to appear, which screws people worse.

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Hey it's your ball, your game and you're the referee.

And the ref doesn't like words being put in his mouth.

Last chance on this one. You owe the forum an explanation as to how your FIRST PRINCIPLE STATEMENT squares with a desire to trade in and out of Swiss Francs and Yuan without tax when those currencies are in fact unbacked fiat currencies as well, and why there should be any sort of special "Don Wills" plank in the platform on this when the alleged purpose, assuming you're telling the truth about your purpose, is already covered in the platform language.

In other words, you're being challenged directly: Is there a hidden and undisclosed purpose in your original premise and platform discussion request?

You know, like perhaps the purpose you disclosed in my Ticker thread but conveniently omitted here?

No weasel words, no BS, address the points.

You get one, and only one, chance to do so. One response, and no second chances.

Yes, I happen to believe that Ron Paul is right. That's the true genesis of our disagreement. And no, your arguments otherwise have not convinced me to change my mind on those issues.

FWIW, I do agree that Ron Paul has been completely ineffectual, and your criticism of his inability to really cross-exam Ben or to actually accomplish anything else is quite legitimate.

Why are you so hostile toward me? I'm really on your side here. It seems to me that verbally running folks like me away from your web site is counterproductive, but hey, I'm just a member of the country class - I must be ignorant so I'm expendable.

And no, there is no hidden purpose.

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Rather, I am a proponent of a free market in money - private money, metal money, money made out of giant round stones, doesn't matter to me. My point is that I wish for no government mandates or favoritism, other than they get to tell me what kind of money I must use to pay their transaction taxes with. You can continue to use FRNs, I'll use gold. It's called freedom.

You have that now. The government denominates the taxable base in the economy in dollars. The government's always going to have their divisor against which they measure taxable events. It would be manifestly unfair if you had no way to know BEFORE PAYING how much your tax would be, right?

Again, what you seek, which is removing taxable events from investment decisions (and choosing how to hold your wealth is such a decision), is already in the platform.

Therefore I ask one final time: What is the true intent of your proposal?

Sorry about the crossed posts. I just edited my prior post to answer your question.

I'll try to answer again -

My true intent is to allow anyone to transaction business in something other than US dollars without negative tax consequences. Period.

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Why are you so hostile toward me? I'm really on your side here. It seems to me that verbally running folks like me away from your web site is counterproductive, but hey, I'm just a member of the country class - I must be ignorant so I'm expendable.

I'm hostile toward you because I believe you posted this thread under false pretense. Your stated intent is already in the platform. Your actual intent was disclosed in the Ticker thread where I threw you off after you made clear you were trying to do something through the back door rather than being up front and honest about it.

Now you're running it here again.

As for not being persuaded, you SAID that inflation was the inevitable cause. Well, find me one year since the Depression when inflation was over 15%. You cannot. Yet there were SEVERAL instances of it, one approaching 30% and another roughly 35% prior to The Fed's existence.

Your claimed purpose is bogus. Swings in the value of the currency approaching 50% within just a couple of years were COMMON before standardized fiat currency in the United States. Yet this is what you claim you want to go back to!

You're nuts. Anyone who seriously proposes this should be BBQd and eaten. The banksters used that former monetary regime to routinely steal everything that people who were not banksters had. It was absolutely commonplace and hard money coupled with credit issuance guarantees that outcome.

Only someone who is either interested in trying to profit from that sort of financial******or who has not bothered to do any sort of studying on the matter could possibly support such a system.

IF you don't understand WHY that happens, get educated. If you DO understand it and are still pushing it, I argue you're a monster, for nobody in their right mind would EVER want that outcome - except a bankster.

Donwills wrote..

I'll try to answer again -

My true intent is to allow anyone to transaction business in something other than US dollars without negative tax consequences. Period.

Bull****. You admitted to your purpose in the other thread:

http://market-ticker.org/akcs-www?single....

Donwills wrote..

If we change all of these rates for gains (denominated in USD) to zero, the Fed ceases to function. Fannie, AIG, price controls on interest rates, and a whole lot of other truly detrimental things cannot happen. Debt ceases to be as attractive. Savings becomes a financially sound activity. Happy days are here again! (Except if you're a Wall Street bankster.)

I'll repeat one more time -

My goal is to END THE FED. Nothing else.

You're done.