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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 -

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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.

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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.

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.

2011-05-22 22:10:26


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