I think it's better than the current system, but I was thinking repeal of legal tender would not be sufficient with the payroll and income taxes making up most of the federal revenues.
Of course, if the government collected its revenues exclusively in gold or exclusively in silver, didn't regulate banking, and didn't have its own mint, then it couldn't spend as much it does.
That they won't compete. If given the option not a person alive would use fiat money over a gold standard. As long as there are not restrictions and regulations on gold. The dollar would collapse in less than a week.
Then why not just retire the dollar for gold so the people who hold dollars or who are owed in dollard don't get screwed?
Maybe I'm just dumb, but I don't see why the people can't just sell their FRNs to the government for a certain amount of gold, the FRNs could be retired/destroyed/whatever, and then the government would just collect its revenues in gold. The government could pay out all of its debts in gold and then people who had money but were not owed by the government could just buy the rest of the government's gold.
I think if they even talk about "retiring" the dollar, people with lots of dollars are going to rush to buy gold or silver or whatever they can to get out of dollars.
The fact that taxes are collected in dollars is neither here nor there. Just calculate your income for the year, then convert to dollars and fill out your forms, write a check through a money exchange that converts gold-to-dollars for a fee and be done with it. Problem solved. This is exactly what American citizens who live overseas have to do, except they are converting from Euros or pounds or whatever.
The capital gains tax on gold and silver, however, is problematic. Basically, gold and silver held as savings are not duty free, thus wiping out a good deal of the advantage of holding gold and silver over FRN's in the first place. Furthermore, tax rules on barter exchanges (which is how the government classifies gold-for-goods or silver-for-goods) dictate that both sides of the bartered transaction be taxed. If you buy a car for $5,000, you don't have to pay taxes on the vehicle, only the seller has to pay taxes on the $5,000. But if you buy a car with 3 gold coins, not only does the recipient of the gold coins have to pay taxes on those but you now have to pay taxes on the "fair market value" of the car because the government classifies this as a barter transaction.
So, there are at least three changes that are required: end legal tender status of FRN's, end capital gains taxation of gold and silver and exempt gold and silver from barter tax rules. But the more you look, the more problems you see. What about gold bank accounts? Well, that would be up to the discretion of the Federal Reserve which is charged with regulating the banking industry. Do you think they're going to be gold-bank-account-friendly? I think not. So, you're going to need to keep the Fed from using its authority to keep banks from offering gold/silver bank accounts.
Given the massive, layered defense the system has built against gold, probably nothing short of a Constitutional amendment or a favorable Supreme Court ruling (LOL!) would be sufficient to change things. Either that or state-by-state nullification.
Clayton -
Well then there would be no need for a federal reserv, no one to bail out the banks, no one to bail out the car industry, no one to bail out the post office, no one to bail out foreign countries when their fiat money crashes, no one to bail out congress when the president decides to goto war on a whim. The fiat system gives the government a way to tax the ppl without them knowing.
Some other reason for fiat money is its a waste of resource . Meaning it will drive up the value on whatever commodity is used as the currency standard which makes it economically almost impossible to use the commodity, in this case gold, for anything else.
Some also claim that gold prices are not stable enough to be used as money and that the fluctuations in value causes booms and busts on its own. Or crazy ideas like that.
If you are saying why don't the people just create the gold market themselves and ignore the government. Thats because the government puts regulations on it. They have the 15% capital gains tax that is always able to go higher (the Buffett rule.). Also ( I've never verified it i just remember ron paul saying it was one time) but its illegal to use gold to buy products. Though I don't know how because bartering isn't illegal and isn't that the same thing?
I believe you are asking this because you heard Ron Paul mention competing currencies? (this is my opinion) he isn't being that serious when he suggests competing currency to bernanke. Dr Paul knows along with the fed that if they allow currencies to compete then the dollar will be valueless. Dr paul also knows that there is a much better chance of abolishing the fed or going to a gold standard than having competing currency. I believe the main idea of his argument is to get the American ppl to think. Why can't we use gold as money? Why does congress not want/ why does the fed not want it? He also knows that bernanke can't give a real answer when asked it. He can only give BS and dodge the question or say because fiat money isn't real money and my dollar would crash in a week.
But you are asking the exact question that dr Paul wants you to ask yourself. It doesn't make sense why they won't allow it? We are a free country right? So why can't we use whatever we want as currency? Why is the government scared to allow gold to be used as money? The answer is its the largest ponzi scheme in history and they have to protect it or the system will collapse.