Members of the Show Me State are preparing for hyper-inflation in the USA, and when it arrives the Missouri House wants Missourians to be ready.
Last week, Missouri House passed the Missouri Sound Money Act of 2012, which declares US Gold and Silver coins to be legal tender in the State.
Backers of the Sound Money Act see a system where in you put your Gold and Silver coins depository and get a debit card keyed to the Spot value of the precious Yellow and White metals.
If the Federal Reserve devalues the Greenback, Gold and Silver will rise in value, and Missourians who have their Gold and Silver on deposit and hold a valid debit card against the rising value will have enhanced purchasing power measured by the rise in price of the two precious metals.
The State of Utah passed a legal-tender law last year, and the State of South Carolina's legislature is considering passing one this year.
A senior member of the conservative lobbying group, American Principles in Action, said institutions in Utah are working to create the Gold-Silver debit-card system. But until that is in place, sound-money advocates have to spend out of bank accounts denominated in USDs, like the rest of Americans do.
Here is the methodology: Missouri's new legal-tender bill benefits precious metals investors by eliminating state capital gains taxes on US minted coins.
A fiscal note: the state Treasury could lose more than $370,000 a yr. That is a small price to pay, backers argue, for sound monetary freedom away from Washington DC..
It's about giving citizens of Missouri an alternative to the dollar that is not affected by the monetary policies undertaken in Washington DC.,
Washington DC is the target of the sound-money movement, because a patchwork of state laws is not going to move the nation any closer to a Gold standard.
Even the Gold Debit Card system would not work well without a change in federal law: Each transaction would subject card users to a 28% federal capital gains tax on the underlying coins.
The era of the classical Gold standard, in the late 19th and early 20th centuries, was marked by frequent financial panics.
In the 1930′s, the US and other nations did not begin to recover from the Great Depression until they abandoned Gold.
In the financial crisis of Ys 2008-09, a strict Gold likely would have made things worse. The US Fed could not have provided enough emergency liquidity if it had been required to back each USD with Gold.
If and when hyper-inflation comes on, Missourians who have Gold and Silver may be glad to have a Federal Tax break on Gold and Silver coins.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.