Buy Silver Bullion Coins

Utah's tax code says U.S. Mint issued gold and silver coins are currency, rather than assets taxable by the state.
Dorothy Kosich
April 1, 2011
www.mineweb.com
RENO, NV

Utah Gov. Gary Herbert last week quietly signed a law which has made Utah the first U.S. state to recognize federally issued gold and silver coins as legal tender.  However, the governor chose not to make any public statement about the Utah Legal Tender Act.

Utah's state tax code now considers U.S. Mint gold and silver coins as currency, which means no capital gains or other state taxes will be levied when the coins are exchanged. However, the gold and silver coins are still only worth their face value despite record gold and silver prices.

A person only identified as close to Herbert told CNN, "If somebody is stupid enough that they want to buy a Snickers bar at 7-Eleven with a gold coin worth thousands of dollars, they will be able to do that."

Larry Hilton, an attorney and insurance salesman who authored the Utah Sound Money Act, said eliminating taxes on the exchange of the gold and silver coins places them in the same playing field as paper currency. However, federal taxes still apply. The law also does not apply to foreign minted gold coins.

He told the Salt Lake Tribune last December that the Utah Sound Money Act is "not intended to be compulsory in any way. The state is offering to taxpayers, "If you want to pay your taxes in gold and silver, we'll accept them."

James West, publisher of the Midas Letter, Wednesday called Utah Sound Money Act "a shot at the Federal Reserve. And Utah isn't alone. A few other states are considering similar bills."

"Conservatives fret that the central bank has permanently damaged the value of the dollar by pumping trillions into the economy, drawing down the greenback's buying power," he observed. "And Utah - where the Tea Party has a powerful presence - is leading the charge against Fed Chairman Ben Bernanke."

The Utah Sound Money Act was also promoted by Washington-based American Principles in Action, which is backing the Gold Standard 2012 program.

[Meanwhile, Congressman Ron Paul (R-Tx) has introduced H.R. 1098, The Free Competition in Currency Act of 2011, which would give legal tender gold and silver coins the same tax standing at the federal level that they now have in Utah. Unfortunately, Congressman Paul has not yet found cosponsors for the bill. Until he does, the bill will be given little consideration on Capitol Hill. Still, this bill shows that Ron Paul is eons ahead of his colleagues in Congress.]

Sarah Palin on Monday made a speech at a trade-association convention in Phoenix urging Federal Reserve Chairman Ben Bernanke to “cease and desist” his “pump priming”. Palin said the United States, “shouldn’t be playing around with inflation.” She went on to say, "All this pump priming will come at a serious price. And I mean that literally: everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher."
 
After obtaining a copy of her speech, the Wall Street Journal's Sudeep Reddy wrote an article criticizing Palin's comments about food inflation, saying that, "Grocery prices haven’t risen all that significantly, in fact. The consumer price index’s measure of food and beverages for the first nine months of this year showed average annual inflation of less than 0.6%, the slowest pace on record." NIA finds it unfortunate that Reddy has been brainwashed into believing the government's phony consumer price index (CPI) numbers.
 
The U.S. Bureau of Labor Statistics (BLS)'s CPI is not a reliable indicator of U.S. food inflation or any type of price inflation. NIA estimates the real rate of annual food inflation in the U.S. to already be 5% and projects that this rate will rise above 10% in early 2011. NIA believes the BLS has been using both geometric weighting and hedonics to artificially manipulate the CPI downward. The U.S. government has a strong motivation to keep CPI increases as low as possible because since the year 1975, retired Americans receive annual Social Security payment increases that are tied to the CPI. NIA calculates that based on the way the BLS's CPI has understated the real rate of price inflation, Americans on Social Security should be receiving payments that are more than double what they receive today. Unfortunately, the government just announced last month that Americans on Social Security will receive no payment increase in 2011, despite the fact that food inflation will likely become the biggest crisis of the year, much larger than the mortgage crisis we have today.
 
When calculating food inflation, the government uses deceptive geometric weighting, which gives a lower weighting to goods that are rising in price and a higher weighting to goods that are falling in price. If the price of steak is rising while the price of hamburgers is falling, the CPI will give a lower weighting to steak and a higher weighting to hamburgers. The government justifies this by saying that expensive steak prices mean Americans are more likely to eat hamburgers. Therefore, the CPI no longer accounts for the price to maintain the same standard of living. The CPI is now calculated based on the realization that America's standard of living has been in decline and the expectation that it will continue to decline in the future.
 
Americans subconsciously realize that it is becoming a lot harder for them to make ends meet and put food on the table, but they don't realize that inflation is the cause of it. All Americans have heard stories from older relatives about how Hershey bars 45 years ago cost only 5 cents. Americans are aware that the U.S. has already experienced massive price inflation, but they don't look at inflation as a problem because these food price increases occurred over a very long period of time. NIA estimates that at a very minimum, the same U.S. price inflation that occurred over the past 100 years, will occur again over the next 10 years as the Federal Reserve's money printing causes the world to lose confidence in the U.S. dollar.
 
There is a misconception in America that wages have risen at the same rate as price inflation, when this is simply not the case. The median household income in the U.S. was $11,800 in 1975 and today is $49,777. If you go by the government's CPI, $11,800 in 1975 dollars equals $47,208 in today's dollars. If the government's CPI is to be believed, Americans are earning higher real incomes today than 35 years ago. However, the truth is, once you discount the effects of geometric weighting and hedonics, the median household income in 1975 of $11,800 actually equals $154,000 in today's dollars. This explains how in 1975, a father was able to support a family on just one income and college students were able to afford their own tuition with just a part-time summer job. Today, both parents need to work and families need to get deeply into debt just to survive.
 
The U.S. government is currently printing money just to survive. The Federal Reserve has held the Fed Funds Rate at 0-0.25% for nearly two years and just announced that it will be printing an additional $600 billion in new U.S. dollars by the end of June 2011. Since the beginning of September until now, just in anticipation of the Fed's upcoming quantitative easing, we have experienced the largest ever short-term increase in the history of agricultural commodity prices with corn rising by 32%, soybeans rising by 32%, orange juice rising by 12%, coffee rising by 19%, and sugar rising by 66%. These agricultural commodity price increases will begin to work their way into grocery stores nationwide in the weeks and months ahead, as food manufacturers and retailers are forced to raise their prices.
 
Food manufacturers and retailers who don't immediately raise prices and pass their rising costs on to U.S. consumers will likely go out of business. Sara Lee just announced yesterday that their first quarter profit fell 32% as price increases it enacted during the quarter were not enough to cover steep increases for agricultural commodities. Dean Foods saw their stock decline 18% yesterday to a new 52-week low due to escalating costs for butterfat, a key ingredient in its creamers and ice creams. Dean Foods' butterfat costs were up 70% over the same 2009 period.
 
The U.S. has no way of paying off its $13.7 trillion national debt and $80 trillion plus in unfunded liabilities without printing the money and creating massive price inflation. China’s Dagong Global Credit Rating Co. lowered its credit rating for the U.S. to A+ from AA on Tuesday with an outlook of "negative", saying the Fed’s plan to buy government debt will erode the value of the dollar and “entirely encroaches” on the interests of creditors. The Fed, by buying U.S. treasuries, is effectively monetizing the debt. In fact, Federal Reserve Bank of Dallas President Richard W. Fisher admitted yesterday that the Fed is monetizing the debt, saying in a statement, "For the next eight months, the nation’s central bank will be monetizing the federal debt."
 
Bernanke testified under oath on June 3rd, 2009 in front of Congress saying, "The Federal Reserve will not monetize the debt." This was a lie and perjury. With baseball great Roger Clemens being indicted for lying to Congress under oath about a personal matter that is trivial compared to this, Bernanke should also be charged with similar crimes.
 
Although NIA believes Palin made a major mistake by supporting the government's $700 billion 'Emergency Economic Stabilization Act of 2008', we give her credit for helping expose to the mainstream public that a massive inflationary crisis is ahead due to Bernanke's destructive monetary policies. On December 16th, 2009, the same day Time Magazine named Bernanke 'Person of the Year', NIA named Bernanke 'Villain of the Year' and said in an article that day, "When it costs $20 for a gallon of milk in a few years, Americans will have nobody to thank more than Bernanke."
 
The average American family currently spends 13% of their total annual expenditures on food compared to 34% on housing. As the Federal Reserve monetizes our debt and creates massive price inflation, these two numbers will reverse. For every 1% rise in consumer wages, NIA expects to see about a 4% rise in food prices. There are currently 42.4 million Americans on food stamps, up 17% from one year ago. The government does not have the resources to make these entitlement payments without printing the money and creating massive food price inflation. Ironically, food stamps are actually making those who receive them, need them even more.
 
If the U.S. government is somehow able to make it to the 2012 election without going bust due to a worthless U.S. dollar, by then it is likely that the average middle-class American will be dependent on the government to survive. Obama's strategy to get re-elected is to make as many Americans as possible dependent on him and scared to elect a true Libertarian candidate like Ron Paul, who will dramatically reduce government spending in an attempt to prevent hyperinflation. We must all work together to spread the word about NIA and educate as many Americans as possible to the truth about the U.S. economy and inflation.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us