Sound Money in 2024

A Presentation Given at the LPMeck Convention*

*edited slightly for print

by: Jp Cortez, Executive Director, Sound Money Defense League

What Happened to Sound Money?

It didn't fail, to be sure. The gold standard did not fail. It was killed, by dishonest politicians who do not like honest money. The main way it was killed was by taxes. You can't use gold and silver anymore as money, largely because of the taxes associated with doing this.

In some states, when you buy gold and silver, you pay a sales tax. In every state, and then again with the feds, you're hit with a capital gains tax when you sell. There's too much friction involved to use gold and silver as money. So what we do [as an organization] is go state to state and DC, removing the disincentives, the frictions, the taxes, and the regulations around using sound money as actual money.

So maybe we'll take a step back. What we're talking about here when we say sound money, we mean money that has long-term purchasing power that has been tested by markets. Money is not determined by a government. If the world were flat, no executive order could make it round. And if the world were round, no act of Congress could make it flat.

On a long enough timeline, money wins out. The government does not get to decide what money is. The market's cheaper.  So what we're talking about here is a money that retains its purchasing power over the long-term. There are two pretty simple value propositions to understand the importance of sound money.

The first is that it allows people to plan for the future. If I were building a house, if I were taking out a 30-year loan, I would want to know that the unit in which the loan is denominated will hold its value. I need to be able to make that sort of planning to be able to build infrastructure, to be able to long-term plan.

And that long-term planning and the infrastructure is what increases livelihood, and what decreases is the mortality rate. These are the things that make a difference long-term.

And so you need a solid money to be able to do that. There are places around the world today where you have to be paid multiple times a day for your job, where you're paid in the morning, and then you're paid again at night, because if you hold the money for too long, twelve hours from now, your money's worthless.

In those places, they're carrying wheelbarrows of cash. Money is broken, and it's not that far away from happening here. This isn't an obscure thing. Historically, this happens all the time. On a long enough timeline, the survival rate for all fiat paper monies is zero. Every single one of them dies. It's just a question of when.

So the first reason why sound money is important is to be able to plan for the future. The second is that it shackles a government that would otherwise support it, spend recklessly, and do things that it's citizenry wouldn't pay for voluntarily through taxation. 

We're talking about wars of choice. We're talking about giant domestic programs, retirement programs. They're so bloated that they don't actually provide any safekeeping for the people who are relying on these things to retire, for example, for the future. So sound money is not just for the ability to plan. It also constrains the government. It keeps the government from doing things that we know we don't want governments doing. 

This idea is sort of for the academic heads, the Miseses, the Rothbards, the Hayeks of the world. This idea is Rothbardian. This definition of sound money comes from the Austrian or the free market tradition. While we know that the monetary problem is largely a federal problem, this is a problem that stems from the federal government and the Federal Reserve monetary system.

We know that, but that doesn't mean that states have to sit idly by and watch the purchasing power of their money be zapped away. All over the country, not just North Carolina, you have people unable to afford housing, unable to afford food, medicine, transportation, and that's not an act of God.

Inflation is a policy choice. This is something that the federal government is choosing to do. States do have options. And one of the primary things they can do is re-monetize other forms of money to allow for competition in currencies. If it weren't for legal tender laws, and if it weren't for the government requiring payment of taxes in the U.S. dollar, we likely wouldn't use the U.S. dollar. Just objectively, this is a piece of paper without any backing. very easily debased. They literally print millions upon billions of them a day, and that money that's regularly printed goes to fund really nefarious and horrible things all around the world.

Fortunately, I'm happy to say that sound money itself is in the middle of a movement. This past year, there were 26 states in the United States that introduced legislation to adopt sound money, and to remove taxes around the use of sound money. To invest physical gold and silver in state pension funds and in state reserve funds. In North Carolina's case, there is active legislation for the state to conduct a study about whether they should store gold, silver, and Bitcoin on the state's balance sheet.

Eight years ago when we started this project, it was a very minor thing. It was me and the people on our staff running around asking states and asking legislators to introduce this stuff. That's not the case anymore. Against a backdrop of record high inflation, of kids not being able to afford to go to college anymore, of public schools failing, of infrastructure failing, and of America regularly fighting wars that they have no business fighting, or at least funding wars they have no business funding, things are changing.

Against the backdrop of all of this, people are starting to say, wait a second, why is this the money we're using? And how does this money enable all of this horrible stuff?  So, again, states themselves are doing a lot of things to encourage individuals to invest in gold and silver, and for themselves to also invest in gold and silver. This was the list of more than half of the states in the country in 2023 that introduced legislation to promote sound money, to promote the preservation of purchasing power, to allow people to save long term.

Historically, in the past, when people wanted to save money, they would simply hold money, because the money itself would hold value. But that's not the case anymore. You can't just hold money as wealth preservation or as a savings vehicle. Because it loses – on purpose, a stated purpose - it loses at least 2 percent of its value a year.

And that's if you buy the official inflation numbers. Closer to 7 or 8 percent if you've walked into a grocery store in the last year, and you know for a fact it's not 2 or 3 percent. So, historically, people were able to store money and because the government broke the money, they're no longer able to do that.

Now you have to invest in risky stock market casinos. Now you have to buy ETFs and mutual funds and stocks. Now you have to buy third-world debt just to have your money keep up. And so now people who are planning for the future, myself, my younger brother, the people in this generation, they need to be working.

They need to be increasing their output by at least 2 or 3 percent a year just to break even. And that's impossible for this many people, the ask is way too high. And too many people are suffering because the money has been broken. People work for money, that broken money, that somebody else prints for free.

And that actually is, at its root, the nature of the failure of the central banking system like one we have today. These are called Cantillon effects, an economic term to describe how, when central banks print money, the people who get that money first are government actors. They're politically tied people.

And by the time the money comes down to you and me and the people in this room, inflation has already adjusted and prices have already risen. It's the people most entrenched, the people with political power, that get the easy money first. And by the time it reaches us, it's the same broken money that we're carrying in our wallets today.

There are also federal initiatives. It's not just on the state level. To be sure, I think at the state level is the best chance of passing policy. D.C. is largely a gridlocked place, a place for people who want to make a name for themselves, who want to grow personas. People interested in actually making a difference are in Raleigh, are in Nashville, are in Albany, are in Tallahassee, in the state capitals.

And that's where you can affect change. And so actually, maybe more than anything I've said today, the largest thing you can take away from what I'm saying is to please be an active participant in your legislature. You don't have power in D.C. I'm sorry.

You call D.C., an intern is going to answer the phone. The congressman may or may not get your message. Probably won't. It'll be filed away. You'll never be heard. When you call Raleigh, when you call state capitals, these people are not used to organized efforts.

Even just ten or twenty calls phone calls to a state switchboard and all of a sudden you have a hot issue on your hand. I understand the belief that political efficacy is at an all-time low, the belief that you don't have much power to change what happens in D.C. I'm sorry, that's probably true. But that doesn't have to be true on the state level.

And so I encourage everyone, be it sound money, be it drug legalization, be it civil asset forfeiture, be it education, no matter what the issue, be an active participant in your state legislature, because you have a voice there.

But we are doing things in D.C. We worked with Congressman Alex Mooney from West Virginia, who has really carried the sound money torch since Dr. Ron Paul retired. Congressman Mooney has introduced several D.C. federal sound money bills. The Gold Standard Restoration Act would peg the dollar to a price of gold based on the market price at the time.

The Monterey Meadows Neutrality Act, and Ted Cruz also introduced something similar to this as well, but Congressman Mooney has a federal bill that would exempt capital gains from gold and silver, which would mean the friction that I talked about, the tax that enforces or levies a tax on anyone who sells their gold or silver capital gains, this on the federal level would completely remove that. And most states operate their tax return based on the federal AGI. So doing this in one fell swoop would be an incredible win.

Many of you may know there is allegedly gold in Fort Knox. I personally have never seen it. I know that there is some sort of made-for-Hollywood TV showing where someone took a camera and they sort of looked at it for a second and then quickly panned away. And we're supposed to believe that there are hundreds of millions of billions of dollars worth of gold in there?

Maybe there is, maybe there isn't. More important than that, though, is whether or not it has any financial encumbrances. The gold might be there, but who owns it? Who has this been pledged to? Does China own it? Does Russia own it?

Does Germany own it? Whose gold is this? And so this bill would call for a full accounting of all transactions, all encumbrances, all financial swaps, or leases, or anything on the gold that supposedly is the backbone of America.

Central banks and the Federal Reserve are still buying gold, and they're telling you gold is not money, but central banks around the world are still actively buying gold. The question as to whether or not it's still there is incredibly important.

In North Carolina, there is legislation on the state holding gold, silver, and bitcoin on its balance sheet. Representative Mark Brody introduced legislation. We did pass it out of the House and we're hoping to get hearings in the Senate this year.

This is my first time at a Libertarian party event, I've never done this, thank you for having me, thank you. I was struck once, I remember having a conversation with someone who said something to me in reference to the Libertarian National Convention. Something like, well, you know, those Libertarians, those people are crazy, you know, they've got shirtless people on stage, they've got, you know, people with hats on, these are crazy people. 

And I said, yes, totally crazy. You know what else is crazy? Bombing the shit out of Aleppo. You know what else is crazy? A system that enables civil asset forfeiture, that allows a cop to pull me over and just take the things in my car because they say so, and with very little recourse for me after they've been taken. You know what else is crazy? That the Revolutionary War was fought over like a 3 percent tax on tea, and now 35 to 40 percent of my wages and everything I do is regularly taxed. Crazy? You guys want to talk crazy?

Come on. National debt will hit $35 trillion this summer. This is a massive issue. And the idea, like, Libertarians are so active, they've been so good for decades on gay marriage, on drugs, on war. Libertarians are the voice. They have been the voice of this country for decades. Long before Barack Obama endorsed gay marriage, Libertarians were writing about it in the 70s.

Libertarians are the background and they're the moral fiber of this country and they're such an important voice. The voice for Liberty, the voice for freedom, the voice for self-choice, for self-efficiency, for self-efficacy. Huzzah for being ahead of the curve. Thank you.

Javier Milei, the guy who just won the presidential race in Argentina. I'm here in L.A., I wake up every morning, I see this guy has cut another government agency, this guy has laid off another thousand government workers. Man, talk about a dream, right? But maybe we do live in the best timeline. Maybe we do. At the end of all his speeches, he says something and he says it in Spanish.

He ends all his speeches with the saying Viva la libertad carajo, which is Spanish for "Long live freedom, dammit." This should be the default. This is not for questioning. My rights are not up for a debate. They sure as shit aren't up for a for a vote.

Thank you so much.

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