The Hidden Cost of Inflation: Why Taxing Gold and Silver is Unfair
Inflation is one of the most pressing issues today, affecting almost every American. Since 2019, the cost of living has skyrocketed, squeezing the middle class and pushing many into financial hardship. This problem isn’t just a fluke of the economy; it’s a direct result of how our money system works, particularly the use of unbacked paper money and central banking. Let’s explore how this happened and why taxing gold and silver is an unfair practice that needs to end.
The Roots of Inflation
The story of inflation in America began with the establishment of the Federal Reserve in 1913. Before this, the U.S. experienced minimal inflation. The Federal Reserve was supposed to manage the U.S. dollar and keep the economy stable. However, it ended up creating more dollars to fund government spending, leading to significant inflation.
In 1933, President Franklin D. Roosevelt took the U.S. off the Gold Standard, meaning dollars were no longer backed by gold. This allowed the government to print more money, leading to higher prices. Further, the Coinage Act of 1965 removed silver from coins, devaluing the dollar even more.
In 1971, President Richard Nixon ended the dollar’s convertibility to gold completely, turning it into a fiat currency, meaning it was backed by nothing but trust. This change caused severe inflation in the 1970s. More recently, the Federal Reserve’s policy of quantitative easing (QE), which started in 2008, has pumped trillions of new dollars into the economy, causing even more inflation.
The Impact of Inflation on Everyday Life
Since the Federal Reserve’s inception, the cost of living in the U.S. has increased dramatically. Consumer prices have risen more than thirty-fold, and the dollar has lost nearly 97% of its purchasing power. Today, a modest lifestyle is becoming nearly impossible for many Americans.
Here are some striking examples of how inflation affects everyday life:
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A family of four needs an income of over $100,000 to live comfortably, yet the average annual salary is just $59,428.
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Americans are spending an additional $700 a month just to maintain the same standard of living they had in January 2021.
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The median home price has hit a record high, making home ownership unaffordable for many first-time buyers.
Quotes on Inflation
Inflation has long been recognized as a silent thief. Here are some notable quotes:
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Vladimir Lenin: “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
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John Maynard Keynes: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
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Milton Friedman: “Inflation is a form of taxation without representation.”
Gold and Silver: Protecting Your Wealth
Gold and silver have been used as money for thousands of years and are excellent at preserving wealth. Unlike paper money, which can be printed in unlimited quantities, gold and silver have a limited supply. This means their value remains stable over time. When the value of the dollar drops, the price of gold and silver rises, protecting those who hold them.
However, the so-called gains in gold and silver prices are actually just a reflection of the dollar losing value. For example, a quality men’s suit cost about $35 (or one ounce of gold) in the 1930s. Today, both still cost about the same amount in terms of gold.
The Unfair Taxation of Gold and Silver
Despite their stability, the U.S. government taxes capital gains on gold and silver at a high rate. These metals are classified as collectibles, like art or baseball cards, and taxed at 28%. In contrast, long-term capital gains on stocks and bonds are taxed at much lower rates. This is unfair because the so-called gains on gold and silver aren’t really gains at all—they’re just keeping up with the declining value of the dollar.
A Legislative Solution
Recently, U.S. Representative Alex Mooney introduced the Monetary Metals Tax Neutrality Act. This bill aims to eliminate federal income taxation on gold and silver bullion. It’s supported by various free-market activists and aligns with a broader trend of states removing taxes on precious metals.
The Takeaway
Inflation is silently eroding the wealth of Americans, and the taxation of gold and silver exacerbates this problem. The Monetary Metals Tax Neutrality Act is a step towards fairness and sound money. To support this bill, contact your local elected officials and spread the word about the importance of removing these unfair taxes. By understanding and addressing these issues, we can protect our wealth and ensure a more stable economic future.