Does Sound Money Prevent Taxation on Gold and Silver? - With Expert Guest JP Cortez
JP Cortez is the Executive Director of the Sound Money Defense League, a nationally renowned policy group known for its fervent commitment to advocating for a stable and constitutional monetary system. With a passion for Austrian economics and a deep understanding of monetary history, Cortez has become a leading voice in the movement to restore sound money to its rightful place in society. We hope you enjoy this special interview!
Hello everybody and thank you for tuning in to the Ron Paul Liberty Report.
Today we have a special guest.
We'll be introducing him in just a few minutes.
But I welcome all our viewers for tuning in today because we are going to deal with the money issue.
No surprise there.
And I've been fascinated with it for a long time.
And we have a young man that's been interested in not too many years because he's young.
But I'm fascinated with what he's done already.
And I want to introduce the individual is J.P. Cortez.
And he's had a relationship with the Mises Institute.
And they helped him along in his undertaking of sound money.
But he's also the, he's also the sound money executive.
And that's the Sound Money Defense League.
And they're doing great work.
And one of the key things, they have several projects, but the one that I'm most interested in is making the point that there's no right of anybody, should be anybody, but at least the states clearly have been prohibited from taxing money.
No tax on gold and silver.
And that's what we'll talk about the most.
So the individual I'm introducing is JP Cortez.
JP, welcome to the Liberty Report.
Thank you very much, Dr. Paul.
It's an honor to be here.
Very good.
And we talked a little bit before the program how you got started.
You're a graduate of Auburn.
And so I ask you, well, did you ever hear the Mises Institute while you were a student?
The Importance of Sound Money00:13:02
And what was your answer there?
That you frequently visited the Mises Institute.
Of course, that was, you know, Auburn's a great institution, but I did my learning at the Mises Institute right across the street from Auburn's business building.
So the place I was paying thousands of dollars to attend, I was skipping class and choosing not to be there in lieu of studying at the Institute with the economists and historians that were there.
Well, that's a neat story.
It's just too bad that more people didn't have that same experience.
But everybody has similar experience on when they started the interest in that.
So you graduate from Auburn, but did you immediately get into your organization, the Defense League, or how long has that been going on?
This is actually our 10th anniversary this year.
The Sound Money Defense League was founded in 2014 as a project of Money Metals Exchange, a national bullion dealer.
And we are a nonpartisan public policy group advocating for the remonetization of money.
You know, there are a lot of reasons today why gold and silver aren't used as money anymore, but it's not because they aren't good money or because they're bad money.
The truth is that the government has saddled any alternatives to the Federal Reserve Note with taxes and regulations and all of these disincentives that introduce friction to using gold and silver as money.
Gold and silver are not workable as money because of all the friction in the form of taxes and other disincentives.
So we go state to state, eliminating all of these obstacles standing in the way of people being actually able to use gold and silver as money.
And then at the federal level, we've worked with Congressman Mooney from West Virginia to introduce bills that would audit America's gold holdings, that would remove the capital gains on gold and silver at the federal level.
So we have been very active locally at the state level and at the federal level to remonetize gold and silver and reintroduce sound money.
You know, the Constitution is very explicit about states that have an obligation to use only gold and silver as legal tender.
And they didn't point out what has happened to the control of the monetary system.
Because, you know, in 1776, after the Declaration, they immediately knew they had to have a sense of independence, so they created a coin.
And so we started off badly.
The Declaration was great, and the Revolution went well, and the Constitution helped sort things out.
But between 1776 and 1787, they were using a continental, but it didn't take them long because it was a fiat currency.
It was just junk.
And of course, there's the famous quote that people use, it's not worth a continental.
Well, in a way, in a way, AJP, I think you're dealing with the dollar is not worth a continental either.
So we've learned the path.
And this is a major undertaking that you're doing, but I think it's so important that you're trying to reverse that.
Yeah, it wasn't so good we had a continental.
We did learn a lesson.
They didn't quite make it straight enough because they didn't realize how massive our federal government would get in the banking system.
I know Jefferson did his best, and Hamilton had an argument about central banks and all these sort of things.
But it's so tempting for big government to drift to saying, there's a free lunch out there.
Just give us control of the money and we'll all be rich.
Absolutely.
And as you said, the founders knew there are a number of quotes out there from Madison and from various writings from America's founders talking about how paper money is unjust and it's the road to evil and how it makes a lottery out of all of private property.
So our founders from the very beginning knew the risks that came with money by edict, money by executive order, fiat paper money.
And of course, the sound money that we're talking about here is important primarily for two primary tenets as to why that is the case.
The first is the ability to make long-term plans, to be able to build infrastructure, to be able to plan to be assured that the value that your money has today will be the case a year from now, 10 years from now.
And that's what allows human flourishing.
That's what allows the raising of living standards.
Foregoing consumption today so that we can spend and invest in tomorrow is how the greatest civilizations are built.
And that's the first important tenet of sound money.
The second, of course, being that sound money is a bulwark against the government that would otherwise spend or act recklessly against a government that would continue for decades to fight global wars of choice and governments that would have bureaucracies and entitlement systems that bloat and that will eventually bankrupt the United States.
So sound money is so important to reintroduce.
And while we know that this is largely a federal issue and an issue that stems from the Federal Reserve system, that doesn't mean that states are standing by and letting this happen to their citizens and to their own balance sheets and investments.
There are things that states can do to mitigate this damage.
And I think ultimately the market rules and the market is on our side and the founders even knew that.
There was a debate going on there that paper money and fiat money would not work.
Sometimes it sounds real complicated.
How are you going to do this?
And it's amazing how well we did from the time the country was started up until 1913 when we had the Federal Reserve.
And the dollar still had a relative respect for the definition of the unit of account because it was gold.
It was gold.
They sort of drifted away from using silver and bimetallism.
But they used the unit of account and $20 an ounce.
$20 essentially is what they did up until our depression.
And then they say, oh, we want to print a lot of money.
So we're going to grab all the gold.
And your program and your talk is talking about what can we do to get the people to have more gold.
And that's why, you know, when you look at it and they're being taxed, if you buy a gold-ounce coin for $1,000, and then all of a sudden, oh, I need my money.
I'm going to get $2,000 for it.
They're going to tax you on that.
So it's crazy.
You can't tax money.
And there are sales taxes and also capital gains taxes.
So I think it's a great issue.
And you've worked on that for a long time.
And I think you've seen some progress.
So you were involved when the very first state had some legislation passed or got interested in eliminating the taxes on money?
The very first state that enacted a policy or a group of policies like this would have been Utah in 2011.
I wasn't around back then.
I was a senior in high school writing reports on a congressman from Texas.
But since then, there has been an incredible growth in states that have adopted these policies.
Today, there are only five states remaining that still charge sales tax on precious metals.
Those are Kentucky, Hawaii, New Mexico, Vermont, and Maine.
And of those five, we're expecting legislation to end that tax this upcoming session.
So we're working to make this tax extinct from the face of the earth.
On the capital gains side, there are only 13 states that have eliminated this tax.
So there are 37 left to go.
There's still work to be done, but these are the two primary points of friction that are impeded, or rather that taxes impede.
When you use the metal, if you want to adopt your own gold standard and use the gold, then you're going to get hit with a tax.
And then when you buy the metal, or if you sell it, you're going to get hit with a capital gains as well.
So it makes gold and silver unworkable as money, not because they make bad money.
We know that that's the case, that gold and silver make good money.
It's been the case for thousands of years.
But the government has shackled these alternatives.
And so we're introducing pressure valves and introducing legislation that allows people to use gold and silver and also empowers state treasurers and state regulators to invest physical gold in their state funds using public taxpayer funds, the funds that would otherwise go to a lot of risky investments and a lot of negative real rates of return on these investments can now be put in gold and silver in some states.
You know, the world, in a way, is starting to desert the dollar, and they recognize the problem.
And yet, what has to be done, I believe, and that is the definition.
I think the defining the unit of account is so important.
You know, whether it was $20 per ounce, and then they canceled it out where we weren't even allowed to own gold for 42 years until in the mid-70s, and that was one of the early things I worked on.
I don't get any credit for it, but I did talk about that.
So it was re-legalized, I think it was January 71.
And that's a big deal.
I mean, we look at all the negatives, but a big positive was really they think, well, we've demonetized gold.
Nobody wants it.
And if you remember Bernanke, when I asked him, is gold money?
No way.
But it is money.
And so by them ignoring it and trying to pretend it is not money, the market worked up and what did it do?
It amazingly permitted our governments to fiat at random more than most people would have predicted.
And just look at that.
So I think the first declaration of the default of the dollar, a big date in my understanding of monetary history was August 15th, 1971.
That was a big deal.
The closing of the gold winner, I think it was a sort of announcement of bankruptcy, but it's amazing how long this false trust in the fiat money has lasted.
But right now, I think what we're witnessing and your activities helping to bring this to attention.
So yes, it's good theoretical stuff, but it's very practical now because the world is in a mess and they don't want to talk about it.
How much talk have you heard in the presidential campaign?
Oh, what we need, what we need is to look at the monetary standard.
But both parties, unfortunately, they have reason to spend the money.
One side for the good things they like, and the other side the good things they like, and the people suffer, except what I think is magnificent is because the activity you do and others is calling attention to this.
So it's so much different than it was when I first went to Congress in 1975.
Right now, there's so much more awareness.
So I have to say, your work has been very, very important.
Thank you.
Thank you very much, Dr. Paul.
And a lot of this work is inspired by your work.
This is the embodiment of markets.
We want a market for money.
We understand that monopolies are bad.
We went through the schooling system and we were told through 12 years of public school that monopolies are bad and that the Vanderbilts were bad and that all of these, the Rockefellers were bad people.
But yet, the government itself has the largest monopoly on the single greatest communicative tool that human beings use second to language.
Outside of talking, humans use money to express their values, to withhold support, to declare things important to them, to get things they need.
Money is such an important standard in the way human beings interact.
And so to have a government that's manipulating it and politicizing it and weaponizing it so as to continue endless wars across the globe and so as to continue wasteful spending here domestically, this is not a system that should be sustained.
And so, yeah, we're introducing this idea of competition in money.
The Hayekian idea, the Nobel Prize-winning F.A. Hayek economist who wrote a book on competition in money, denationalization of money.
It should be treated like any other good.
Let the best good compete and the market will decide.
And we know after thousands of years, that's gold and silver.
Why Gold Matters00:12:27
Right.
And that was knowing about Hayek is one of the reasons why I had bills in the Congress to just denationalize and make it competing and the market would work it out.
But I do have a question for you because I'm interested in your answer because I don't think I have the full understanding and knowledge how this works.
And that has to do with the state, and sometimes they use the word investing in gold.
I'd like to clarify that.
Are they out investing like the people on the futures market?
It says the states will invest, but they do buy gold.
And I think Texas has something they call a depository for it.
It may become a custodian.
Could you explain a little bit more of that?
Because maybe others are a little bit confused on that.
And are the states agreeing on what they do?
Or is this something that's very easy for you to understand?
The beauty of the American experiment is that we have 50 different sandboxes.
And so each state kind of plays by its own rules.
In the case of Texas, In, I believe it was 2011, Texas announced that they had acquired a billion dollars worth of physical gold that they were storing in their teachers' pension fund.
It was physical gold held in that pension fund.
But it was stored in New York because of COMEX regulations, because of the regulations that govern the large-size bars of gold and silver.
So they decided we should build a state depository somewhere in the state of Texas where we can store the state's gold and private clients' gold.
So they built this depository.
They contracted a private business and they built the depository.
So now they have that depository in Texas.
They eventually divested from their gold position.
So they no longer own physical gold.
The state no longer owns physical gold.
But Utah, for example, or excuse me, Ohio, for example, owns about a billion dollars worth of paper gold.
We'll call it ETF gold futures.
They own about a billion dollars worth of digital gold, paper gold.
In the case of Utah, this year, the governor signed a bill there that permitted and specifically listed the state funds in which the state is allowed to invest gold.
They listed a number of different funds.
And after speaking to the sponsor, my understanding is that the state has approved a $180 million purchase of physical gold to be stored within the state at one of the facilities that already exist in the state.
So each state, and so these are just the states that have effectively passed legislation like this, but several other states are considering legislation to establish their own physical bullion depository to store the state's gold if the state were ever to invest in gold.
There are mining states in the West side of the country that it makes a lot of sense in mining states that already are mining the gold out of the ground to have some place to keep it.
So these are just one of the issues that we are promoting to help remonetize gold and silver because the state, if the state were ever to invest, say, $100 million, $1 billion in physical gold, physical gold, excuse me, they would need a place to store that.
So this is just one effort to that end.
Well, you know, in a way, it's the reserve.
So if you had a more honest government, you know, the way it was intended originally is there would be reserves.
You could have paper gold.
You could have a gold certificate and you wouldn't have to carry the gold around.
But whoever issued that, whether it's the government or private, they have to have the gold in reserve to always go.
So if you go to your bank or go to your private source, and you say, look, this piece of paper says it's worth an ounce of gold.
I want my ounce of gold.
So it boils down, I think, to the honesty of the people.
And right now, there's so little trust in the government.
Oh, it's too confusing.
You know, there'll be corruptions that the private people are establishing some of these things.
But I'll tell you what, with the amount of trust that people have now in the government telling us the truth, oh, but we'll put the FBI and the CIA in charge, and they'll protect our gold.
That's why as close to home as possible, and that's why, you know, I think I like the word in the reserve, that's there.
And in a reserve, you know, if assets are there and it's a public service, then you have to be able to prove that they're not going to be cheating.
But right now, you know, New York and the United States kept so much gold for other countries.
And that, of course, is what would happen in 1971.
France especially, they wanted their gold back at $35 an ounce.
But gold was already worth about $300 an ounce.
So that's why they had to do something.
But I think an effort has to be made.
I don't think we're going to wave a wand and all of a sudden all you're going to have is private money.
But I think you have to have something with the integrity of understanding why you have to define the money and you have to, you know, Barry Rothbard used to always say a gold coin standard was the greatest because he said if you had a one single coin, you should be able to go into the bank.
And, you know, I lived under those days, especially with the silver standard.
As I got to know that silver at one time, when I started looking at it, was $1.29 an ounce.
And then when it went to $2 or so, people started melting it.
You know, I would take my Federal Reserve note, my $1 Federal Reserve note, and get a silver dollar.
But obviously the market took care of that.
That didn't last real long.
And then finally, they ran out of silver.
They couldn't afford it.
So that's why you need that market function in there.
But I think your effort is very great because you do a lot of education and understanding.
You know a little bit about the history of this.
And I think that eventually there's going to be a rush for this.
I think for me personally, looking at my finances and the politics and the education, I look at the price of gold, the market price of gold, even though I always tell myself it's not a price of gold.
What I'm really interested in is how rapidly the depreciation of the dollar is going, because that is usually what happens.
And, you know, this is one of the most frustrating issues that I have is when I'm speaking to people and you watch the television.
They'll say, and it'll be on both sides, but especially the Democrats, they'll say, oh, well, grocery prices are high and my gasoline prices are high.
My res is up.
Give me more money.
I need more money.
Without understanding that that money printing is the cause of this issue now.
Yeah, and that's why education is so important.
And I think it's economics, but I consider it a moral issue because what the government is doing, I think inflation, inflating the paper, is theft.
And we don't use that word.
And I think, you know, when people come up and they're politicians and say, well, I'm going to get $10 million, $10 million, $10 billion, I want to send it to Ukraine.
Well, where are you going to get the money?
From taxpayers.
From people here.
Extracting value, extracting value from productive people here in the United States in the private sector, in the productive sector, to give it to the unproductive sector, the government.
And so that's why it's so important.
You mentioned trust in the dollar.
And that's, is the gold there?
You mentioned having the gold.
There's gold at Fort Knox, supposedly.
And that's why we worked with Congressman Mooney on legislation to really ensure that America's gold reserves are actually there.
This is a bill that would call for the audit of America's gold holdings.
You may remember there was in the 70s the made-for-TV viewing where they marched a few politicians through Fort Knox.
They showed them a few walls of bricks of gold.
They had some cameras, lights and flashes, and then they filed everyone out without going through a single serial number inspection, without doing any assaying of the bars, without ensuring that those are actual gold in any way.
So this bill would call for an audit of America's gold, but not just to ensure that it's physically there, because like you mentioned, there was a lot of gold changing hands around the time of the 70s.
De Gaulle was pulling his gold.
America was holding gold for other people.
So the gold that is there, is it America's?
Does it have any encumbrances on it?
Is it pledged in any leases or swaps?
So these are the questions that would be answered by this piece of legislation that Congressman Mooney filed last year.
Okay.
You know, in the early 70s, this was a big deal trying to figure out what would happen when the gold was closed.
And Jesse Hales and myself, we introduced legislation in the House and he and the Senate, and we passed something called a gold commission to study the role of gold in the international monetary system.
And there were 19 people on that commission.
And so I worked real hard as one of our resolutions is that we would audit the gold.
Oh, boy, you'd think that would be a good idea.
You'd think.
So I pushed it to go to woe.
And out of the 17, we got 15 people against it.
So Lou Lehrman and myself were the only two that said, you know, we ought to at least look and have an honest audit.
So like you said before, they fudged the audit, and that was 10 years or so before that.
Phil Crane, I think, was involved in that.
But in this case, there was no audit.
There's not going to be.
And that's why closer to home, closer to home.
And trust in the dollar is waning.
Trust in the dollar is waning.
You can see that internationally.
You can see the BRICS countries talking about gold-backed currencies, alternative to the dollar.
But it's not just countries with adversarial relationships with the United States either.
Like I mentioned, states themselves are de-dollarizing.
They're saying, wait, we need to hold a more stable money, a money that can't be politicized or can't be, whose value isn't governed by the whims of politicians.
And then, of course, individuals who are adopting their own gold standard because they no longer believe in this fake money, this money that only has value because the government says it does.
This isn't going to stand anymore.
And we're seeing more and more that individuals and states themselves are waking up to these ideas.
They're asking themselves questions about money that haven't been asked for at least a decade.
Right.
You know, JP, we need to finish up, but I want to give you a chance to let our viewers know if they want to follow what you're doing a little more closely and keeping up with the Defense League and what they're doing.
Give them away the best way to find that information from you.
You can find us at soundmoneydefense.org.
You can find me on Twitter or X at JPCortez27.
I encourage everyone to go to our website and sign up for our alerts.
We produce or we supply alerts during key moments in battles, specifically in your state.
We provide committee members' names and phone numbers and email addresses, and in many cases, even pre-written messages.
We make it very easy to advocate and to be an active member in this battlefield for sound money.
So I encourage everyone to please be an active participant in your state legislature where you still have power.
Delighted to Discuss Creative Solutions00:00:36
JP, I want to thank you very much for joining us today.
It's a great interview and I consider it pretty important because the motivation for me to even speak out, let alone get exposed to running for office, I never thought that was going to happen.
But it is a big issue and I'm delighted to meet people like you that have worked hard and very creative in getting the information.
So thank you very much for being with us today.
You've inspired me and so many others.
Thank you, Dr. Paul.
Very good.
And I want to thank our viewers for tuning in today for this very important interview.