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07/17/2003 Archived Entry: "A plan to place a "stamp tax" on your currency"
GUMMINT KEEPS OUTSTRIPPING OUR PARANOIA ABOUT GUMMINT:
Koenig and Dolmas propose what they admit is a radical idea: a "stamp tax." In this, a currency would have to be stamped periodically, and you would be charged for your currency, "in order to retain its status as legal tender. The stamp fee could be calibrated to generate any negative, nominal interest rate the central bank desired." They toss out a few numbers, say 1% a month, to validate your currency. In other words, it would cost you 12% a year to have the gall to save money.
So basically, these unelected morons are contemplating a new law -- "Thou shalt not save, thou shalt spend." And, if you don't, we're going to confiscate your money, via a tax, after we've already confiscated your money via debasement.
When I first opened the e-mail from reader JC "Bear" telling me some Federal Reserve weinies had come up with the above-described plan, I though, "Oh yeah. Another sucker falls for another piece of patriot paranoia." But before I could finish rolling my eyeballs, I clicked on the article from MSN's Money Central. And there it was.
The Koenig and Dolmas referred to are Fed-o-Crats in Dallas, and this harebrained idea is for real. Their stamp-your-cash scheme is far from being federal policy, and even they admit it's probably too radical for the moment. They say it deserves study and possible implementation within the next 10 years. But this scheme sure shows how those guys think. And oh, by the way, this is their plan designed to "cure deflation." Like, getting gummint out of the money-manipulation business wasn't a more sensible answer.
J.C. also sent along a link to the actual proposal and several tips. The tips were good, sensible ones, so I'm pasting J.C.'s message, complete with those tips, behind the "More" link.
Here's the message from JC:
As the economy fails to respond to the Federal Reserves 'CPR' and slides towards deflation, the Fed is floating some outlandish ideas to jump start the economy. One such idea is to tax savings - that's right, not just the interest, but the savings themselves. And to keep people from just pulling their money out of the banks, there would be a stamp tax placed on all paper currency to discourage saving ("hoarding?"). The 'problem' is how to handle the physical certificate (stamp) that must be attached to the bills.
This first link is a scathing review of the concept.
The second link is to the actual document authored by Koenig and Dolmas of
the Federal Reserve branch in Dallas.
In the unlikely event that the Fed does something this bone-headed, there are some things we can do to minimize the tax. (Note I didn't say 'avoid' - avoiding taxes is ilegal. Minimizing is 'ok'.)
1. Pay off your debts with your savings.
This will save you money in both the short run (taxes) and in the long run (interest). Of course, this screws the banks, because it deprives them of their interest income, and leaves them with only the bad debts they'd like to get rid of.
2. Buy excess comsumables and barter with your friends.
This has to be done 'unofficially' lest it attract the attention of the Franchise Tax Board (sales taxes), etc..
3. Buy traveler's cheques with your rainy-day fund.
While it's true that you pay a premium for the cheques, if the money is to be held for more than a few months, the premium could be less than the taxes and you come out ahead.
4. Buy dollar coins from the Mint or get them at the bank.
Attaching something to a dollar coin is not practical. If you're willing to put up with the inconvenience, it could be a great way to save on taxes.
5. Buy gold and silver coins and ingots.
Buy and hold them; sell them back when you need the cash. You will probably end up paying a tax on the cash returned when you sell the bullion, but it's better to be taxed once, than every month. Besides, if the Fed does succeed in creating inflation to fight the deflation, gold could be a good investment in it's own right.
Just a few thoughts.
Posted by Claire @ 05:39 PM CST