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Daily Digest 5/12 - The Wealthy Are Hoarding Bitcoin in Bunkers, The Real Middle East Nuclear Threat

Saturday, May 12, 2018, 5:33 PM

Economy

The Wealthy Are Hoarding $10 Billion of Bitcoin in Bunkers (Adam)

The outsize holdings underscore the faith that Casares -- a serial entrepreneur nicknamed “Patient Zero” for stirring Silicon Valley’s interest in Bitcoin -- has garnered among his acolytes and at major crypto investment firms, such as Grayscale and CoinShares.

Bullshit jobs: why they exist and why you might have one (Matt H.)

Bad jobs are bad because they’re hard or they have terrible conditions or the pay sucks, but often these jobs are very useful. In fact, in our society, often the more useful the work is, the less they pay you. Whereas bullshit jobs are often highly respected and pay well but are completely pointless, and the people doing them know this.

Iran Claims Israel Attack Was A False Flag (blackeagle)

During the attack, Israeli jets and mortars struck intelligence sites and arms depots, among other military targets allegedly operated by the Iranian forces. Syria's SANA state news channel said earlier that a Syrian radar installation was hit in the attack while "tens" of missiles were intercepted.

Trump Was Right To Blow Up The Iran Deal (thc0655)

Since the Iran Deal did absolutely nothing meaningful to safeguard against the production of nuclear weapons in the long run, it’s in the national interest of the United States to exit and seek a better deal. The Obama administration, which assented to every imaginable Iranian demand to preserve this agreement, allowed Teheran to dictate the terms of IAEA access, which included asking permission for inspections, the ability to deny access to military sites and the ability to take nearly a month’s time to clean up at sites.

‘Iran has no reason to strike Golan’: Analysts dispute Israel’s ‘political’ claim of missile attack (blackeagle)

The retired colonel-general also drew attention to the fact that Tehran is even less inclined to make such moves at a time when the fate of the 2015 deal on the Iranian nuclear program is in limbo. “Iran is highly interested in keeping the deal” intact, Ivashov said, implying that Tehran would probably avoid any aggressive steps that could spark a backlash from the international community.

EU wants to 'replace' US after it ditched Iran nuclear deal. But can it? (blackeagle)

The top European official accused the US of being unwilling "to cooperate with other parts in the world." His words came just days after the US President Donald Trump announced that he would pull the US out of the Iranian nuclear agreement, which he repeatedly denounced as the "worst deal ever negotiated." Despite facing criticism from other parties to the deal, as well as some other members of the international community, the US leader seems to be sticking to his decision.

The Corbett Report – The REAL Middle East Nuclear Threat (yogmonster)

There is in fact a Middle Eastern nation that is in fact in control of a vast, undeclared stockpile of nuclear weapons. This nation does have the capability of deploying those weapons anywhere in the region. It is not a signatory to the nuclear non-proliferation treaty and its arsenal has never been inspected by any international agency. But this nation is not Iran. It’s Israel.

Stress and Resilience: Preparing for the Days Ahead (Thomas R.)

Strеѕѕ аnd ѕlеер рrоvе tо hаvе a robust relationship that саn be utіlіzеd to combat ѕtrеѕѕ аnd іtѕ negative еffесtѕ. Mоѕt hеаlth еxреrtѕ will tell you thаt gеttіng еnоugh ѕlеер іѕ key to оvеrаll hеаlth and wеll bеіng and ѕраnѕ beyond уоur аbіlіtу tо wіthѕtаnd ѕtrеѕѕ. Immune ѕуѕtеm funсtіоn аnd рhуѕісаl hеаlth саn bе соmрrоmіѕеd іf аn individual іѕ nоt gеttіng аdеԛuаtе sleep.

Schools are removing analogue clocks from exam halls as teenagers 'cannot tell the time' (Uncletommy)

Mr Trobe, a former headmaster, said that teachers want their students to feel as relaxed as possible during exams. Having a traditional clock in the room could be a cause of unnecessary stress, he added.

He said that schools are trying to make everything as “as easy and straightforward as possible” for pupils during their exams.

Advantages and Disadvantages of ETFs (Thomas R.)

ETFs can be more tax-efficient than mutual funds because most of the tax on capital gains is paid on sale and completely up to the investor -- even if the ETF sells or buys shares while attempting to mimic the basket of shares it is tracking. This is because the capital gains from in-kind transfers, seen in ETFs do not result in a tax charge, and therefore, can be expected to be lower compared to mutual funds.

Cash payment crackdown to counter tax evasion and black economy (Thomas R.)

It says the three main sources of illicit tobacco in Australia are smuggling, leakage from licensed warehouses, and illicit domestic production. To combat this, it will create an illicit tobacco taskforce with powers to prosecute organised crime groups at the centre of the illicit tobacco trade.

Garden Cheats – Quickie Starts & Expansions (Thomas R.)

Here are a few hacks we can use on that front, whether we’re beginners, or in a hurry for some expansions. Most are totally appropriate for anyone with a patio, balcony, or prime prepper property with acreage. They’re about saving time so we can start learning our gardening lessons or increasing our yields.

Hawaii volcano shows 'no sign of slowing down,' destroys dozens of homes (Thomas R.)

Hawaii County Civil Defense Administrator Talmadge Magno told reporters on Sunday that some of the fissures “have established pretty good flows and just continue to cover more of the subdivision,” adding a sizeable lava flow was heading north of a new vent.

Gold & Silver

Click to read the PM Daily Market Commentary: 5/10/18

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

20 Comments

Matt Holbert's picture
Matt Holbert
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Regarding BS jobs...

I disagree with David Graeber's claim that "Whereas bullshit jobs are often highly respected and pay well but are completely pointless, and the people doing them know this." I have never met a person who would admit that they have a BS job. If they know it -- and have the resources -- they would leave the job. I personally know many people who have the resources to leave a BS job. None have done so.

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sand_puppy
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The Escape of the Tax Donkeys

Charles Hugh Smith has been writing for some time about the plight of the tax donkeys--those that carry the burden of funding the government programs, especially pension programs, from their taxes.

He predicted that the pension fund crisis would cause local governments to try and extract ever more $$ from income taxes and property taxes to fill these short falls.  This in turn would begin to force the emmigration of the tax donkeys to lower taxed areas.

Well today from ZH:

.... At a pension event, a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.... linked here.

Homeowners with houses worth $250,000 would pay an additional $2,500 per year in property taxes, those with homes worth $500,000 would pay an additional $5,000, and those with homes worth $1 million would pay an additional $10,000.  [Each year for 30 years!!]

... Confiscatory property tax rates have already robbed ... Illinois families of their home equity.

Property taxes in many Illinois communities already exceed 3%, 4% and even 5% of home values.   This is far higher than the surrounding states.

Charles wrote last month:

The War between Public Pensioners and Tax Donkeys Is Heating Up   April 20, 2018

Public pension obligations are rising so fast that even repeated tax increases can't keep up. ...  Public pensioners are a subset of the entitled Baby Boomers, but their pensions can't be paid with borrowed money like Social Security and Medicare; public pension obligations come out of local and state taxes, and as those obligations soar then public services must be slashed and taxes jacked up by annual double-digit increases.

But the two sides are not equals in this battle.

Like virtually all wars, there are asymmetries between the two combatants: in the war between public pensioners and the Tax Donkeys, the pensioners can't switch pension programs, but the Tax Donkeys can move to lower-tax states.

If the real estate and stock/bond bubbles pop, the pension bubble pops, too.

The emmigration of tax donkeys leaves the floundering cities in even greater distress.  They are likely to further raise taxes and further accelerate the emmigration.

The migration is only beginning, but that's only half the story: those who can't leave for whatever reason can opt out: close their businesses, quit their high-stress, high-paying job, move back to the family home, retire and start living as close to the ground as possible.

This is the model for many half-farmer, half-X refugees: people who are moving to homesteads or small towns with the networks and skills needed to earn a part-time living in the digital economy. In a lower cost area, they only need to earn a third or even a fourth of their former income to live a much more fulfilling and rewarding life.

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Mots
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Emmigration of tax donkeys

Sand man, thanks for quoting Charles Hugh Smith, who has more insights than others in the webosphere.......

Your (CHS's)  point is true, that "This is the model for many half-farmer, half-X refugees: people who are moving to homesteads or small towns with the networks and skills needed to earn a part-time living in the digital economy. In a lower cost area, they only need to earn a third or even a fourth of their former income to live a much more fulfilling and rewarding life.

I have been seeing an increase of this type of emigration.    People dont realize this but it is entirely possible for entire communities (religious groups possibly) to emigrate to rural places in high tech countries  that experience population drop, particularly if they can make a case for seriously working the land and accepting the new country's rules (such as no drugs and no guns).....................

Even Russia has a free land policy.  Some countries welcome skilled immigrants.  The "news" and "reality" that exists inside of people's heads in N America does not comport with what people see outside that region, particularly in Asia where the biggest country in the world (and which is actively importing scientists and engineers from Asia as a national policy and providing opportunities to these immigrants) is growing a prosperous middle class and small businesses very fast.  

 

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Mots
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double posting

double posting (maybe because I cut and pasted to remove italics)

Mots's picture
Mots
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double posting

.

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HappyCamper
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Tax Donkeys

"The problem with socialism is that you eventually run out of other peoples money."
Margaret Thatcher

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saxplayer00o1
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How once-mighty Venezuelan economy collapsed

How once-mighty Venezuelan economy collapsed

ABS-CBN News-10 hours ago
Venezuela issued some $62 billion in sovereign bonds from the state oil ... Government spending soared, so much that in 2012 the budget deficit rose to 15.6 ...

Argentine peso opens 6.22 pct weaker, sets new record ...

Reuters-52 minutes ago
(Adds central bank intervention, market context). BUENOS AIRES, May 14 (Reuters) - Argentina's peso currency opened 6.22 percent weaker on Monday at .

The Argentine Peso's Death Spiral

Wall Street Journal-20 hours ago
But a persistent fiscal deficit, inadequate regulatory reform and slow growth have ... Since April 19 it has sold around $8 billion in international reserves in a futile ...

India's 'Ugly' Inflation to Pile More Misery on Bond Investors

Bloomberg-59 minutes ago
India's retail inflation accelerated more than estimated, giving ammunition to hawks in the central bank's rate-setting panel for tightening policy and potentially ...

 

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davefairtex
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tax donkeys, the Fall of Rome, human nature, and gold

Armstrong points out that during the fall of the Roman Empire, the Empire's property tax policies ended up forcing people to walk away from their properties simply because they couldn't afford to pay the taxes anymore.

That same thing is starting to happen in Illinois.

https://www.armstrongeconomics.com/world-news/taxes/illinois-to-impose-1-property-tax-on-top-of-everything-annually-for-30-years/

As Armstrong points out, history repeats because the basic patterns of human nature do not change.

As people start to become aware that they have become a tax donkey, gold might become more popular than real estate as a store of value.  Consider:

1) If you buy real estate, your local property tax (from 1-3%, per year) is not subtracted from your tax basis.  If you own property for 30 years, that's 30-90% that should theoretically be added to your your cost basis.  But it isn't.

2) It costs money to hold real estate - repairs & maintenance.

3) Of course, you get to live in your house, but...

4) if they raise property taxes, and you want to move, you can't take your house with you.  Either you sell and take a loss (since many others are selling also) or you end up being a trapped tax donkey.

If you buy gold, on the other hand:

1) you don't have to pay "property tax" on gold.  You do have to store it - but storage is much less than 1-3% per year.

2) if your locality starts to turn you into a tax donkey, you can pick up your gold and trot off to somewhere more welcoming.

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Donkey Trotting

Don't be the last donkey to leave town, avoid the rush.

Now leaving [redacted]...

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Trapped Tax Donkey

Most of us nearing retirement age consider paying off our home mortgage to be the top priority for a stable retirement.  The result is lots of our "wealth" is bound up as equity in our paid off home.

So if our locale starting to raise property taxes in response to state pension crises, it would be really good to catch on to this EARLY and sell the house before the field of potential buyers evaporated.

(Just read the Armstrong link--he said exactly that.)

Another thing that might adversely effect savings in the form of home equity, would be a local disaster of that made one's local area uninhabitable  -- like a leak from the local nuclear plant...

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Re: tax donkeys, the Fall of Rome, human nature, and gold

davefairtex Wrote

"As people start to become aware that they have become a tax donkey, gold might become more popular than real estate as a store of value."

What makes you think they won't impose property taxes on Precious Metals? 

People buy real estate because they need a place to live in. It just happens to be so expensive that people end up spending their lifesavings for a place to live.

FWIW: I think at some point as state & local pensions go bust, The Federal gov't will step in with a bailout. Recall that the Federal gov't got its fingers around the states when it assumed the Pension debts on the revolutionary war soldiers. Congress will probably enact something like a national sales tax or VAT to to fund the bailout. That said the Federal gov't has its own debt problem with entitlements and welfare. 

Probably the only realistic way to avoid become a tax donkey is to downsize to a small home & property or relocate a rural area zoned for agraculture so you can put the land into farm use to avoid property taxes. 

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not where the money is

What makes you think they won't impose property taxes on Precious Metals?

Inverse Willie Sutton: "because that's not where the money is."

https://fred.stlouisfed.org/series/HNOREMV

Total value of household real estate in the US: $27 trillion.

If we assume the US holds 20% of the outstanding gold in the world, that's about $2 trillion.

So with metals, the dollar amounts are small, and your target is easily hidden and quite portable. With real estate, the dollar amounts are more than 10 times larger, and your target is very visible, and immobile.

Where would you focus your taxing energy, if you were the gang in charge?

Taxation and property ownership are also joined at the hip.  The same county agency that says "yep, you own this parcel" is also the same agency that says "and the taxes for that are...$10,000 per year."  Convenient, that.  Its a well-oiled taxing machine.  Few people are needed to run it - efficiency is awesome.  Now imagine that same thing for gold at your local county level.  Can you describe how that might work?

If you own real estate, you're probably going to be a tax donkey - especially if you live in a high tax jurisdiction with a poor pension plan outlook "when times are good."

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Canaries

My property taxes cost me 18% more this year. Part of it was due to assessed value increases, but most of it was due to an initiative on the ballot last year to improve emergency medical services (EMS) in the local area. It is bad enough that taxes increased. It is even worse that those added services aren't being completely paid at the time of use. Why? Those government employees have been promised pensions in order to accept a lower current wage. Those pensions have unrealistic built in assumptions that delay much of the cost until the future. (Please note that I'm not blaming the civil servants. I'm blaming the politicians and the idiots (voters) who get us in this mess.)

That is really what caused the current Illinois debacle. Of course, Illinois is the canary for what's wrong with the system. Their unions can contribute to candidates who promise more compensation. As long as the current bill doesn't seem onerous, people don't balk. Everyone has an implicit idea that growth will keep the future tax bills reasonable. So, what happens when growth fails to appear? Those pension promises have to be kept or the current crop of elected officials bear the brunt of failing to keep the sacred promises. If they reneg on those promises, there will be hell to pay. As a result, we can expect taxes to increase as long as the donkeys accept the extra load. Once donkeys start leaving, taxes have to increase faster to make up the difference. It is baked in the financial cake.

As sand_puppy noted, this isn't the only concern; however, it is easy to see how solvent your city, county, State, and other local taxing districts are. Since pensions are such looooooong term costs, that's the first place for politicians to hide the costs. Here's a website that shows the current (2017) rankings of State fiscal situations. https://www.mercatus.org/statefiscalrankings In this ranking, New Jersey is #50 and Illinois is #49. Here is the website's conclusions (Note that bolding is Grover's.)

Conclusion

Updating the fiscal condition of the states with another year of data shows that drivers of strong fiscal performance remain the same. Top-performing states tend to exhibit fiscal discipline in the form of having high levels of cash, maintaining revenues that exceed expenses, and keeping debt levels low relative to resident income. These factors can easily be threatened if a state relies too heavily on narrow tax bases and volatile revenue sources or if pension plans are not adequately funded, leading to persistently large and growing liabilities.

The lessons from this year’s study demonstrate that policymakers should take stock of both their short- and long term fiscal health before making public policy decisions. The quality of financial reporting also plays a large role in what is known about the states’ fiscal health. This report attempts to make available financial information more accessible while also stressing the importance of improved reporting. These metrics, when used alongside other information, are intended to help policymakers identify trends in state finances and respond with policies to ensure short-run solvency and long-run fiscal stability.

If you're thinking of moving to avoid the consequences of being a tax donkey, you don't want to move out of the frying pan into the fire.

Grover

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Don't Worry, Be Happy, We're Smarter In the Future

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Taxing fantasies - the American solution

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davefairtex wrote: "So with

davefairtex wrote:

"So with metals, the dollar amounts are small, and your target is easily hidden and quite portable. With realestate, the dollar amounts are more than 10 times larger, and your target is very visible, and immobile."

I don't see that happening. If anything Amercans will buy paper gold which is very manipulated, and those are easy to subject to property taxes. I don't see that americans will ever embrace PMs, especially physical PMs. Also consider that most americans are dead broke. They use debt to purchase their homes & vehicles. While the value of US real estate is $27T, about half of it is borrowed via mortgages. Of that $27T, most of its grossly overvalued\inflated. 

davefairtex wrote:

"Where would you focus your taxing energy, if you were the gang in charge?"

The issue is that neither you or I are in charge. What matters is who is in charge and how they will act, and it won't lead to mass PM ownership.

 

TechGuy's picture
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Grover wrote: "If you're

Grover wrote:

"If you're thinking of moving to avoid the consequences of being a tax donkey, you don't want to move out of the frying pan into the fire."

The issue is that I see some of the currently top states degrading as more people from the worst states relocate. For instance Texas & Nevada is seeing a big increase of people leaving California. Lots of people from the North East are relocating to Florida & North Carolina. They will be bringing there values and voting for the same type of politicians that cause the mess.

Grover wrote:

"Those government employees have been promised pensions in order to accept a lower current wage."

I believe the average gov't employee recieves a better compensation package than a private-sector worker. 

 

 

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davefairtex
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pension problems are local

TG-

While the value of US real estate is $27T, about half of it is borrowed via mortgages. Of that $27T, most of its grossly overvalued\inflated.

Even if property values drop by 50%, that's still 6 times the amount stored in PM.  And that includes paper.

"Where would you focus your taxing energy, if you were the gang in charge?"

The issue is that neither you or I are in charge. What matters is who is in charge and how they will act, and it won't lead to mass PM ownership.

Eh, my argument is one of efficiency, not about me being in charge.  The gang in charge wants to extract the most taxes possible for the least amount of work.  So does the Mafia.  "That's a mighty nice shop you have there.  Be a shame if anything happened to it."  EROEI.  Property tax extraction is extremely efficient.  Taxes on physical metals - extremely inefficient.  Good luck finding out who owns what.

My underlying point is that the pension problems are state & local, not federal.  The only real tax target the local boys have is property and local business.  If you are in a high tax/underfunded pension state, the local boys will come after your property, because that's the thing that is hardest for you to hide, and the easiest/most efficient thing for them to tax.  Same thing for your local business.

Both of those two things are very difficult to move.

PM, whether it be paper, or physical, is easy to move.  If California starts charging me a wealth tax on my PHYS holdings, the fix is simple - I just move out of California.  I can get that done in 5 days.

It is substantially more difficult to execute this plan if I own a home, and/or a business in California.

And that's why they are going to go after property and business when their (local) pensions get in trouble.  Because that's where the money is - and because that is the most difficult to move and/or hide.

At some point, people will figure out that portable wealth is a good idea.  As is usually the case, this realization will come far too late.

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Grover
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Agreement
TechGuy wrote:
Grover wrote:

"If you're thinking of moving to avoid the consequences of being a tax donkey, you don't want to move out of the frying pan into the fire."

The issue is that I see some of the currently top states degrading as more people from the worst states relocate. For instance Texas & Nevada is seeing a big increase of people leaving California. Lots of people from the North East are relocating to Florida & North Carolina. They will be bringing there values and voting for the same type of politicians that cause the mess.

Grover wrote:

"Those government employees have been promised pensions in order to accept a lower current wage."

I believe the average gov't employee recieves a better compensation package than a private-sector worker. 

TechGuy,

I agree with both of your points. It is ironic that we all pine for the nature before humans spoiled it, yet we want all the modern conveniences that we're used to having. The same thing happens when tax donkeys leave a spoiled political arena. They want to bring the "good" part with them. Those "good" parts have baggage (taxes & regulations) that ruin the new area.

As far as government employees getting a better total compensation package - my point was that much of that compensation isn't charged when the work is being performed. It gets delayed so that future tax payers foot the bill for work that was performed decades ago. Does that seem fair? Idiots (voters) who only want "good" legislation refuse to understand this concept.

Grover

PS - To make your posts more readable when quoting another, you can type this:

[quote=Grover]

Stuff.

[/quote]

... and the Peak Prosperity computer will produce this:

Grover wrote:

Stuff.

TechGuy's picture
TechGuy
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Pensions

"My underlying point is that the pension problems are state & local, not federal. The only real tax target the local boys have is property and local business. If you are in a high tax/underfunded pension state, the local boys will come after your property, because that's the thing that is hardest for you to hide, and the easiest/most efficient thing for them to tax. Same thing for your local business."

1. There is indeed a federal pension problem. Like Social Security & Medicare, Federal Pensions are not funded: Its pay as you go.

2. I think once a state goes belly up, The Feds will step in with a Bailout. They didn't for the US auto manufacturers and those are tiny compared to states. I think Eventually all States with underfunded pensions will be assumed by the Federal gov't. Recall the first major act of the US federal gov't to take over state debts and pensions for the Revolutionary war.

 

"PM, whether it be paper, or physical, is easy to move. If California starts charging me a wealth tax on my PHYS holdings, the fix is simple - I just move out of California"

 

Sorry I just do see that as a viable option. As the Dollar weakens, PMs will be taxed at the federal level if not made Illegal. Up until 1971 Gold ownership was illegal for US citizens. I don't see the masses embracing PMs. Like I stated, The Majority of people that own real estate did it using debt. Technically the Bank or leader owns the property. You can get a mortgage on a home, but not on PMs.

 

" Property tax extraction is extremely efficient. Taxes on physical metals - extremely inefficient. Good luck finding out who owns what."

 

They already do. 

 

 

 

 

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