Mask Slippages Dept.

Even reading widely and with attention doesn't guarantee that nothing will get past you.

Via Maetenloch over at Ace of Spades HQ comes this bit of agita, which I apparently missed when InstaPundit first covered it:

To "The Precious Metal Purchasing Act" From Executive Order 6102 - Santelli's Take

"Ever heard of SB3341?" is Rick Santelli's opening salvo in today's rantless discussion of the concerns he has with Illinois' 'Precious Metal Purchasing Act'. While passed in the Illinois Senate last year, and moth-balled in the House since, Rick notes that "the long and short of it is they want an audit trail to any precious metals, whether you're talking coins or bullion." It does not seem too much of a stretch to this Chicagoan to the 1933 Executive Order #6102 that confiscated gold and cleared the way eventually for Nixon's 1971 disconnect of the dollar from gold. As Liberty Blitzkrieg's Mike Krieger notes: "So let me get this straight. First they want gun registration and now precious metal registration? I’m sure the government would only use such information in our best interests, because as we all know: Your Government Loves You. Sounds reasonable, after all, only 'terrorists' buy guns and gold anyway."

The text of the bill:

...Provides that a person who is in the business of purchasing precious metal shall obtain a proof of ownership, create a record of the sale, and verify the identity of the seller.

Provides that a person who is in the business of purchasing precious metal shall not pay for the precious metal in cash and shall record the method of payment.

Requires the purchaser to keep a record of the sale for one year or, if the purchase amount is over $500, for 5 years.

Fascinating. I can see it now: a crazed domestic terrorist -- a right-winger, of course -- forces his way into the Sears Tower at Noon and holds everyone in the building hostage...with a gold brick for his only weapon. Thousands of lunch breaks imperiled! No one in Chicago is safe! Clearly we have to be prepared to thwart such a schemer before he can strike. Otherwise, the terrorists will have won!

Go ahead and laugh, It's good for what ails you. But there's a serious point to it, too.

As I wrote some time ago at Eternity Road:

Money is a medium of exchange and a store of value. The significance of the first property should be obvious: not everyone can be persuaded to accept a chicken in exchange for a loaf of pumpernickel, and besides, barter of that sort makes it difficult to "make change." But the importance of the second property has always been at least as great. Today, it's near to overpowering.

The State's ability to tax us relies on our use of legal tender: the dollar. But the dollar is not money; it's a politically managed currency with no intrinsic value. In the absence of the legal tender laws, it would be worthless.

That wasn't always the case. Time was, the dollar had a statutory definition as a fixed amount of gold or silver. By presenting a dollar bill to any bank in the country, the bearer could demand the equivalent weight of precious metal in exchange. (If you've ever seen a Silver Certificate, that's what that was about.) That property of hard (redeemable) money is what stabilized the dollar until 1913, since no bank that wanted to remain solvent would issue more banknotes -- the origin of the paper dollar -- than it could redeem in precious metal.

(Yes, some banks did so; the famous bank runs of the Nineteenth and early Twentieth Centuries testified to the variable trustworthiness of financial institutions in those days. But the banks that did so either fell, or were wildcats protected by corruption at the state and territorial levels. One could always protect oneself from such perfidy by dealing exclusively in gold or silver.)

The most salient point about money in our current situation is this: legal tender, which a merchant is required by law to accept "for all debts, public and private," is not money. It cannot store value; the Federal Reserve, no longer required by law to redeem a dollar in precious metal, can therefore inflate the supply of dollars without limit.

That article continued on to exhort its readers to preserve their purchasing power by storing it in gold or silver.

The precious metals cannot be inflated. More, the value we place upon them is intrinsic to their nature; it doesn't depend upon a "legal tender" designation, nor upon how many zeroes are printed on them.

But as I observed in the snippet above, the State dislikes gold and silver, precisely because it cannot track their use as a medium of exchange, and cannot steal their value via the printing press. They are not proxies for money but money itself: the best materials ever used for commerce among free men.

It appears from the ZeroHedge article that the Illinois state government wants to scotch any thoughts among residents of the Land of Lincoln about recurring to gold and silver as the dollar deteriorates and tax rates explode.

That this should come at a time when various states are contemplating the minting of their own currencies -- so what if that's expressly forbidden by Article I of the Constitution? -- only adds to the irony.

When I posted the original "Defending Your Money" article at Eternity Road, a fair number of readers chose to quibble with it about the need for gold and silver specifically to secure our wealth. Based on the recent proliferation of gold-accumulation and storage services, and the surge of interest in barter societies, I dare say there are fewer quibblers today.

Illinois's Assembly has apparently not voted on that noxious bill. That doesn't mean, as state tax revenues crash and wealthy residents flee for more rational locales, that it never will.

Verbum sat sapienti.