The Return of Sound Money

[Origanalist]

Well, I managed to make three different transactions at three different locations with $25.00 in gold backed currency today. I'll be sending a check after I order some Helmuth.

 

[Jamesiv1]

No. That is a serious accusation.

My apologies. I really did not mean that in an untoward way. I just meant that instead of me holding my gold, now you would be holding my gold. No offense intended.

 

[Peace&Freedom]

True.


We'll make it up on volume!

No, it's good to be suspicious of companies with no visible revenue source. First off, the storage fees and conversion fees we're dealing with are surprisingly low. At least part of the long-term revenue plan involves sharing a portion of the merchant charges (which, as you may know, is a significant percentage). Profitability will not be immediate (especially with significant sunk costs), but with enough active customers it should be able to turn a profit.

I'm not concerned about the coverage of expenses issue (you'll figure that out as you proceed), but more about the protection from the jackboots issue. In a decade that has seen the raiding of lots of online, gold-based financial services or alternatives to government fiat tyranny, will your variation fare any better? E.g., just because the gold is in Zurich, the site and business may still subject the enterprise to government intervention (shutdown attempts) if either of the latter are US based.

You don't think they'll go after you? Tell it to the Liberty Dollar, e-Gold, e-Bullion, Liberty Reserve, etc. If you are a non-fiat alternative that could thus effect the current regime in some way, watch out. Bitcoin et al cryptocurrency has been successful for a reason---as an open-source software and peer network based transaction vehicle, there is no office to raid, no centrally located assets that can be seized, no party to subpoena to suspend operations, and no website to shut down. To duplicate that kind of invulnerability to disruption while still remaining physically based, you will have to take more steps than I see on the current site.

I suggest to you four countries: Morocco, Cambodia, Nepal, and Mongolia. These are about the only four nations left that a) have no laws or enforce no laws about such financial alternatives, and b) have no standing extradition arrangement with the US. I suggest you store the gold in one of these four countries, set up the physical HQ in another, register the domain in another, and host the site on a server in the fourth.

Between the lack of US jurisdiction and the spreading of risk across countries not cooperating with the US, your alternative then should be safe enough to stably operate. Apart from such extreme safeguards, I have concerns about its survival.

 

[helmuth_hubener]

Well, I managed to make three different transactions at three different locations with $25.00 in gold backed currency today. I'll be sending a check after I order some Helmuth.

That's great, Origanalist!

 

[helmuth_hubener]

Send me information on how to sign up as a beta tester.

But, what are the tax implications? IF gold goes up and we convert to USD to spend are we not on the hook for capital gains?

Can do! PM on the way.

Regarding taxes: precious metals are classified by the IRS as collectibles, and so a higher capital gains rate may apply. The maximum capital gains rate charged on collectables is 28 percent. This does not necessarily mean that you will have to pay 28 percent, however. The actual rate that someone pays is determined by the amount of time the precious metals were held and the payer’s ordinary income tax rate. The investor must also determine if the capital gain is short-term or long-term based on how long they held the precious metals. Short-term capital gains are taxed differently from long-term capital gains.

I am, unfortunately, (or maybe fortunately! ) not a tax expert, but basically this is my understanding:

1. 28% is the maximum, not the minimum.
2. If your regular tax rate is lower than 28%, you use your regular tax rate (just add the gains on as a little extra income).
3. If your overall amount of capital gains is below a certain amount, I think it's $10, nobody reports it and the IRS doesn't worry about it.

From the IRS directly:

"If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies.
Example.

"All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply."

-- http://www.irs.gov/publications/p17/ch16.html#d0e56153

 

[wizardwatson]

I have a question Helmuth, for everyone's benefit really.

In the thread which split off this one concerning whether FRB was fraudulent (I say it is and was declared thread winner by the way) the main question of what distinguishes a fractional reserve bank from a 100% reserve bank is WHETHER THE DEPOSITOR IS THE LEGAL OWNER OF THE DEPOSIT.

Can you assure your customers that they are in fact the legal owners of the gold being stored on their behalf and that their deposit is not a "loan" to your institution?

Because if the deposit is a "loan" then technically it is your companies asset. If it is a bailment, then you are simply storing the owners asset for some fee.

Very important question.

EDIT: Also, sign me up for beta testing. You signed up for mine, I feel like I'm not reciprocating fully.

 

[specsaregood]

Can do! PM on the way.

Regarding taxes: precious metals are classified by the IRS as collectibles, and so a higher capital gains rate may apply. The maximum capital gains rate charged on collectables is 28 percent. This does not necessarily mean that you will have to pay 28 percent, however. The actual rate that someone pays is determined by the amount of time the precious metals were held and the payer’s ordinary income tax rate. The investor must also determine if the capital gain is short-term or long-term based on how long they held the precious metals. Short-term capital gains are taxed differently from long-term capital gains.

I am, unfortunately, (or maybe fortunately! ) not a tax expert, but basically this is my understanding:

1. 28% is the maximum, not the minimum.
2. If your regular tax rate is lower than 28%, you use your regular tax rate (just add the gains on as a little extra income).
3. If your overall amount of capital gains is below a certain amount, I think it's $10, nobody reports it and the IRS doesn't worry about it.

From the IRS directly:

"If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies.
Example.

"All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply."

-- http://www.irs.gov/publications/p17/ch16.html#d0e56153

So the answer is yes.
With that in mind, will you have detailed reports available to users that show their conversion rates with buy-in/cash out dates and the differences in value so they can properly figure out their taxes owed. Or even plan on sending out a yearly statement if requested with all the info they need?

I say this partly to protect your customers AND to protect yourself as not doing so could be interpreted as aiding tax evasion I would think.

 

[helmuth_hubener]

So the answer is yes.

Yes. Sorry, I guess maybe I over-complicated the answer with too much information.

With that in mind, will you have detailed reports available to users that show their conversion rates with buy-in/cash out dates and the differences in value so they can properly figure out their taxes owed. Or even plan on sending out a yearly statement if requested with all the info they need?

I say this partly to protect your customers AND to protect yourself as not doing so could be interpreted as aiding tax evasion I would think.

Absolutely. Thus far everyone has been well under the $10 limit, so no problem. But once things are really rolling, we will need to provide everyone with an annual report like you are talking about -- probably just a 1099, actually. So for 2016 we didn't, but for year-end 2017, that is the plan!

 

[helmuth_hubener]

I have a question Helmuth, for everyone's benefit really.

Can you assure your customers that they are in fact the legal owners of the gold being stored on their behalf and that their deposit is not a "loan" to your institution?

Yes, the customers are definitely the legal owners of the gold. Midas is just the custodian. As a good custodian, our job is simply to make sure the gold is sitting there, safely. We cannot use the gold for anything -- certainly cannot loan it out.

EDIT: Also, sign me up for beta testing. You signed up for mine, I feel like I'm not reciprocating fully.

Can do!

 

[helmuth_hubener]

My apologies. I really did not mean that in an untoward way. I just meant that instead of me holding my gold, now you would be holding my gold. No offense intended.

No problem!

 

[helmuth_hubener]

[MENTION=26621]jct74[/MENTION], [MENTION=2]Bryan[/MENTION], [MENTION=1]JoshLowry[/MENTION], [MENTION=1425]ronpaulhawaii[/MENTION]? Incisive remarks?

 

[ronpaulhawaii]

Looks simple enough. A pre-paid debit card that uses gold to store value.

For me, using this would be completely separate from any personal stacking I may do, so I'm not sure why that red herring was tossed in the fire... Then a whole field of FRB strawman. Quite the slog... That Rothbard quote was apropo...

I'm assuming you are banking on merchant fees and rounding down to turn a profit. What about ATM fees?

On a different note, I don't care for the thought cloud thing on the blog page. Looks cute. I don't know that cute and banking fit well. More practically, it makes it hard for me to scan/read, being a small window. Otherwise site looks good and url is great.

Bravo for this initiative. I'd be happy to help beta test.

#Onward

 

[helmuth_hubener]

Looks simple enough. A pre-paid debit card that uses gold to store value.

Right, except I would leave off the "pre-paid" part. Pre-paids are cards like Green Dot, etc., that one can pick up at Walgreens-type places and usually charge high monthly fees. This is more like just a normal debit card. Except it uses gold to store value, just as you say.

For me, using this would be completely separate from any personal stacking I may do, so I'm not sure why that red herring was tossed in the fire

Exactly! Thank You!! You understand it 100%. We all can and should have some gold and a little bit of silver in physical form -- I would generally recommend bullion coins -- and keep it in our possession. At the same time, most of us also need to interface with the larger world around us and purchase things from it, and today that means using the current banking/payment processing system, and that's what Midas is designed to help with. It would be great if everyone accepted bullion coins and all employers paid with bullion coins and we could just run our lives on that, on the physical metals. Unfortunately, that's not the case. This is a step, at least, to get a little closer to that.

I'm assuming you are banking on merchant fees and rounding down to turn a profit. What about ATM fees?

Yes. ATM fees is an unresolved issue. I would like people to be able to affordably withdraw cash from a network of thousands upon thousands of ATMs. With the current solution, that is not the case. ATM cash withdrawal is just unreasonably expensive -- around 6% plus a flat fee of a few dollars.

On a different note, I don't care for the thought cloud thing on the blog page. Looks cute. I don't know that cute and banking fit well. More practically, it makes it hard for me to scan/read, being a small window. Otherwise site looks good and url is great.

Yes, I think you're right. I just haven't gotten around to changing it yet. That is terrific feedback! What do you think about the overall visual layout? Should I change it entirely?

There's so many design options to choose from. I could go for the standard Silicon Valley startup style: flat, one-page. Like this:

https://thegrid.io
https://www.magicleap.com

Or more like a bank:

https://necu.org/

A hybrid, some of each:

https://www.simple.com/

Or something completely different! Stripped-down black-and-white simplicity:

http://urbit.org/posts/

Bravo for this initiative. I'd be happy to help beta test.

That's great. Thanks! And thanks for your very kind words and very constructive criticism.

#Onward

Yes! And I love your signature! Press on! We will never surrender! The r3VOLution will never die.

 

[ronpaulhawaii]

Yes. ATM fees is an unresolved issue. I would like people to be able to affordably withdraw cash from a network of thousands upon thousands of ATMs. With the current solution, that is not the case. ATM cash withdrawal is just unreasonably expensive -- around 6% plus a flat fee of a few dollars.

I'm wondering if it shouldn't be mentioned up front in the fees section. I imagine many will have the same question...

Yes, I think you're right. I just haven't gotten around to changing it yet. That is terrific feedback! What do you think about...

Of all of them I prefer

https://www.simple.com/

but I'm kinda old... I do imagine there is value in the format being familiar to people looking into your bank...

 

[helmuth_hubener]

I'm wondering if it shouldn't be mentioned up front in the fees section. I imagine many will have the same question...

It should be. Done!

Of all of them I prefer

https://www.simple.com/

but I'm kinda old... I do imagine there is value in the format being familiar to people looking into your bank...

Thank you again. Excellent feedback!

 

[specsaregood]

Maybe I missed it, but are you planning on adding the ability to ACCEPT Credit cards to fund the account. Or set one up as a business account instead of personal?
ie: sometimes customers want to pay me by credit card, I'd consider using this as a merchant account.

 

[helmuth_hubener]

Maybe I missed it, but are you planning on adding the ability to ACCEPT Credit cards to fund the account. Or set one up as a business account instead of personal?
ie: sometimes customers want to pay me by credit card, I'd consider using this as a merchant account.

I had not considered this. But, with the technologies I'm tying into, it would be possible. Hmm.

Well, it's not going to be the first feature on the road-map to add, but perhaps down the road a while. It would be a nice feature.

 

[H. E. Panqui]

Well, it seems like you, or whoever runs the vault, is the one holding the gold. Not me. I get what you're saying about how it works. And it isn't like But the issue is that the whole point of holding gold is that I hold it, in my hand. Or at least I have easy access to it.

And it still sounds like I'm left using dollars. You take my gold, convert it to dollars, that gets spent. I get what I bought, the company gets gold converted dollars (digital or physical), you get gold with whatever amount you take as user fees and such. That isn't a bad plan as far as economic go, except the dollar is controlled by madmen who are destroying it. That problem and its related problems of devaluation don't go away.


And no, I don't hate you. I hate some of the ideas you've espoused. But that is not the same as hating the person.

...i agree with pierzstyx...i was going to stay away from criticizing helmuth's republican-radio level of understanding about 'money' but helmuth just neg-repped me with a 'worthless'......and i've been wanting to call helmuth out so i'll start by pointing out the fraudulent idiocy of the title of this thread....helmuth...AGAIN...there has NEVER been a 'sound money' system to 'return to'...i believe you'll find THE BANKSTERS HAVE ALWAYS CHEATED...i believe a return to your phony ludwig fantasy would reveal a system whereby the banksters merely mixed in a little gold to their mostly paper/bank credit system...just to keep the mullets confused...

...furthermore, a/?your stinking gold/metal system would be attended by much environmental destruction in order to undertake a mere 'increase in the money supply'...furthermore, the same goddamned monster$ who now control our miserable monetary order WILL SURELY control the gold/mines/etc.. and will STILL exercize their hideous, unjust control over the rest of us...

wizardwatson writes: I myself am convinced that taking the money power from the hands of a few and making it accessible and controlled an enlightened public is the most suitable course of action. It goes to the root of the problem. What other strategy gets to the root problems as completely?


...most/all people i meet are worse than butt-ignorant about 'the issuance of money'...PRIVATE BANKSTERS [not 'the government'] get to use 'our' money in 'the first round of spending' and this is the/an insurmountable advantage/privilege of your real ma$ter$...until you deal with this [and NO STINKING REPUBLICRAT IN MY LIFETIME HAS EVER EVEN PUBLICLY DISCUSSED THIS TRAGIC AND MONSTROUS ASPECT OF 'BANKING'] you will fail in any attempt to promote 'justice'...

...a simple 'strategy' would be to undertake and honest educational effort as to 'money'...getting 'a major microphone' into the hands of an honest monetary realist could affect rapid positive change...but 'the banksters' own the microphones...ugh...

 

[helmuth_hubener]

helmuth just neg-repped me with a 'worthless'

The post was worthless. Discouraging worthless posts and encouraging worthwhile ones is the purpose of the reputation system.

i've been wanting to call helmuth out

Thank you. The rep worked like a charm. Having you, Zippyjuan, and satirical ("opposite day") accounts like JamesIV and TheTexan criticize my work as worthless and stupid is some of the best endorsement I could get.

I actually thought long ago that you personally, Hank, might actually like my creation and give me a bravo or two when it was released. That it might bring a smile to your face and be a little beam of light on the existence you otherwise see as so dreary and miserable. But your brain is too addled to understand it. Ahh, well.

I'll start by pointing out the fraudulent idiocy of the title of this thread....THE BANKSTERS HAVE ALWAYS CHEATED

Great. Please feel free to change the title in your head to whatever you deem more appropriate.

...just to keep the mullets confused...

Do people still have mullets? I haven't seen one in quite a while.

Perhaps just in your household?

If I wanted to keep people really confused, I would put you in charge of communications.

your stinking gold/metal system would be attended by much environmental destruction in order to undertake a mere 'increase in the money supply'

Oh no. Not that. I must stop destroying Mother Gaia. Must.... Stop........ Too hard. Maybe next year.

...but 'the banksters' own the microphones...ugh...

You know, Hank, if you would just stop tuning in to the Golden EIB Microphone for even just one week, just one day, I think you would find yourself a lot happier. That little button on the left side of the radio box is for "off."

Oh, and thanks for the feedback.

+rep!

 

[helmuth_hubener]

I hope that my last post was not discouraging to you, Hank. I like you. I think I would possibly like you, were we to meet in person.

I have created a financial system with a 100% reserve. A system where no one is using your money first in the first round of spending. If you really think this system is a bad thing, explain why.