Let’s say someone went 24-karat goldbugshit and decided that the way to Heaven’s paved in ‘honest’ money. Since he couldn’t get his hands on any gold-backed currency, he decided to just pay for everything in life with the metal itself.
How long will this guy get before his immovable faith meets a bureaucratic mountain?
Are we supposed to assume that this person refuses to exchange gold for cash or cashier’s checks when necessary? And that he refuses to pay other people to write checks on his behalf?
If he can do that, then it’s just a inconvenience to his life, by having to constantly exchange gold for cash and vice versa.
If he won’t do even that, he’s probably out of luck. The IRS, at the very least, is going to require payment in legal US tender. Even the gold coins currently produced by the US Mint are not going to work because they don’t have a face value printed on them - they’re marked by weight and valued by the current market price of gold. Therefore, I’m pretty sure he has no legal way to pay his taxes in gold.
Although… I suppose he could have an employer who would withhold enough from his paycheck so that the employer would be paying the taxes rather than the guy in question. But that’s having write a check on his behalf, so I think we wind up again wondering just how strict this hypothetical guy is.
I don’t think they are going to accept it down at the supermarket either.
That would be a strange assumption to make.
dracoi, imagine he’s absolutely strict. “Insurance is a form of gambling” strict. “Bankers are Satanic moneylenders the likes of whom Jesus would slaughter” strict. So I suppose he would have severe problems with the IRS, end up in prison, and that’s that.
OTOH, I think most store owners recognize that gold is valuable and can, in theory, be used to barter with. It wouldn’t be that hard to scrounge up a scales and get the latest gold fix from a newspaper or the Internet and figure things out from there. It’s more attractive than losing a big sale, anyway.
How many transactions in your life are “big sales?”
What are the costs of having to figure out what the conversion rate of gold is, needing to test it to see what the quality and purity is, and take the hit for the need to make a special trip to a gold-buying establishment to sell the gold, which will also cost you fees? Who would be willing to do all that for a bag or groceries or a meal or a car wash? How do you handle 1/10 of an ounce of gold? Do you shave off the gold bars? Do you trust in weighing out gold dust?
Paper money is infinitely fungible. That’s why it works so well. Gold is not. The odds are that literally no one in everyday life would be willing to put up with the expense of a customer paying in gold.
Why would that be strange? It would defeat the purpose of the OP’s question if the guy is willing to just trade his gold for cash.
More importantly, how many merchants are going to want to go through the same bit of trouble for a sale? Plus, they need to be alert for gold plated items – they’d have to assay everything you gave them. Easier to tell you to go elsewhere.
Even when money was only gold and silver, it was traded as coins so that everyone knew the value.
Well, it’s somewhat more dignified than declaring yourself a strawman and taking out a lien against the super-secret ALL CAPS personality maintained by the NWOIRS so the admiralty courts won’t have jurisdiction to declare your mentality frivolous.
I think our gold-bug’s only hope of making this even sort of work would entail going seriously off-grid. Buying a good-sized farm might be a large-scale enough transaction that the seller would be willing to put up with the inconvenience of being paid in gold bars (especially if Mr. Goldfinger is willing to pay a premium over the asking price for the land). Goldfinger would then have to raise as much of his own food as he possibly could manage; drink water from his own well; generate electricity from solar or a windmill in the backyard; etc. Barter gold with some congenial person when he absolutely needs something (a new plow), and probably accept the hypocrisy of simply using someone else as a middleman who takes his gold then buys the whatever-it-is from Wal-Mart (at a considerable mark-up to Goldfinger) with regular money. The IRS can’t tax your income if you don’t have any income.
And of course there’s the question of where the hell he’s going to get all this gold in the first place.
Realistically, someone living his life dedicated to “honest” money would probably wind up with a really crappy standard of living (think the Unabomber before he was captured, though presumably without the bombs); he’d still have to cheat; and probably would still wind up getting in hot water with the government (even it he isn’t mailing explosives to the Federal Reserve) since the authorities would likely take a dim view at being paid property taxes with gold dust.
It’s a strange assumption because (like the OP question) I don’t think it’s likely to be relevant to reality. Why would someone refuse to allow his gold to be traded for paper currency for the sake of accomplishing his transactions (while paper currency retains value in the wider economy, which presumably he believes is a temporary condition)? He need not accept the paper currency.
If he doesn’t accept the paper currency, then the transaction goes something like this:
“I need to go get groceries. Can you convert this gold into dollar bills the grocery store will accept?”
“Sure, that’s $50 worth of gold. Here’s your money.”
“No, keep the money, I won’t accept it.”
And he’s no closer to getting his groceries than he was before.
Alternately, you could mean that he does accept the paper currency, but only for purposes of passing it on to someone else to buy something of value to him. In which case, he’s not a nut: He’s using money in exactly the same way as everyone else. The only reason anyone accepts money is that we all know we can pass it on to someone else.
I think it would be easy to do, for a price. Just find someone willing to go buy things from the place that won’t take cash, or pay bills for you. You will have to pay a premium for the service, but it might not be that much for people who think gold is a good investment, and aren’t afraid of money. As long as gold maintains its long term increase in value, this might work better than money, which is likely to depreciate over time. Another approach would be a bank which will accept gold as payment and accepts credit card payments. There might be one somewhere, so just buy with a credit card, you can pay in advance and run a positive balance, so it’s not even a loan.
BTW: There are independent gold prospectors now who live off the gold they find, preferring to barter whenever possible. I haven’t heard of one who won’t just sell his gold for cash if necessary though.
Where does this guy keep his gold anyway? He must at least belive in real estate, hard to understand how he would keep the gold in a bank, but not deal with money.
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I’m having trouble seeing a potential factual answer for this, so I’m moving the thread from General Questions to In My Humble Opinion.
[/moderating]
Several years ago, there was someone here in Oregon who tried to pay his taxes in either gold or silver coin. I forget which metal and whether it was bullion or specie, although I think it was gold bullion. I know the authorities had problems accepting it, but I don’t remember how the whole thing was resolved. Unfortunately my google fu is weak today and I can’t find a link about it.
Honestly, I think it’s been asked and answered: He can’t pay for small purchases in gold, so he has to buy in bulk, which still doesn’t save him because it’s impossible to pay your taxes in gold, so he ends up in prison.
They actually DO have a face value - $50.00 for a one-ounce coin. This is their legal tender value, but, of course, they’re worth their weight in gold.
Joe