Jp Cortez joins Eric Brakey on Free America Now! to discuss sound money legislation
Jp Cortez, Policy Director for the Sound Money Defense League and lead author for the Sound Money Index, joins Free America Now to discuss the actions state legislatures can take to fight inflation and defeat the Federal Reserve.
https://www.podbean.com/ew/pb-73gch-1197443
Twitter: https://twitter.com/SenatorBrakey
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TRANSCRIPT:
Eric Brakey:
Lockdowns, mass surveillance, forever war, is this still the land of the free? It will be again. I'm Eric Brakey, and it's time to Free America Now, because an idea whose time has come cannot be stopped by any army or any government. Hello friends. This is what Joe Rogan says. I guess I got to come up with my own opening catchphrase is, "Hello and welcome everyone." That's what I usually say. I don't know. Maybe that works.
Eric Brakey:
Anyway, this is Eric Brakey, your renegade statesman host of Free America Now. Welcome to episode 104. It is Wednesday, February 2nd. I'm so glad to have you here, and I'm looking forward to introducing you to our guest today for today's free-range conversation on how to free America.
Eric Brakey:
Today we're going to be talking about sound money, particularly what can be done on the state level to promote sound money policies, to combat the tyranny of the Federal Reserve and fiat currency with someone who is really established himself as an expert on this. His name is Jp Cortez. He is the policy director of the Sound Money Defense League. He's also the lead author of the Sound Money Index which is an annual report that ranks states on their pro-sound money policies.
Eric Brakey:
He's got over a dozen victories as far as legislation goes in a dozen different states since 2018. So, he's become quite a recognized expert on this and is published in a lot of places from Business Insider to the Huffington Post, Newsweek, Washington Examiner, our friends at the Mises Institute, and the Foundation for Economic Education plus more. Anyway, we're going to have a great conversation today. Hey, Jp. Welcome to Free America Now.
Jp Cortez:
Hey, Eric. Thanks for having me on.
Eric Brakey:
Hey, pleasure's all mine. So, I'm trying to think where to begin here. I know, for myself personally, this is a very important issue. I think it should be an important issue for anyone who cares about the economy, anyone who cares about being able to earn a paycheck, put your savings away, and have the value of your savings still be there rather than inflated away and stolen by those who just print the money and devalue the currency.
Eric Brakey:
And it's always been a hard topic I think. We can talk about so many solutions and things that can be done on the federal level to promote sound currency and sound money. I mean, Ron Paul has advocated in the past for auditing the Federal Reserve and ending the Federal Reserve and legalizing competing currencies and restoring the gold standard.
Eric Brakey:
But these I think on a state level and, of course, with Young Americans for Liberty, we're focused so much on electing state legislators. Sometimes it feels hard to know what you can do from your state capital to make an impact on these issues. We can try to shake Washington DC and get them to do the right thing, but they don't seem inclined to do that. So, what can we do from the state level, and I know you've been doing a lot of work on this over the years.
Jp Cortez:
Yeah. Yeah. And it's been a lot of fun. It's been really fulfilling, and the truth is that there's so much that can be done. Like you just said, the problem largely starts on the federal level, right? The Federal Reserve and unelected bureaucrats largely control and manipulate the value of our money.
Jp Cortez:
But the reality is that states don't have to be a victim to this. They don't have to go along with this, and there are things that they can do to mitigate some of this damage. More generally, this approach, this state-based approach to bringing about change, to me is it's the most effective way to do it. Like you mentioned, the federal process is gridlocked it's assess poll. These are people that largely don't get much done.
Jp Cortez:
And so, to enact change on a state level, I'm a huge supporter of what YAL has done in that regard. And it's the same approach that we use because while we have introduced federal legislation, while we've worked on federal bills, the most change that we've seen, the victories that we've seen largely come from state battles. And so... sorry, go ahead.
Eric Brakey:
No, I was just going to ask you... yeah, it's echoing I think a lot of what you're saying there. Yeah, I think you're absolutely right. I feel like Washington DC and Congress is always, we always think that solutions have to come from there particularly these policy areas that we tend to think. Well, that's not a state responsibility but Congress... I don't know.
Eric Brakey:
Sometimes I wonder how much we really have representative government in Congress. It seems like the elected officials, they are just a sideshow. It's a circus to keep us all just distracted, fighting about the inconsequential issue of the day while the biggest decisions like war and monetary policy are determined by people we never voted for, we never elected-
Jp Cortez:
Exactly right.
Eric Brakey:
... or not accountable to us. And so, we could feel powerless to make change on the federal level, but the states can stand up. What are some of the specific policies that you guys have been advocating for states to enact to promote this?
Jp Cortez:
Yeah. So, the idea in general is that we would like to remonetize constitutional sound money, and that is gold and silver. And the best way to do that, that we have found, is largely by remonetizing it, right? The reason that people don't use gold and silver today, there are obviously convenience factors and there's a digital age element to it. But largely the reason we don't use gold and silver in transaction today is because of the laws that surround its use.
Jp Cortez:
So, in nine states across the country, if you were to buy precious metals, you're hit with a sales tax. And then, on the federal level, when you sell your goods, you'll be charged to capital gains by the Feds. And then, in most states you'll be charged again by the state on that capital gain. So, you're hit with triple taxation in some cases. And so, it becomes unfeasible to use gold and silver in transaction.
Jp Cortez:
And so, what we're trying to do here then is to remove any of the impediments or the obstacles in the way to letting people buy, use, purchase gold and silver to store their wealth, their purchasing power, because inflation is this really insidious process by which hourly workers, people on fixed income, pensioners, savers, anyone trying to save money and plan for the future and plan for the future is harmed by this inflationary practice.
Jp Cortez:
And so, going around and removing all of the obstacles, all of the things that stand in the way of people being able to store their money in an inflation hedge that has served for thousands of years, that's what we strive for. So, the regulations, the taxes are a big one, gold and silver, sales taxes, and capital gains taxes.
Jp Cortez:
But it's not just that. That's how it works on an individual level or that's what's important to individuals. But as far as the states themselves, we've been encouraging states to opt out of this federal system and opt back into a constitutional system, and they can do that by bolstering their state funds in gold and silver, pension funds, taxpayer funds, reserve funds, trust funds. All of these funds are largely held in dollar-denominated debt. This is risky assets, volatile emerging world debt, and many times because of inflation, the real rate of return on these is negative.
Jp Cortez:
And so, it is astounding that many states, most states, 49 of them don't hold a single ounce of gold in any of their taxpayer funds when all of them talk about how the safety of the fund is important and the safety of principle is among the most important things. But here they are investing our money, our future, the livelihood of potentially tax payers for what or on what?
Eric Brakey:
Right. In a paper currency that is, by official numbers, losing 7% of its value in the course of the last year.
Jp Cortez:
That's what makes it... and that's the insane part that we've seen, and it happens slowly at first but then fast and all at once. And we're getting to that point where you can feel it, and it's not just the richer being harmed as I keep seeing the Washington Post or major publications talk about how the poor aren't really harmed by inflation. It's the rich that are. That is absolutely a backwards way to look at this. If you already can't afford food or medicine or rent and these things are going up, you're making it harder for people to live.
Eric Brakey:
Yeah. I've seen that. I've seen that line trotted out by a lot of the corporate press that inflation's actually good for people. It's good for the poor. It's good for the middle class, and actually it hurts the rich. And it's just like, you look at the fact... I know Ron Paul recently released a report. I don't know if you saw that, but I mean he released a really good report detailing the effects of inflation with those who earn less.
Eric Brakey:
Families that earn less than $40,000 a year tend to spend about 40% of their household income on items that have been most heavily hit by inflation, gasoline, groceries, heating oil, where families that make more than a hundred thousand dollars a year tend to spend only 10% of their income on these things. So, the wealthy... and also on top of that, wealthier families tend to have more of their savings in inflation-protected assets-
Jp Cortez:
There it is.
Eric Brakey:
... than poorer families do. And so, this is very much a regressive tax on the American people. It hits the poor and the middle class and even more perversely on top of all that, of course, when inflation is caused by just people running the printing presses, you got to ask, "Who's getting that money? Who's getting that new money?"
Eric Brakey:
And of course it's the wealthy special interest connected to the Washington DC political machine. They get the dollars first. They spend it into the economy. They buy up goods and services at pre-inflation prices, and the rest of us is that money circulates through the economy, when it finally reaches the end of us, we get those newly printed dollars and the prices have gone up on everything. So, it doesn't do us any good-
Jp Cortez:
Exactly.
Eric Brakey:
... and to the regular person.
Jp Cortez:
Exactly right. And it's not even that it doesn't do the regular person any good, it's that it actively harms the regular person. What you're describing here is called the Cantillon effect. I wrote an article about this a while ago that appeared on FEE, on the Foundation for Economic Education about how Richard Cantillon is probably the most important economist that you've never heard of.
Jp Cortez:
I believe it was the 1700s. He wrote a famous economic treaty called Essay. He named it Essay. In France, I think it's Essai of... whatever the French words are, but in English it's commonly known as just Essay. And he described this process that you have illustrated here that in central banks and monetary systems like the ones that... like the one that we live in today, money is printed or made to appear by the central bank, and it trickles out into the economy.
Jp Cortez:
But the first people who get it, the people who are closest to the disseminator of the money, get the most value, receive the most value from this new money. And by the time it reaches you, by the time it reaches me, prices have gone up, right? So, it's a great thing. I mean, I hope that people are happy with the $1,200 pandemic checks that they got, but the bill for that stuff was in the trillions.
Jp Cortez:
So, not only did American people get fleeced on as far as what spending and what the money went to, prices went up. So, even the money that... the little bit of the scraps that the American people did get were devalued and watered down by the price of everything going up.
Eric Brakey:
It is such, I think, such an important point and the shell game that was played with all the COVID, supposed COVID relief funds, right? The American people get $1,200 checks, but the cost to the average American person in taxes and inflation and debt is much more akin to like, it was some $9,000 per person.
Jp Cortez:
I think it was even more than that. And I don't know if you saw, I think it was yesterday, we officially hit $30 trillion in debt. And to be sure, the number is larger than that when you consider unfunded liabilities and all of the things that the promissory debt that is coming, but wow. That is, it is astounding and it's astounding how quickly it happened. A pandemic and a war and suddenly we went from 4 trillion or whatever it was to 30 trillion now.
Eric Brakey:
Yeah. I mean, I remember the Tea Party days back in 2010, that's when I got politically active for the first time. And we felt like the national debt as it approached, it must have been 12 trillion or something back then we thought that was a big number. We thought that was a lot of debt and unsustainable and, yeah, we certainly haven't reversed course. We've continued to pile on and-
Jp Cortez:
No, it's gotten worse. As these numbers get bigger, as the number goes from 4 trillion to 12 trillion to 30 trillion to a hundred trillion, these numbers begin to lose their meaning. They lose their purpose, right? So, when you can endlessly print money, you have no regard for the value of money or how the money is spent. And this moral hazard largely explains why these central banking systems fail or why they're no good.
Jp Cortez:
The people that are printing this money have no incentive to be cautious with it, to be frugal, to be thoughtful about how it's spent. And so, these are just arbitrary numbers and lines on a screen somewhere. So, "Go to town. Print trillions on a war. Print millions to study the effects of toad urine or whatever these wasteful, both foreign and domestic policies, are spent on."
Eric Brakey:
Yeah. Yeah, I mean I think even it is funny to me when I look back at like the 2008 bank bailouts, and that was $800 billion. Of course, the Federal Reserve and there was a lot of other stuff going on, but the package that Congress passed was $800 billion. And at the time in 2008, the American people were just jaws dropped at such a big number. $800 billion in bailing out the big banks. And there was so much uproar about it that the first vote didn't pass Congress. Congress was afraid to vote for it.
Eric Brakey:
And now, it seems quaint that we were flabbergasted by $800 billion. It's like every single spending package now in Washington DC that's proposed from Build Back Better to the supposed Infrastructure Bill, which I guess has just come out that apparently gives Pete Buttigieg the ability to install speed cameras across the United States to find the American people-
Jp Cortez:
Raise revenue.
Eric Brakey:
Yeah, yeah. Apparently, all of these big spending packages are just in the trillions and we've just become, I guess, that even the idea of a trillion dollars, it's just gotten to be so ethereal. So, it just doesn't feel like we're playing with real money anymore.
Jp Cortez:
And we aren't. And that's... you just nailed it on the head right there. We aren't playing with real money. The rules have changed. There is no need to be considerate or to be thoughtful of how money is spent when you have access to the printer.
Eric Brakey:
Yeah. So, I've always... so, I've long thought about... having been in my own state legislature, what are policies that we could do? So, if you look at Washington DC, I always say there's three ways that they get money from us. They steal directly from our paychecks with taxation. They steal from our futures with debt, and they steal from the value of our savings and our retirements and our kids' college funds, and then I guess also our paychecks with inflation.
Eric Brakey:
And I thought there are things we can do to combat the debt. I mean, people have proposed about passing a balanced budget amendment. There's always pros and cons and how you would exactly go about doing that, but that's one idea there. Stop, stop, stop the debt.
Eric Brakey:
I've been increasingly intrigued by ideas of tax nullification, which is basically if you had the states collect the federal dollars rather than sending it directly to the IRS and have the states review the federal budget and say, "You know what, we're going to send you the amount of money you say that we owe you based on what percentage of the federal budget we decide is constitutional." I think that would be very interesting.
Eric Brakey:
But of course, all of that is... if those are the only two problems we address and we do not address the ability of the federal government through the Federal Reserve to just print the money out of thin air and to steal value from our savings, then we might as well do nothing because that is... all three of those together are how they extract wealth from us.
Jp Cortez:
So, to that point, I actually, I heard Tom Woods say something recently about that that I hadn't really considered about how people largely, it doesn't even occur to people that these are problems that can be addressed on the state level. People largely think this is something that happens on the federal level, or it doesn't happen at all. And that doesn't have to be the truth.
Jp Cortez:
The states don't have to be a party to the monetary debasement. The states don't have to be a party to gun grabbing laws or any of these things where the federal government is coercing the states to be the bag holder for its policies that are generally unpopular. And the Feds don't even want to be the ones to enforce them, so they're forcing private businesses to do that on their behalf. The states don't have to put up with this.
Jp Cortez:
And so, the state legislature, and as someone who was as a member of the Maine State Senate, right, this is how change is made. These are the processes that cause change to actually happen, because the federal process is largely a waste of time today.
Eric Brakey:
Right. I think, we have parallel issue war. People had regarded for a long time that, "What do the states have? The states don't have any power. The states don't have any the influence. What can the state legislatures do?" All right. So, Congress keeps getting us into wars overseas that go on. They aren't following the constitution.
Eric Brakey:
So, we're just going to keep asking Congress to do the right thing, and 20 years in we're like, "Well, that hasn't worked." And so, you see a growing popularity across the country have Defend the Guard legislation which is sponsored in a whole slew of states over this past year movements of local people, local veterans standing up and saying, "If Congress isn't going to declare the wars, then the states are going to exercise their constitutional authority over the state National Guards to bring the troops home," which count for 50% of the troops serving overseas today. So, that would be a big deal.
Jp Cortez:
Yeah. That would be... yeah. That would be awesome. Excellent.
Eric Brakey:
Yeah. And so, that's a movement that's growing in popularity. That is something that is being done and fought for on the state level on an issue that people until recently generally regarded as something the states just mind their own business on and let Washington DC do their own thing or complain about what they're doing and how illegal it is what they're doing.
Jp Cortez:
Exactly. It doesn't even occur to people that these problems can be solved in places other than the federal level. And so, changing that opinion is a huge part of the success that we've had here. It sounds like Defend the Guard, and I know that there are other state-minded policy initiatives that are going state to state because they largely see the ineptitude and the lack of results from the Feds.
Jp Cortez:
But I think you touched on something here that I thought was super interesting. And I think... so, this idea that we've been told at least with things like money and war, that the experts know, that the experts are the ones making these decisions. They are highly educated. They are highly credentialed. And so, these are the people that should be making the decisions, and largely these are the only people that should have an opinion on these decisions. And that's not true.
Jp Cortez:
You can look around. You don't have to be a PhD in monetary econ to look around and look at how inflation over the last 10, 20 years has completely changed upside down the way Americans save, the way Americans spend, and so the effect that this has on the populous. Because, right, we can talk about this in monetary econ, and we can look at supply and demand curves, and we can look at Cantillon effects and all of that.
Jp Cortez:
But we also don't have look that closely at the esoteric quote, unquote science behind this. Just look around you, look at the world around you, look at what happens when you go to the grocery store and try to pick up meat, or when you go to the gas station and try to get gas, right?
Jp Cortez:
This is something that is affecting all of us and we're being gaslight largely into being told that it doesn't exist. So, at first there was no inflation, and then inflation was transitory. And now, we're being told that, "It's here to stay. But don't worry, it's good for you." It is insane what these people are doing.
Eric Brakey:
I think it is such an important, I guess, a much larger conversation this idea of how should we think of experts? And I'll say I'm all for experts. I think that, especially in the world that we live in today, we can't all be experts on everything. Specialization in fields of knowledge is very important, but when it comes to the experts who are selected and promoted by the government, there's a problem there, right?
Eric Brakey:
The experts who are promoted by the government are always going to... there's always going to be a selection bias. They're going to select experts who have a bias towards promoting government power. Of course, why would the government promote people who promote government power? Well, for obvious reasons.
Jp Cortez:
And there's the gatekeeping that comes with that, because it's not just that the experts are there. It's that no other experts are allowed either.
Eric Brakey:
Right, right. When you see what... I mean, when we look at... I guess, in the past this has been called like we think of the court historians. You go back into the 1500, and who wrote the histories? Well, tended to be the historians who the monarchy commissioned to write the history.
Eric Brakey:
And it's always a version of history where the monarchy is... the king is the hero and the government does all of the great things. And obviously there's a bias there when they're being commissioned by their employer to write a history that promotes the narrative that their employer wants.
Eric Brakey:
Well, of course, today we have that with court epidemiologists like Anthony Fauci. There's a reason why Anthony Fauci is the person we're told to listen to but not highly-credentialed experts like the authors of the Great Barrington Declaration, epidemiologists at Oxford and Stanford and Harvard who have just all the credentials, but they're not the ones promoted by the government because their solutions do not promote government power.
Eric Brakey:
Or of course, back into the realm that we're really talking about is the court economists are all the Keynesians, right? The whole Keynesians school of economics promotes a view on economics that requires robust government power essentially centrally planning the economy, centrally planning at least aspects of the economy, major aspects of the economy particularly the monetary supply which is half of every economic transaction that we ever participate in.
Eric Brakey:
But of course, the Keynesians are promoted by government because for obvious reasons, when the Austrian school is dismissed. Because the Austrian school says, "We don't need government centrally planning the money supply. We don't need government tinkering around in the economy. People are better at planning for themselves than central planners are at planning for us." And so, of course the government doesn't want the Austrians to be listened to.
Jp Cortez:
Of course not. And so, like you said, they have invested interest in making sure that the Austrian and the free marketers largely aren't listened to. And I think part of that, part of it I think is that I'm not sure that the money managers, the people in charge today understand, well, obviously they don't understand what money is and where it derives its value. But they don't understand the level that money impacts the world we live in and the way it takes shape, right
Jp Cortez:
So, outside of language, money is the single biggest communicative tool that we have between human beings, and there are people largely, and recklessly and irresponsibly manipulating and changing the value of this communicative tool to serve their needs, to serve their desires.
Jp Cortez:
And so, I think as wrong as that is morally, ethically, just as far as actual feasibility and how that plays out in political systems, the answer isn't to... the primary answer is not to make sure that you elect good politicians or even to make sure that you elect or that you pass good legislation. The answer I think is to remove the trust that's inherent in these institutions.
Jp Cortez:
Even good guys do... even good people do bad things. And the reality is that even if your person in office today is doing good things, there's a really strong chance that one day the person holding that office and holding that power won't do good things. And so, to create trustless institutions is going to be ultimately the larger answer, and gold and silver do that because there is no counterparty risk here.
Jp Cortez:
Gold has its value not based on what the government says, not based on Janet Yellen or Jerome Powell or Mnuchin or whoever is in charge. Gold is money. It's sound money because it's chosen by the market, not because some monetary wizard came and waved the wand declared something legal tender and now suddenly it has value.
Eric Brakey:
Yeah. And I just always find it fascinating the way in so many state and federal laws the way gold and silver are treated when you can open up the constitution and you can see like... I'm going to paraphrase this. I don't have the exact language in front of me, but the states are prohibited from issuing their own currency except for gold and silver. It's specifically there.
Eric Brakey:
It's like gold and silver have a special status in the constitution because they are. They have been for thousands of years, they have been used as currency. In fact, when we were under the Gold Standard in America, we had some of the most... it was one of the most prosperous times in our country with the fastest economic growth when people could count on the money being honest and not just devalued. And you didn't have to gamble everything in the stock market in order to try to preserve your wealth.
Jp Cortez:
Exactly right. And that introduces, that hits on something that I wrote about a while ago on what is the Keynesian trilemma, right? So, in inflationary systems like the one we exist... like the one we live in today, you're set with... you have three options ultimately. You can spend the money that you are being given today and try to get as much value out of it, because you know that it's being devalued so you're going to spend it immediately. That's option one.
Jp Cortez:
Option two is to save. You're taking a tax for that. There's a penalty for that because inflation is withering away your savings. So, you can save but have it come at a cost, or you can invest it in risky assets, try to play the casino, the stock market casino, and hope that you do well. All of these options are bad options.
Jp Cortez:
And this trilemma exists because this inflationary system forces people to spend. And when you have this monetary system that's predicated on money velocity and aggregate demand, you lose the fact that the amount of money's changing hands or the rate at which it change hands is not necessarily the important part here, right? There's infrastructure that has to take place. There's capital accumulation. There's saving.
Jp Cortez:
That is what raises levels of living, standards of living. That's what grows people out of prosperity, not debt-laden, credit-laden systems where money's being printed out of nowhere. You don't have to look far to see examples of how that has gone disastrously wrong. Today, even in the United States, that has gone wrong. There's a reason. It's not worth a Continental as the saying. America has hyperinflated a currency before, right? So, it isn't even to say that it can't happen here.
Eric Brakey:
Yeah. Have you ever read Brave New World?
Jp Cortez:
I haven't read Brave New World, but I've heard that it's great and that I should.
Eric Brakey:
I just think... I remember reading Brave New World and just feeling like, "This is the end of Keynesianism." It is weird to me how we... Keynesianism is treated like a form of capitalism, or it's treated or it's often thought of as, "This is what capitalism is." But really it's a form of hyper-consumerism. It's a form of or hyper... yeah.
Eric Brakey:
I mean, it is basically that we are manipulated through what they're doing to our money to put us on this consumer-hamster world where we've always got to be consuming more and more and more. I mean, you hear it today. Even when so many proposals are issued out there, it's like, "Well, yeah, we got to give money out to people, but those people are going to spend the money. And that's good for the economy. We want people spending the money and buying things and going shopping."
Eric Brakey:
And it's like, "Hey, I'm having access to all these great things in the world and consumer goods. I think that's wonderful." But the way that savings is discouraged. I think as you point out like, "This is how those in the lower class rise to the lower middle class and rise to the upper middle class. It's savings. If you don't save you can't accumulate wealth and you remain stuck."
Jp Cortez:
And then, you've got these yoo-hoos, your Paul Krugmans of the world that are pushing policies like that, that are going on the New York Times, talking about how disaster is good for an economy, that this stimulates spending. It's a good thing when towns are destroyed by natural disasters, or if an alien invasion would come, this would be good. This would stimulate spending. So, all of the destruction is ultimately a good thing.
Jp Cortez:
And Krugman and these yoo-hoos have obviously not read their Bastiat, have not been reading the Austrian literature, right, and then the broken window fallacy. It's staring at them right in the face, and they're unable to take off those Keynesian goggles and view the situation for what it is.
Eric Brakey:
Yeah. Yeah. And I look at not just our national debt as a country, but you look at all the credit card that exists. We've been manipulated by the monetary system to not save, to consume everything we have, and then some. And it's turning us into economic serfs.
Jp Cortez:
Exactly right. And that's why Mises, he obviously said it best on so many things, but Mises was so good on sound money specifically in that he categorized it as important as any of the other first 10 Amendments, right? So, sound money should exist in the Bill of Rights. The need for sound money, the way it affects society, a civilization living under that monetary system, that is just as important as the ability, the right to own guns, the right to freely express yourself.
Jp Cortez:
All of those things, because sound money fits right in the center of this protection. Because ultimately the Bill of Rights is a protection against the government. The founders knew that that the bill of rights doesn't apply to individuals or businesses. This is a list of things that the government is not allowed to do to you or to do to the country.
Jp Cortez:
And sound money, Mises said, should be among that list, because sound money, the reason it was desired, the reason it was devised, its whole purpose is to act as a defense, as a bulwark against big government.
Eric Brakey:
Yeah. Yeah. Well, so tell me you've had about a... you said you've had about a dozen policy or legislative victories in about a dozen states. Tell me about some of those. What have those entailed?
Jp Cortez:
Yeah. So, several of them, many of them, we focus a lot of our efforts on the tax issue. So, all across the country in the last couple years, we've seen a lot of states eliminate taxes on gold and silver. Arkansas saw recently did this. Ohio recently did this. Wyoming, West Virginia, Alabama, Louisiana, these are all states in the last couple years that have eliminated sales tax or eliminated income tax from precious metals. And it's not just those, that's not an exhaustive list. There are others that have done this as well.
Jp Cortez:
We've also worked with states to introduce measures in states to allow them to establish their own bullion depository like the one that we saw in Texas 10 years ago. We've seen and we've worked with-
Eric Brakey:
What does that mean exactly, their own bullion depository? I've heard that Texas did this, but what does that mean exactly?
Jp Cortez:
In the case of Texas, it was about 10 years ago, they established a bullion depository that was run privately but it was governed by the state. The reason that worked is because Texas already had a billion dollars' worth of physical gold in the Texas teacher pension fund. And so, Texas decided they would rather hold the gold in their own state out of the clutches of federal banking systems hundreds of miles away when they can't even confirm their our gold is in there, right?
Jp Cortez:
There's obviously a lot of question about whether or not gold is in the US vaults. I don't know what's in Fort Knox. I don't know what's in the US, the New York Federal Reserve bank as far as the gold that they claim to have, but Texas decided, "We don't want to take that chance, so we'd rather have our own gold in our own depository." So, they brought it home, stored it in their own building. And at least in theory, that acts as a defense against a federal confiscation.
Jp Cortez:
In 1933, FDR came through with Executive Order 6102 and told everyone by executive order through pen, through decree that owning gold is illegal in the United States, and they went through and confiscated all of it. There was a buyback where the people who were fooled into doing the buyback got a massive haircut. And so, the idea is that if the gold is stored within our own state, the Feds aren't going to come to take it. Or if they are going to come to take it, they're going to have to physically come in and do it, because we're not giving it to them.
Eric Brakey:
All right. And hopefully in Texas, they've got enough guns to defend it.
Jp Cortez:
Yeah. I don't think there's any shortage of guns there or gold for that matter. So, good, it should be defended. And so, those are some of the projects that we've been working on, and as inflation becomes more of a hot button topic, the interest in these measures both from elected officials and people in the state have grown tremendously. As you know, we've worked on in Maine to eliminate some taxes on gold and silver there. We haven't quite gotten it across the finish line, but we're hoping to be able to do that.
Eric Brakey:
Yeah. I remember I sponsored a bill on that my first term in the 2015, and it didn't get very far. I was sponsoring 20 different bills that year, and I don't think I gave it the amount of attention that I gave like constitutional carry. So, it's something that needs to be done, because especially I looked at your index. Let me pull that up here, and it actually might be fun to go through.
Eric Brakey:
So, this is the Sound Money Index. You're the lead author of this. This is @moneymetals.com, and you've ranked all of the different states. And I was going through this just before we got this, and I want to see, "Oh, okay. Where is my state?" I see at the top of the list, "Oh, there's Wyoming. Wyoming, number one. Texas, number two, South Dakota, Alaska, New Hampshire. All right, well Maine can't be too far down, right?"
Eric Brakey:
I'm scrolling all the way down, and I'm starting to get nervous as I get past 20 and getting especially nervous as I get past 30. 30 is Illinois. And I'm thinking, "Oh, my God, Illinois' ahead of us." I'm getting down to 40, "Maryland. We're not even there. Maryland's ahead of us." Get all the way down to number 48 and there's Maine with New Jersey and the absolute worst is Vermont. So, I got to ask. What's so bad about Vermont, and what's so good about Wyoming?
Jp Cortez:
Well, so to be sure, this ranking is only based on sound money policies, so which states offer the most pro and anti-sound money environment in the country? As far as regular environment, Maine is a beautiful place. Vermont is beautiful. There's a lot to like there, but unfortunately-
Eric Brakey:
Just not beautiful for sound money.
Jp Cortez:
The sound money policies are not among the things to like or appreciate about Maine and Vermont. And I wish I could say it was one thing but honestly just top to bottom, Maine, Vermont, New Jersey, Kentucky, Wisconsin, the states at the bottom of the list are just top-to-bottom bad on this issue.
Jp Cortez:
They charge sales tax on precious metals. Their sales tax rates are tend to be high. They charge income tax. Their income tax rates tend to be high. They haven't made any legislative effort to affirm that gold and silver are constitutional money. There is no gold or state bullion depository. They don't protect their taxpayer funds with gold.
Jp Cortez:
So, I'm sorry to tell you, Maine. Maine and a lot of these states here at the bottom just are not faring well, which isn't to say we aren't trying. And we're hopeful, we introduced a bill the last year there that died unfortunately, and we're hopeful we might get that one done in the upcoming year. But if you have any pull in Maine, I encourage you to start blowing up the phones because this is something we've been working on, and we haven't had a ton of traction unfortunately.
Eric Brakey:
Well, it'll be a new legislature next around. We'll see. I know we've got a growing Hazlitt Coalition in Maine and of course, New Hampshire. New Hampshire's blowing everyone away. I am getting jealous.
Jp Cortez:
I heard recently that New Hampshire has the third largest governing body in the world. Are you familiar with that?
Eric Brakey:
Their state legislature is 400 members.
Jp Cortez:
Yeah, just like India. India and the US Congress are the only governments in the world, bigger or legislative bodies in the world, bigger than New Hampshire.
Eric Brakey:
Yeah. It's like every little neighborhood has their own state representative.
Jp Cortez:
Yeah. It's almost like a one-to-one representative ratio.
Eric Brakey:
I often joke with... and so, my father-in-law was a state legislator in New Hampshire for several years, but I always joke that, "You go to New Hampshire and you're more likely to meet someone who was in state legislature than not in the state legislature." It's such a big legislative body but amazing. Amazing. And I think that actually... I hear some people who are advocates of limited government say, "Oh no, we need to shrink. We need to have fewer legislators is where we spend too much money on the legislature."
Eric Brakey:
And at least in New Hampshire, they've got a huge house, but they pay them $200 a year plus polls. So, no one gets into the New Hampshire legislature to get rich and-
Jp Cortez:
Good.
Eric Brakey:
... and it's also really... I think it's really a clear example, this is a citizen legislature, regular people. You don't have to be some political hotshot with connection, all the special interests to get elected, you're just some guy in your neighborhood, and you're like, "This is crazy. What's going on in the state capital? I'm going to run."
Eric Brakey:
Regular people get elected all the time there. It's beautiful I think more so there than in any other state. Of course, I am always proud of Maine and other many states where we have representative bodies that are very much composed of regular people. That's not true in every state. Certainly not true in Congress.
Jp Cortez:
Sure. And so, I think what you mentioned there, the Hazlitt Coalition that's been building over the last couple of years, and I believe that is a project of YAL. Is that accurate?
Eric Brakey:
Yep, yeah. It's a part of Young Americans for Liberty. It's our Hazlitt Coalition is state legislators, mostly folks who we have helped get elected through our activist programs like Operation Win at the Door. But there's also a number of legislators who are just very much aligned with us philosophically, and they already got elected on their own initiative. So, so we've included them, brought them into that as well.
Eric Brakey:
So, it's been a great... I love the Hazlitt Coalition because it didn't exist when I was there and I really wish it had. Because when I was in the state legislature, I was alone fighting the establishment in my own state and not having a lot of guidance or examples from other state legislators or people who I could turn to and ask for advice when things got tough.
Jp Cortez:
Yeah. Just allies. It's lonely being the only... and so, I've worked... I'm glad to say that we work closely with the Hazlitt Coalition. We've worked with several members to introduce and to pass legislation across the country, and that's exactly it. It's lonely being the only Liberty-minded legislature or legislator in a legislature made up of largely big government people or people that don't relate or resonate with these ideas of personal liberty and small government and such.
Jp Cortez:
And so, being able... having a resource to turn to for model legislation, for talking points, or just for a buildup, for a gas up, this is really hard and draining to promote Liberty on this level is difficult. And to share and have things in common and be able to share in victories or to ask for advice from others that are currently there that have been there is invaluable. And so, the Hazlitt Coalition has been super helpful to our projects. I'm sure that they're carrying a bunch of good legislation across the country.
Eric Brakey:
What I love about it is it's not just... it's one thing to be alone in your own state capital, but most of these states now we got a good coalition there within the states. We were in like, we have presence in 37 states now. So, people are or legislators are less alone within their own state capitals than they had been in the past when maybe there were 10 Ron Paul-inspired state legislators in the country. Now, we've got approaching 200.
Eric Brakey:
But what I love too is not just the support structures that exist for people to be able to push back in their own states, but that it crosses state borders. We have a whole interstate network now of legislators. And if we want to talk about combating federal tyranny, oftentimes one state standing up by itself isn't enough.
Eric Brakey:
One state standing up by itself, especially if it's a small state, like if Maine stood up to Washington DC by itself, what do Washington DC do? Washington DC would crush Maine. It'd be like, "Oh, you want to... we're going to cut off your federal funds. We're just going to make an example out of you."
Eric Brakey:
But you get 10 states, 20 states, 30 states standing up together against... let's say 30 states passed the tax nullification and said, "We're going to start collecting the federal taxpayer dollars, evaluating whether your spending projects are constitutional and sending you what we think is appropriate."
Eric Brakey:
What does the federal government do to something like that? They can't. They can't defeat 30 states acting in unison together on something like that. In that way I think the state legislators can combat federal tier any more effectively than anyone in Washington DC and the Congress can.
Jp Cortez:
Absolutely. Yeah, I absolutely agree, and I think they largely don't know the power that they have but they're starting to. And the Hazlitt Coalition is a really good example of how people are waking up to these ideas that the problems don't... these problems largely stem from the federal level, but they don't have to be addressed from that level.
Eric Brakey:
Right. The problems come from the federal level, but the solutions are not going to come from the federal level.
Jp Cortez:
Exactly right.
Eric Brakey:
Yeah. One thing we haven't talked about in all this, we've talked about gold and silver but of course in the 21st century, a lot of people who are interested in sound money are also looking at these new digital assets, cryptocurrencies like Bitcoin that have really become a big part of a lot of people's portfolios.
Eric Brakey:
Though I know many people who are gold bugs who I have tremendous respect for like Peter Schiff who are very down on cryptocurrencies and say, "No, gold and silver is... these hard metals are the only way." And I personally, I own gold and silver and Bitcoin and other cryptocurrencies. I like to be diversified in all of these non-fiat currencies.
Eric Brakey:
I try to hold as few dollars as possible, because why would you want to hold your savings in something that is losing value every single year? But how does cryptocurrency fit into your overall mission through the organizations you with, is this something you touch on at all? Is this something you see as a part of the bigger picture, or is it something you're ambivalent on or agnostic on?
Eric Brakey:
Because I know your number one state, Wyoming, on your list there is not just [crosstalk 00:47:12] gold and silver. You got Senator Cynthia Lummis there who is the number one advocate for cryptocurrency in the US Senate. You've got Tyler Lindholm who's your policy director now, who's from our Hazlitt Coalition who wrote the pro-cryptocurrency laws in Wyoming, particularly I think of things like special depository institutions basically banks for cryptocurrency. They're still trying to get Federal Reserve approval on that. For some reason, the Federal Reserve missed all the deadlines that they're supposed to approve that by.
Jp Cortez:
Weird how that happened. An oversight, I'm sure.
Eric Brakey:
It's weird how when you have a competing currency and you got to go to your competitor to ask for permission to exist, they're not so inclined to give you permission-
Jp Cortez:
Yeah. Strange, right?
Eric Brakey:
It feels like there's a parallel there with Certificate of Need laws and healthcare-
Jp Cortez:
Oh, yeah. Absolutely.
Eric Brakey:
That's a whole other story. So, anyway, what's your attitude towards cryptocurrencies as they fit into all of this?
Jp Cortez:
As a question of the organization, the Sound Money Defense League, most of the legislation, most of the projects that we do are going to be gold and silver or precious metals mined. We have worked on legislation that does include some crypto language, some Bitcoin language. None of those have passed.
Jp Cortez:
But in general, sound money is this idea that it's a money that can't be manipulated by people who might act recklessly or irresponsibly with the power to control that money, and Bitcoin fits that definition, right? So, the volatility that happens today to me can be explained away by a fixed supply schedule. So, that will even out as more Bitcoin continue to be mined.
Jp Cortez:
But in general, yeah, I think that alternative currencies are always going to be a good thing. Competition in money is a good thing. And Bitcoin has... Bitcoin introduces a new decentralized currency that, I don't know, that the Feds are up for fighting against. I'm not sure what the answer is going to be from them. I guess the answer is the digital-backed central bank currencies. But ultimately, those don't stand a chance for the same reason that the dollar didn't stand a chance. There's a centralized power getting to make these decisions, and largely we're interested in removing those trust-based systems.
Jp Cortez:
So, Bitcoin is a really good example. This doesn't require trust. It's all math. It's an algorithm. You can look at the code if you don't believe it. I can audit Bitcoin right now if I wanted to. I can audit a gold bar right now if I wanted to. We haven't audited the Fed or audited America's gold in decades.
Jp Cortez:
So, as a question of like, which money serves as a better store of value? Which money serves as a better unit of measure? Which money serves as a better... anything really. Gold, silver Bitcoin, all of those are going to beat the Federal Reserve note.
Eric Brakey:
Yeah. I increasingly wonder if it would be wise in moving forward on policy on sound money. Because I certainly know whenever I talk about Bitcoin or cryptocurrency in general, of course, if I've mentioned just Bitcoin. There's a lot of cryptocurrency people who get on me, because everyone's got their favorite or everyone thinks the reasons why they think Bitcoin is the be-all, end-all or something else is the be-all, end-all. That's fine. I'm I guess I'm agnostic on that. I'm not... who knows what works out best in the end? People can debate that.
Eric Brakey:
But then, I also get, when I talk about cryptocurrency, I get a lot of people who are very skeptical of these digital currencies, and they're hard gold, silver people. And so, I just feel like, "Let's put it all in the same basket. Anything that truly meets these standards of..."
Eric Brakey:
I guess, I wonder if it would... I think that in this day and age, it might be wise for legislators to move forward with efforts that seek to do gold, silver, Bitcoin, maybe other... I guess, you have to be clear because not all digital currencies are decentralized in the same way as Bitcoin is but maybe other cryptocurrencies that are similar.
Eric Brakey:
You should maybe move forward on getting rid of the sales tax and the capital gains taxes on all of these, treating them like currencies like the US dollar is at the same time so that we don't have this factionalism where people feel like, well, their favorite one is being left out or what have you.
Jp Cortez:
Yeah. I think in some cases, the problem with Bitcoin as far as the hard money people go is the tangibility of it. These are people that have their entire lives held silver in their hands, held gold in their hands. And there's the real digital disconnect that comes with like, "Wait, what do you mean that I have money but I can't touch it, and it's stored on the internet somewhere?"
Jp Cortez:
But I think generally, your larger point is right. These are complimentary to each other. There doesn't have to be factionalism among the sound money, amongst sound money advocates or fans. Ultimately, all of these things work or aim to take the power away from a cabal of unelected bureaucrats who are making these decisions without any accountability and without any input from anyone other than their PhD circles.
Jp Cortez:
And so, I think all of these things are generally a good thing. And so, working to legalize, quote, unquote, them to make sure that there aren't disincentives in the way to or for smart people or smart entrepreneurs to start businesses or to create these different avenues by which we can transact or through which we can transact, all of that is a good thing.
Jp Cortez:
So, as far as sound money goes, yeah, Bitcoin, gold, silver, any legislation that frees these things up and allow market processes to determine which money is best is going to be a good thing. It's going to be something that I'll go to bat for.
Eric Brakey:
Awesome. Well, hey, we are arriving at the end of the hour. Are there any final thoughts you want to share with folks before we wrap up here today?
Jp Cortez:
I don't think so. Maybe the importance of sound money and the importance of actively being part... being an active participant in your state's legislature, right? We work hard on a dozen bills across more than a dozen states throughout the year, and what we hear most is that when you're blowing up a Capitol switchboard... because states aren't used to grassroots organized movements.
Jp Cortez:
So, when you hear several people calling your line, blowing up your email, this is what helps people make decisions. In Arkansas, I can tell you that we passed a bill last year, the bill wasn't going to be heard. It wasn't scheduled to be heard before a committee, and I got a call from the chairman of that committee upset at me, blasting me like, "Why are you sending all these people our way? Stop sending these people."
Jp Cortez:
And I talked to my boss here, the director of the Sound Money Defense League and the president of Money Metals Exchange, and the way we responded to that was, "Okay, let's double down. If we're ticking these guys off, if we're getting their attention, then we're doing something right."
Eric Brakey:
That's absolutely what it takes. There's the old rule I guess we teach everyone, all of our activists in the school of confrontational politics. When the political class tells you, "This is how you should be doing it, or this is how it should be done," you have an immediate red flag go off and say, "How does it benefit them if I believe them on this?"
Eric Brakey:
Because at the end of the day, the political class does not want to go on record on controversial issues. They do not want to hear from their constituents. They don't want to be held accountable. They want to stay away from taking tough votes.
Jp Cortez:
Exactly.
Eric Brakey:
So, we have to make it very clear to them that there are voters in their districts, and a lot of them who are ready to vote them out of office and to organize to get them out of there if they do not do the right thing and restore whether it's sound money or gun rights or any issues of basic constitutional liberty. We got to hold them accountable to that.
Jp Cortez:
Exactly right. There hasn't been enough holding of feet to the fire. There hasn't been enough accountability and organizations like ours, organizations across the country that are fighting these small government advocacy projects, these are the organizations that are pointing a laser beam at these politicians and forcing them to stand true to their word, forcing them to understand that the people of their states are waking up to this idea the sound money is super important.
Jp Cortez:
And being able to take them to task on these issues when they don't hold a hearing when they said they were going to, when they do a bad vote, when they generally speak nonsense during committee hearings, holding politicians to task on this stuff is what we aim to do. And it's what we have done so far, and we've achieved great results so far.
Eric Brakey:
Awesome. It's like Thomas Jefferson said, "When the people fear the government, there is tyranny. When the government fears the people, there is liberty." If we want our liberties back, we should make the government afraid for their reelections, these politicians afraid for their reelections.
Jp Cortez:
Just make them uncomfortable.
Eric Brakey:
Yeah, absolutely. Well, hey, Jp, it's been an absolute pleasure. Thank you so much for coming on today. It's pleasure talking with you. Thank you for the work that you're doing. I think that it's very important. And so, thank you for that. To our audience, appreciate having you tune in today.
Eric Brakey:
Tomorrow, we're going to be releasing the audio version of the recent interview I did with Mahgdalen Rose of the Rose Report. You may have seen this... we released this as a video cast on the Facebook on YAL's Facebook page and our YouTube page last Sunday. So, you can go and see that if you want to see the video cast version, but tomorrow you can also tune in to the audio podcast that'll be up.
Eric Brakey:
And then, Friday I haven't decided what we're doing on Friday yet. I guess that'll be a mystery. So, thank you everyone. Furthermore, my opinion is, the Federal Reserve should be destroyed. And boy, I've never done an episode where that closing tagline made was as appropriate to the topic we were talking about as it is today. So, well, one more time, furthermore, my opinion is the Federal Reserve should be destroyed. Talk with you all-
Jp Cortez:
Cheers.
Eric Brakey:
... tomorrow. Yes, cheers to that.
Jp Cortez is the Executive Director for the Sound Money Defense League, a non-partisan, national public policy group working to restore sound money at the state and federal level, and lead author of the Sound Money Index.
