Ryan Lenz, writing for the Associated Press, has an article on the raid of a currency protest group in Evansville. From the article, I gather that this Liberty Dollar group mints coins — not counterfeit, I guess, since they aren’t duplicates of existing currency — and puts them into circulation. I don’t know if similarity to federal coinage is part of the gag or if they’re just using currency that is accepted in an underground economy of some sort. One of their coins features Republican Presidential candidate Ron Paul.
The organization, which is critical of the Federal Reserve, has repeatedly clashed with the federal government, which contends that the gold, silver and copper coins it produces are illegal. NORFED claims its Liberty Dollars are inflation free and can restore stability to financial markets by allowing commerce based on a currency that does not fluctuate in value like the U.S. dollar.
“They’re running scared right now and they had to do something,” von NotHaus told The Associated Press Friday. “I’m volunteering to meet the agents and get arrested so we can thrash this out in court.”
There is a pretty substantial Wikipedia entry about the Liberty Dollar here. From the description there, it looks like there is no intent for the coinage to be mistaken for federal coinage. They claim that the coins are “numismatic pieces or medallions which may be used voluntarily as barter.”
From a purely individual standpoint, I don’t suppose there is any problem with people using alternate currencies among themselves, so long as the use is entirely voluntary and well-informed. In other words, nobody should ever be fooled into thinking that the currency is something other than private issue. From a government standpoint, a government should be very jealous of its prerogatives with respect to currency — it’s almost as important to a government as keeping a monopoly on violence. There was a line in Frank Herbert’s Dune on the subject of keeping power to the effect of “Control the courts and the currency, let the rabble have the rest.”
From the United States Mint website I read the following:
“The United States Mint urges consumers who are considering the purchase or use of these items to be aware that they are not genuine United States Mint bullion coins and they are not legal tender. These medallions are privately produced products and are not backed by, nor affiliated in any way with, the United States Government. Moreover, prosecutors with the Department of Justice have determined that the use of these gold and silver NORFED “Liberty Dollar” medallions as circulating money is a Federal crime.”
Later they add:
“Under 18 U.S.C. § 486, it is a Federal crime to utter or pass, or attempt to utter or pass, any coins of gold or silver intended for use as current money except as authorized by law. According to the NORFED website, “Liberty merchants” are encouraged to accept NORFED “Liberty Dollar” medallions and offer them as change in sales transactions of merchandise or services. Further, NORFED tells “Liberty associates” that they can earn money by obtaining NORFED “Liberty Dollar” medallions at a discount and then can “spend [them] into circulation.” Therefore, NORFED’s “Liberty Dollar” medallions are specifically intended to be used as current money in order to limit reliance on, and to compete with the circulating coinage of the United States. Consequently, prosecutors with the United States Department of Justice have concluded that the use of NORFED’s “Liberty Dollar” medallions violates 18 U.S.C. § 486.”
This is somewhat nuanced. It isn’t the coins themselves that are illegal, but how they are intended to be used. I understand private currencies are not illegal, as long as the users of such currencies understand that as far as the tax laws go they are engaging in barter when they use a private currency and they report transactions in private currencies as barter transactions when subject to tax. I’d be surprised if the Government doesn’t see “Liberty Dollars” as having substantial potential for tax evasion, and is taking a strict line under the referenced sections of the United States Code because they’ve been unable to hang the “Liberty Dollar” group for that.
There is a pretty substantial Wikipedia entry about the Liberty Dollar here. From the description there, it looks like there is no intent for the coinage to be mistaken for federal coinage. They claim that the coins are “numismatic pieces or medallions which may be used voluntarily as barter.â€
That all sounds good, but the Liberty Dollar folks basically make that claim to try to cover themselves and to offer an air of legitimacy. However, look at what they say on their website about how to use the Liberty Dollar:
http://www.libertydollar.org/ld/spend-liberty-dollars/howtospend.htm
Simply offer The Liberty Dollar with the confidence that it will be accepted. After all, why wouldn’t it? When you offer the American Express Card, if it is not accepted, they tell you. Likewise, if the store does not accept Liberty Dollars, the cashier will tell you and you can simply pay another way.
It’s even worse if you look at what they used to say, which we can thanks to Archive.org:
http://web.archive.org/web/20061101164151/http://www.libertydollar.org/ld/spend-liberty-dollars/howtospend.htm
1. Please don’t attempt to educate people about money when using Liberty Dollars.
4. “Do the Drop!” The best way to introduce the Liberty Dollar is to drop the Silver Liberty in someone’s hand. Do not hand it to the cashier, Drop it! Hold the one-ounce Silver Liberty a couple inches above the outreached palm and drop it so it lands flat in the person’s palm.
5. Now the hardest part – don’t say anything! Just wait. Let the person marvel at its beauty, weight, and discover it says TEN DOLLARS. If you are asked anything, just keep your answers short. Remember to KISS – Keep it Short and Simple.
6. When asked “Is it real?” Answer: “Yes, one ounce of silver, 10 dollars.” Do not rush. Just stand there and wait, patiently. No need to smile. Just wait.
7. After 30 seconds, say, “I have the paper [show the cashier FRN cash], but would prefer to pay with silver.” If the cashier hands it back immediately, you may ask her to show the currency to the manager, or just pay some other way.
Liberty Dollar users were basically relying on the ignorance of minimum wage cashiers to accept their currency thinking it was US government issued.
It gets even worse if you read their “success stories” (Why would they call them “success stories” if they’re using the Liberty Dollars in a legitimate way, anyway?):
http://www.libertydollar.org/ld/spend-liberty-dollars/success-stories.htm
I am here to tell you that the
major chains and businesses will accept them. Here is a list of some
of the places I used them.
Joe’s Fina Mart / Placido TX
James Texaco / Lolita TX
Jack In The Box / Austin TX
Chevron / Schulenburg TX
McDonalds / Port Lavaca TX
Wal-Mart / Port Lavaca TX
Reeds Grocery / Odem TX
Exxon / Odem TX
H.E.B. (a major grocery store through out Texas) / Sinton TX
Dos Hermanos Mexican Food / Edna TX (They also got $80 worth from me
before I left)
Texaco / Richmond TX
Baskins Outlet Mall (Tommy Hilfiger Store) / Livingston TX
Pizza Hut / Sinton TX
To name just a few……
I used only Liberty Dollars at each of these places and as you can
see most are major chains. On my road trip I spent over $700 in the
Liberty Dollars. I only had one place reject it because they had
received it before and their bank said it was not accepted there.
I’m virtually certain that hardly any of those businesses would knowingly accept Liberty Dollars.
Just now, I went to the local Sav-A-Lot grocery store. The total was $11.19, so I pulled out a $10 Liberty and a $10 FRN. The cashier was intrigued and said she had never seen these before. I nonchalantly said it was a new silver-backed private currency being used for 4 years, and the piece she was holding was genuine silver. I also handed her a information kit so she could do some reading about it.
To my complete and utter surprise, she handed me change – in FRN’s. I acted like this was completely normal, though I was so excited. I slowly walked out of the store, though half expecting someone to collar me and tell me I had to come back and pay in FRN’s.
Again, preying on the ignorance of a grocery store cashier. Why would he be so excited and fear having someone “collar” him if there wasn’t an element of fraud involved?
I went to my local gas station and picked up a 12-pack of pepsi. When I got to the counter, a gentleman in his 50’s was working the register. I figured this would be easy – he’d probably seen silver in circulation before (I assumed.) I asked him if he would accept “the new American dollar.”
Surprisingly, they printed this “success story” even though the user admitted to misrepresenting the Liberty Dollar as “the new American dollar”.
It’s a heck of a lot more American than fraudulent and illegitimate fiat currency ever could be…
Kurt,
What industrialized nations do not use a fiat currency?
Thanks in advance,
Johnny
I for one am excited about the American Liberty Dollar (at least this one is backed by silver/gold/platinum/copper) unlike the Fed which I have noticed in the last 10 years great inflation even on necessities. I hope that the court case againt Von NotHaus can be resolved relatively soon, and the fraudulant case against Liberty Dollar dropped soon. That way they can get back on track, and start reproducing/expanding. I would like Ron Paul’s ideas for our currency/fed to be adopted so that there would be much less opposition.
I hope von nothaus can work out a way to set up their own banks/wearhouses so that people can start getting paid in these rather than just using them for small purchases.
The only problem I can see is for (even though it’t barter) the government to tax them!? The taxes for the forseeable future will probably have to be paid by Fed notes (which means always keep some of these on you when you use libertys), while the barter is done with libertys..makes sense.