Liberty Dollar, Inc. sues the US Mint

[EZ_E]

 

http://www.jonchristianryter.com/News_Folder/Behind.html

 

Liberty Dollar, Inc. sues the US Mint

Shortly before noon on March 20, attorneys for Liberty Dollar™, Inc. d/b/a Liberty Services filed suit in the US District Court for the Southern District of Indiana in Evansville against Henry Paulson, Jr., Secretary of the US Treasury, US Attorney General Alberto Gonzales and Edmond C. Moy, the Director of the United States Mint. Liberty Dollar™ founder Bernard von Nothaus' suit alleges harassment and intimidation by the US government to wit, officials at the US Mint posted a warning regarding the Liberty Dollar™ on its website under the designation "Consumer Awareness—Hot Items."

 

The posting stated: "The United States Mint and the United States Department of Justice have received inquiries regarding the legality of these so-called 'Liberty Dollar' medallions. 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." (Emphasis added.) "Therefore," the US Mint concluded, "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 violate 18 USC § 486." (NORFED is an acronym for National Organization for the Repeal of the Federal Reserve Act. According to von Nothaus, the NORFED name has not be used for several years. The corporate entity is Liberty Dollar™ d/b/a Liberty Services.)

 

In its statement, Mint officials concude that "...Liberty merchants are encouraged to accept NORFED Libety 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 wiht, the circulating money of the United States. Consequently, prosecutors with the United States Department of Justice have concluded that the use of NORFED's Liberty Dollar medallions violate 18 USC § 486."

 

Section 486 says: "Whoever, except as authorized by law, makes or utters or passes, or attempts to pass, any coin of gold or silver or any other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

 

(The term "current money" comes from colonial days when colonists were forced to accept foreign coins as legal tender. As the trade with the Old World increased in the 18th century, the fledgling nation was economically obligated to accept foreign gold and silver coins as hard money in America. To make sure that the value of the foreign coins in circulation here was uniform throughout the colonies, the colonial government established the rates at which the foreign coins would circulate. Because of colonial rivalry, with too many colonies arbitrarily changing the value of the coins in circulation to gain an economic edge over their neighbors, the British Parliament issued a decree stipulating the worth of all coins. Those coins were then known as current money, and remained such until the Crown, by fiat, changed the value. The term stuck. Today, our legal tender—whether coin or currency—is still referred to as "current money.") To the US Treasury current money is "real" money. Nothing else is. That means even though the Liberty Dollar™—which is barter currency with a precious metals value equal to its face—does not purport to be "current money" it is not, in a legal sense, "real" money. The Liberty Dollar™ silver certificate—like the American dollar prior to 1933—is technically a warehouse receipt for precious metals warehoused by von Nothaus in Idaho.

 

While the Justice Department argues as though it is convinced that Liberty Services has represented the Liberty Dollar™ as legal tender—i.e., current money—to its customers, Bernard von Nothaus, the company's founder says nothing could be farther from the truth. Von Nothaus says his company merely encourages people to use the Liberty Dollar™ as a barter medium. Liberty Services encourages its customers to exchange Liberty Dollars™ for goods and services and has never represented Liberty Dollars™ as "current money." Real money, perhaps; but not current money. And that may be part of the problem. As far as Uncle Sam is concerned the US government believes the fiat money the US Mint prints for the private bankers at the Federal Reserve is real money, and that nothing else is. Depending on who is interpreting it, the US Mint figures it has the law on its side. In addition to the argument presented by Title 18 § 486, § 489 "...prohibits the making of any token, disc, or devise in the likeness or similitude of coins in the United States, except under the authority of the Secretary of the Treasury." In other words, § 489 deals not with attempts to counterfeit US coins or manufacture facsimile coins (which are then represented as coins of other nations) but with the minting of coins that "...have no serious potential for use in place of genuine money." In its warning last September, the US Mint said the coins, minted for Liberty Services by Sunshine Minting in Coeur d'Alene, Idaho, uses verbiage such as "liberty," "dollar" and the phrase, "Trust in God"—and the Liberty head that is prevalent on US coinage. A US Mint spokesman told the media that the warning was issued because merchants were confused by consumers who tried to use the barter money to purchase consumer goods and services in their stores and offices. The US Mint also cited the Liberty Dollar™ website which touts the Liberty Dollar™ as an inflation-proof alternative to Federal Reserve Notes.

 

Von Nothaus, who describes himself as a monetary architect, told the Evansville Courier-Press that he has never claimed Liberty Dollars™ were legal currency or that they were backed by the US government. "We have never, ever referred to the Liberty Dollar™ as legal tender. It's private [money]," adding that the use of the coin is voluntary on the part of merchants and consumers. Von Nothaus compared the Liberty Dollar™ to American Express, saying, "Some merchants just say, 'We don't take that. It's up to them to decide to take it." He then compared the Liberty Dollar-US Mint battle to the FedEx-USPS legal battle when the US Postal Service threatened to prosecute FedEx for entering the packaged mail business.

 

Title 18—which created the US Code was enacted on June 22, 1874 from HR 1215. HR 1215 was an expansion of The Act of June 27, 1866. What was new in 1874 was the federal income tax code. Without any fanfare to alert the public, Lincoln's illegal income tax—and the unconstitutional and very draconian techniques used by the federal tax collectors between 1862 to April, 1865 to collect it—was codified.

 

When Title 18 USC § 486 was originally written, its intent was to protect the American people—and its government—from potential counterfeiters and swindlers who possessed both the ability and the means to fabricate facsimile coins. Today, according to von Nothaus, the government is using that muscle to assault free enterprise. It appears the government is planning to use §486 as a non-compete law. And, since the American "current money"—which very soon will become a hemispheric monetary unit—is backed only by the goodwill of government where the Liberty Dollar is backed by silver and gold, it is easy to see the government's concern. A private monetary system that returns the United States to the gold standard could prove to be much more popular with the American consumer than a dollar whose worth is based on debt—owned by someone else, but paid by the American taxpayer.

 

One of the major causes of inflation is the elasticity of our monetary system. The current value of "current money" is pegged at the relative value of gold in 1933. On March 6, 1933, within a hour or two of his inauguration, President Franklin Delano Roosevelt issued Presidential Proclamation 2039 to freeze the transfer of gold by closing all America's banks, savings and loan companies and credit unions. On March 9, 1933 FDR introduced, enacted and signed into law, the Emergency Banking Relief Act of 1933 outlawing the private ownership of gold through a political sleight-of-hand in the wording of the Trading With the Enemy Act of 1917 that reclassified Americans as enemies of its government (which was the only way he could legally confiscate the gold owned by the American people). On April 5, FDR issued Executive Order 6102 and seized all gold in the possession of the American people—but only that owned by working class Americans). In a coup d'etat unequaled in modern times, Congress legitimized Roosevelt's theft with the Congressional Joint Gold Clause Resolution of 1934 that abrogated the gold clause and required all debts paid with scrip. With a second sleight-of-hand, Roosevelt devalued the dollar by 51 cents. Overnight, FDR's scrip became worth 41 cents on the dollar, and Roosevelt succeeded in stealing 59% of the wealth of the American people with a new form of taxation—assessed by the bankers directly on the wealth of the people. Because natural wealth remains pegged at its 1934 value, the more elastic our money supply becomes, the higher the prices on the commodities we purchase.

 

Von Nothaus accurately notes this on his website, www.LibertyDollar.org: "Remember when gas was only 25-cents a gallon? You could take a dollar down to the gas station and buy four gallons for a buck! At that time our dollar was backed by real money—real silver. Guess what? The same amount of silver still buys four gallons of gas! That just shows that real money like gold and silver holds its value. It's the green paper money that's now worth a lot less. As a matter of fact, when you think about it, you realize that gas, food, and almost everything else has not gotten more expensive. It only seems that way because the value of paper money is worth less—and it takes more dollars to buy the same goods and services. Most people think prices have gone up, but in reality: it is the value of the US dollar that has actually gone down."

 

The World Trade Organization is now struggling to complete the tedious task of merging the currencies of the nation states before the end of this decade. This task will be accomplished, first, by regionalizing the world's currencies into four or five monetary units. Then the four or five regional currency models will be compressed into a single cyber-monetary unit. This will be done to accommodate the economic need not of the peoples of the world or their composite governments, but for the transnational bankers, merchant princes and industrialists are determined to forge this consolidated global marketplace—and with it, a global government controlled by them. What does not fit in their plans are private barter currencies that are backed by gold or silver.

 

If the US Mint prevails against Liberty Dollar™ there could be very serious ramifications not only for Liberty Services but for the numismatic industry as well. That will happen if the Justice Department is allowed to exercise its license to liberally interpret that § 486 and § 489 to contend that Liberty Services and Bernard von Nothaus is representing the Liberty Dollar™ medallions as current money (i.e., legal tender coinage of the United States) based on a mint design that incorporates Lady Liberty and the phrase, "Trust in God." If the federal government prevails in US District Court against von Nothaus, a precedent will have been established that will allow the US Mint, the Treasury, or the Dept. of Justice to seize any rare numismatic under the guise that they were represented not only by the seller but the owner as well as legal tender US coins (or foreign coinage defined under § 486 and 489)—even if they weren't. Furthermore, if the court weighs in favor of the US Mint, it is very likely the Department of Justice will move to outlaw the Liberty Dollar™ and seize whatever inventory of coins and/or silver bullion are in possession of Liberty Service.

 

When the Roosevelt Administration outlawed the public ownership of gold in 1933—and in particular, gold coins—a Philadelphia jeweler named Israel Switt squirreled away ten $20 St. Gaudin double eagles. They were among a handful of 1933 St. Gaudins to survive the foundry. One such Double Eagle, formerly owned by King Farouk of Egypt was auctioned by Sotheby's in 2002. It sold for $7.59 million. Switt's Double Eagles popped up on the US Mint's radar screen in 2005 when Joan Langbord, Switt's daughter asked the US Mint to authenticate the 10 uncirculated coins. The government seized them, claiming because all gold had been outlawed in 1933, the coins—which were worth roughly $75 million—were stolen. In December, 2006 Langbord sued for return of the coins or $40 million, which represented half of the value). The government countered that the coins were technically not seized since the US Mint viewed them as stolen property since they could not be legally possessed by Switt who was obligated to surrender them under the provisions of the Emergency Banking Relief Act of 1933. Most of the gold coins the US Mint seized over the years were melted down to bullion. However, the Double Eagles are far too valuable to melt.

 

Can Liberty Services and Bernard von Nothaus prevail? Von Nothaus seeks an injunction against the US Mint and an order from the court barring the US Mint and/or the Dept. of Justice from declaring the Liberty Dollar™ to be an illegal currency. Neither is likely to happen. In the end, the US government will win this one. It is only the extent of their victory that is undecided. If the government is content with the removal of suggestions that the Liberty Dollar™ is "real money,:" then von Nothaus' silver and gold medallions will survive. It is more likely the government will demand the removal of the Liberty image, the phrase "dollar," and the Liberty torch from the coin—if they aren't granted the right to seize all existing coins and certificates. When they do prevail to whatever extent, the die will be cast for the ultimate confiscation of some current gold and silver coins somewhere down the road to Utopia.

[Zoins]

the die will be cast for the ultimate confiscation of rare gold and silver coins under the guise that they are being sold at prices 100 to 1,000 times or more the face value of the coin, suggesting that consumers may have been defrauded by unscrupulous coin dealers profiting exorbitantly by selling coins based on their numismattic value rather than their face value.

That sounds more like US Mint NCLT than Liberty Dollars to me

[pendragon1998]

 

WOW - it's 0.99% pure silver - less than 1%?

 

The coin has wealth equal to its face value? None of my coins has wealth. Neither does my couch, my chair, or my cat. As far as I knew, only living beings could possess wealth.

 

"The rest of the world has already done so"...done what?

 

That paragraph has more problems than a quadriplegic in a patch of poison ivy.

[zrlevin]

WOW - it's 0.99% pure silver - less than 1%?

 

The coin has wealth equal to its face value? None of my coins has wealth. Neither does my couch, my chair, or my cat. As far as I knew, only living beings could possess wealth.

 

"The rest of the world has already done so"...done what?

 

That paragraph has more problems than a quadriplegic in a patch of poison ivy.

 

And you wonder why your threads only get one star...

[EZ_E]

 

That paragraph has more problems than a quadriplegic in a patch of poison ivy.

 

So, give the thread a "one star" rating, then.

[astrostu]

the die will be cast for the ultimate confiscation of rare gold and silver coins under the guise that they are being sold at prices 100 to 1,000 times or more the face value of the coin, suggesting that consumers may have been defrauded by unscrupulous coin dealers profiting exorbitantly by selling coins based on their numismattic value rather than their face value.

That sounds more like US Mint NCLT than Liberty Dollars to me

 

Amen. What's up with the Mint charging $35 for a $25 roll of Sacs that cost them $5 to make?

 

While I think that if the Mint didn't have a monopoly prices would be much fairer for us numismatists, I do think that the government has an obligation to protect its monetary system ... however poor that system may be.

[pendragon1998]

Some people are waaay too easy to offend. I can say that if I was a quadriplegic I'd laugh my butt off at that one. Of course, there are people who go around looking for things to take offense at, so I guess I can't please them all.

[Zoins]

Some people are waaay too easy to offend. I can say that if I was a quadriplegic I'd laugh my butt off at that one. Of course, there are people who go around looking for things to take offense at, so I guess I can't please them all.

Yes, you can be funny but I don't think you can make a credible claim on how you'd feel as a quadriplegic unless you have been one for some time, say a year. Sure there are probably some quadriplegics that would find your joke funny and others that would find it offensive but I'm not sure you'd really know how you would feel unless you were one yourself. Failing that, do you know any quadriplegics?

[pendragon1998]

Oh god...

 

Look, can we just let Ez_E discuss his thread?

[Zoins]

Oh god...

By that response, I'm guessing you have no experience with the situation you are talking about.

 

BTW, I've only voted on one of your threads. I was the first vote and I gave it 5 stars if you're being paranoid.

Look, can we just let Ez_E discuss his thread?

Looks like we were until you started posting

[midwest]

That paragraph has more problems than a quadriplegic in a patch of poison ivy.

 

[Fergie]

Oh god...

 

Look, can we just let Ez_E discuss his thread?

 

 

 

Looks like it's time for another hi-jacking party !!

 

Hey pendragon,

 

don't bother playing any lottery games this week !

 

 

What up ya big EZ_E, you trying to get ma BOY in some more touble ?

 

Fergie.

[Stanley]

That paragraph has more problems than a quadriplegic in a patch of poison ivy.

 

.

[World Colonial]

That is what the government wants people to think. From the standpoint of the private economy, there isn't any more of an ecomomic reason to have a money monopoly than for anything else.

[just-john]

As long as I'm in my chair poison ivy no problem.Big wheel's keep on turning put my chin to the metal and I'm gone.

[pendragon1998]

Okay, here's my take on the liberty dollar...

 

In no particular order:

(1) I like the idea of a currency based on intrinsic value of the coins.

 

(2) I don't like the idea of the government telling us what we can and can't exchange for goods and services. They act like they dislike monopolies in the private sector, but they don't have a problem with them when it's the government that runs the monopoly.

 

(3) I think that what the governement says about the liberty dollar attempting to compete with the US dollar is true and, without looking at the regulations myself, I'm assuming that's illegal (whether or not I agree with the law aside).

 

(4) I think the whole idea behind the liberty dollar is just a scheme to separate people from their US dollars. Note that the people saying the US $ is useless and bad are also the people who are trading the '"valuable" liberty $ for the "worthless" US $. I never expect to get something for nothing, and neither should the liberty $ buyers.

 

 

That said, let me address my critics from higher up in the thread. I got a little hot under the collar because I do not appreciate the line of thinking that says you cannot comment on something unless you've "been there and done that" yourself. I also do not like the mindset that attempts to limit what people say because it might offend someone; that notion is all well and good until it comes to some people deciding what's okay and not okay for someone else to say. I write this to elaborate on why I was irked by the response to my joke, and not to provoke debate on the above opinions. I recognize that not everyone will agree with those two opinions, but I respect the right of others to disagree.

 

As for my little quip above in the thread, let it be known that I did not write it with any malice in my heart for people in such an unfortunate medical plight. While I do not know any quadriplegics, I have known several other people with equivalently bad medical disorders, and I also have a healthy imagination so that I could imagine how I'd feel in that situation. I have a rather quirky sense of humor, so I could imagine someone making the comment to me if I was a quadriplegic and it would probably crack me up. I realize personalities differ and some would be offended by that, others would have a sense of humor (one would hope). I've been known to chuckle about, for example, my weight, my nearsightedness, and a minor medical complaint I've had for years. Other people I know would be very embarrassed if I kidded them about the same thing.

 

So while I believe I had and have the right to make a somewhat off-color joke from time to time, and would hope people recognize such jokes to be made in the friendly, jovial spirit they may be made in, I apologize to any quadriplegics in the audience who took offense to the joke I made. No offense was intended. If I had meant to say something derogatory about you, it wouldn't be cloaked in a joke. Someone on a tv show I like once said:

 

Simon: I'm trying to put this as delicately as I can. How do I know you won't kill me in my sleep?

 

Mal: You don't know me, son, so let me explain this to you once. If I ever kill you you'll be awake. You'll be facing me. And you'll be armed.

 

If you'll excuse the extension: if I ever insult you, you'll be present, you'll be clear on the insult, and you will be free to respond. (Unless you're just being a stupid *spoon*, at which point all bets are off )

[Fergie]

Thanks Mr P,

 

Your thoughts # 1 to # 4 are well put and I have to say I agree with you.

 

On all counts no less.

 

Ha, you saved me a whole day of thinking, that's great.

 

Thanks again,

 

Fergie.

[DC Dawg]

(1) I like the idea of a currency based on intrinsic value of the coins.

Except that coinage has a history of not being worth its intrinsic value. One of the reasons behind the Bland-Allison Act, aside from being corporate welfare for the silver mines, was to have the US buy the silver, take it out of circulation, and change its intrinsic value.

 

When the intrinsic value of the coinage raises beyond the value of the coin, the country has the tendency to change the coin. Large cents changed size and content twice while they were struck. The Flying Eagle cent was an answer to the hoarding of copper when the intrinsic value of the copper was higher than the face value of the coins.

 

These are just a few small examples without going into the discussion on the base metal coinage changes that began in 1965.

 

(2) I don't like the idea of the government telling us what we can and can't exchange for goods and services. They act like they dislike monopolies in the private sector, but they don't have a problem with them when it's the government that runs the monopoly.

We need to go back to civics and macro economics classes to understand why government controlled currency is better than private issues. For the US, the need for a common currency was the results of the fiscal issues that occurred during the time when the Articles of Confederation was the seminal document. Under the AoC, the states ran their own banking systems in a manner similar that the feudal lord did in England up until the 18th century. When these varried currencies could not be reconciled, it was stiffling commerce and a real issue for the young nation.

 

Alexander Hamilton studied the banking reforms in England during the 18th century and understood the need for a strong central bank to support the economic needs of the Confederation. While he did not think the commonwealth concept was appropriate, Hamilton proposed the central banking system that controlled a single currency and placed the federal government as the arbitrator over its value. This helped open commerce across the borders of the varied states and the economy calmed.

 

But there were other problems, such as how to allow (for example) New York to trade for goods with Georgia. To do that goods had to cross land or waters that were legally claimed by the costal states. Each state wanted to collect tarriffs on the goods as they crossed the borders. Further, even though this was supposed to be a union, some states were beginning to require separate rules for travel through their land. The result was the stiffling of commerce. In order to keep make the union a union and not splintered feudal states, Hamilton and Jefferson introduced the concept of the interstate commerce clause into the constitituion. The interstate commerce clause opens the borders for trade and travel but also allows the central government to arbitrate commerce across the many states.

 

I am not even going to start with the non-renewal of the US Bank under Jefferson (not a good idea) and the fractured currency situation that existed until the government asserted itself twice in the 19th century to better control currency--under the interstate commerce clause.

 

(3) I think that what the governement says about the liberty dollar attempting to compete with the US dollar is true and, without looking at the regulations myself, I'm assuming that's illegal (whether or not I agree with the law aside).

The right to coin legal tender is granted under the constitution and the various sections under Title 31 of the United States Code. I believe it was the Coinage Act of 1864 that solidified these rules by removing legal tender status from all currency not minted by the US government.

 

(4) I think the whole idea behind the liberty dollar is just a scheme to separate people from their US dollars. Note that the people saying the US $ is useless and bad are also the people who are trading the '"valuable" liberty $ for the "worthless" US $. I never expect to get something for nothing, and neither should the liberty $ buyers.

A fool and his money are soon parted - Anon.

A fool and his money are lucky to have come together in the first place! - Gordon Gekko

 

There is no law that says commerce has to be consumated by the exchange of money. Bartering is legal as long as both sides agree to the exchange and the value of the bartered goods or services. However, there are rules in the Code of Federal Regulations that require government arbitration, whether it be through the legal system or other available means, to resolve any dispute using legal tender. The use of government enforced legal tender provides a legal basis to carry out commerce and redress grievences should the transaction have problems that requires outside arbitration. A barter contract, whether verbal or written, is more difficult to arbitrate should something goes wrong.

 

And to go one step further, by using government supported currency for international trade provides a basis for determining value across international borders. Without going into the politics of the issues, but the use of government currency will allow the government to assist with trade across the borders for the betterment of the country. It is an ideal definition, but in reality we know politics changes the answer.

 

 

Considering the history of feudal money in England and the foresight of Alexander Hamilton to open the borders, I have no problems with the government supoprted money. I have no problems with the change in intrinsic value of the physical paper or coin as being less than representative of the money's value. As long as I can spend the money and purchase the various goods and services I wish, I will continue to use it without complaint.

 

So... if you do not like the alleged debassed currency, I would be more than happy to take those pesky coins and notes off your hands. PM me and I can tell you how you can ship these items to me!

 

Scott

[astrostu]

Oh, I wanted to add that I think the suit against the Mint based upon the idea that the Mint simply provided information on its website is stupid.

[Zoins]

Oh, I wanted to add that I think the suit against the Mint based upon the idea that the Mint simply provided information on its website is stupid.

I'm not so sure, Wikipedia's page on slander and libel says

In law, defamation is the communication of a statement that makes a false claim, expressly stated or implied to be factual, that may harm the reputation of an individual, business, product, group, government or nation. Most jurisdictions allow legal actions, civil and/or criminal, to deter various kinds of defamation and retaliate against criticism.

The Liberty Dollar has been around since 1998. If it really is illegal, I imagine the government should have been able to shut them down by now, like the CNMI Freedom Tower Dollar which I believe only took a matter of months, not over 5 years. If they can't shut them down, then perhaps Liberty Dollars are not technically illegal, in which case the information on the Mint website may qualify as libel. I don't see any harm in a suit to determine the legality of Liberty Dollars once and for all. What the Mint is saying now is just claims and may amount to FUD. If the Mint is right, shedding some light on the issue and actually ending the Liberty Dollar is the way to go. If the Mint is wrong, they should stop their claims in this particular area.

[Zoins]

The right to coin legal tender is granted under the constitution and the various sections under Title 31 of the United States Code. I believe it was the Coinage Act of 1864 that solidified these rules by removing legal tender status from all currency not minted by the US government.

This area may actually be interesting to look into. The US Mint website quotes a number of regulations however they may not really apply to Liberty Dollars

 

US Mint Hot Items Page section on Liberty Dollars mentions the following:

• "under the Constitution ( Article I, section 8, clause 5 ), Congress has the exclusive power to coin money of the United States and to regulate its value." I'm not a constitutional legal scholar, but when I read the Constitution, I do not interpret Article I, section 8, clause 5 to be "exclusive" and would be interested to hear other comments.
• "By statute ( 31 U.S.C. § 5112(a) ), Congress specifies the coins that the Secretary of the Treasury is authorized to mint and issue and requires the Secretary to carry out these duties at the United States Mint (31 U.S.C. § 5131)." These seem to be how the Secretary of the Treasury and Mint should operate ... and completely irrelevant with respect to private coinage.
• "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." Out of the 4 legal references mentioned by the US Mint, this is the only one that seems relevant to me. This does mention illegal acts but the section heading is "CHAPTER 25--COUNTERFEITING AND FORGERY." This raises the question of whether Liberty Dollars are counterfeits and/or forgeries.

IMO, the US Mint Hot Topics section on Liberty Dollars is either (a) written badly or (b) written to spread FUD.

 

In the case of the CNMI Freedom Tower Dollars, NCM was sued by New York Attorney General. I don't see any problem with a legal suit here to get to the bottom of the issue, it's been hanging around way too long.

[World Colonial]

Scott,

 

You provided some good historical background of which I was only partly aware of but I have a few things to add.

 

What you describe worked generally well until the introduction of the Federal Reserve system because that is when the relentless expansion of credit since 1913 which has conincided with the debasement of the US dollar started. Prior to 1913, inflation alternated with deflation so that the value of the currency was essentially unchanged from 1830 to 1913 (that is what I read although I do not know the source).

 

I do not agree though that it is necessary to have a common currency for a common trading block like the US or the EU today. Obviously, it makes it easier but that does not make it necessary.

 

There are drawbacks to both a currency monopoly like all national currencies and a competitive system such as that which theoretically could exist with the Liberty Dollar or the previous ones with colonial money and national bank notes.

 

We know what the drawbacks are for national currencies. It is what we have seen with the fiat money Federal Reserve system. Most people have limited or no options to protect the value of their savings (without speculating or "investing") and suffer a hidden tax even though they do not know it. That is the cost of this "free" good.

 

With any potential alternative, since the currency has been a warehouse receipt, it is a liability of the issuer which means that it can be defaulted upon just like any other debt and there is also the possibility of fraud just like we see periodically elsewhere. There can be no default of US currency because it is not redeemable for anything. (You can spend it but the Federal Reserve will not give you anything for it even though it is a liability on their ledger.)

 

The possibility of fraud with a private currency does not bother me because there are safeguards which can be put in place (see the Perth Mint website for their bullion program as an example) and if it did happen, I believe it would be isolated because that is the only the issuer could stay "in business". With the current system, we are all getting ripped off. It is just that because the currency depreciation is relatively low every year, many do not notice it.

 

At the present time, currency monopolies are probably necessary for the survival of the state as this is the basis of any government's economic power along with the ability to tax. The US government knows that the only thing holding up the value of the dollar is confidence and they are almost certainly acting to what they perceive as a potential threat that could undermine it.

 

As a US citizen, I support the government on balance even though there are many things I do not like that it does. As an economic optimizer, I do what I can to maintain the value of my savings. If the US government woud just manage the currency properly, there would be no need to have a conflict between these two goals.

[DC Dawg]

What you describe worked generally well until the introduction of the Federal Reserve system because that is when the relentless expansion of credit since 1913 which has conincided with the debasement of the US dollar started. Prior to 1913, inflation alternated with deflation so that the value of the currency was essentially unchanged from 1830 to 1913 (that is what I read although I do not know the source).

Actually, the debasement of money started earlier with the issuance of fractional currency notes. While it was necessary in order for commerce to continue, upon the end of the Civil War, the currency became worthless and the country could not pay its debts. If it wasn't for the silver and gold trade and the controlling of the flow of these metals over the borders, the resulting depression, especially in the south, would have been an economic disaster.

 

A few times over the succeeding decades, the US government changed the mechanisms for supplying currency. In nearly every occasion, to stem the recession, the US issued new currency (eg, bank notes, US Notes, US Currency Notes, etc) and withdrew legal tender status of the old notes. In fact, the debasement of currency, the falling prices of metals, and other factors lead to the depression of the 1890s.

 

The concept of a central bank and decentralized regional supporting banks was a result of the decline in the worth of the paper in the 1890s. President William McKinley actually started the central bank concept with the Treasury controlling economic policy and the federally chartered banks in each state providing the services. Theodore Roosevelt strengthened it by taking away state control of the federally chartered banks and placing them in government hands. After Taft increased tarriffs and started to deregulate credit that loosened money policy to the point that the country was slipping back into a recession, and Woodrow Wilson felt that the federal government had to play a more central in banking and economic policy. It was under Wilson that the Federal Reserve was officially born out of the insecurity of the US currency.

 

I do not agree though that it is necessary to have a common currency for a common trading block like the US or the EU today. Obviously, it makes it easier but that does not make it necessary.

Technically, it is not necessary but the economic benefit can be seen in the phenomenal success of the Euro!

 

We know what the drawbacks are for national currencies. It is what we have seen with the fiat money Federal Reserve system. Most people have limited or no options to protect the value of their savings (without speculating or "investing") and suffer a hidden tax even though they do not know it. That is the cost of this "free" good.

The hidden tax is called inflation. It is caused by the changing worth of the currency that is backed by investment or the promise of the government. But the economic mechanisms that cause inflation also allows economic growth and allows for more wealth to be generated.

 

Sometimes, I don't understand why people want to put the economy back on some finite standard like gold or silver. Under these standards, the amount of money is controlled by the amount of the tangible assets that exist. Credit is limited to those notes that can be backed with something tangible (eg., a mortgage on a house). Other uses of credit would not be allowed and, in a lot of cases, would be illegal. The reckless use of this credit caused the two depressions in the late 19th century, the great depression in the 20th century. In all three cases, the system did not have enough assets to cover the debt resulting in the lowering of the money supply and the rise in costs for the money as the demand did not change.

 

By removing the standard backing of the currency and maintaining a certain amount of fixed assets for backing (e.g., the gold in Fort Knox and the silver in West Point) with the ability to control the money supply (ie., interest rates, changes in reserves), the strength of the currency is dependent on market forces and not how much gold and silver are in a vault somewhere. With the appropriate controls and safeguards, the money supply can change for the betterment of the participants. Just compare the economy of the 1970s with the economic power of the US currency of today.

 

BTW: Up unil 1972, the United States government regulated the price of gold and silver. That year, President Richard Nixon deregulated precious metals to allow the market set the prices. It was probably one the best decisions he made because in the long run, it actually allowed for the creation of wealth. Chairman of the Federal Reserve Paul Volker used this to allow markets to create themselves and then lowered the interest rates to expand the money supply. Alan Greenspan took this further by not only lowering interest rates, but lowered the reserve requirements to allow money to flow. He just did it too fast, which lead to the 1987 crash of the stock market.

 

With any potential alternative, since the currency has been a warehouse receipt, it is a liability of the issuer which means that it can be defaulted upon just like any other debt and there is also the possibility of fraud just like we see periodically elsewhere. There can be no default of US currency because it is not redeemable for anything. (You can spend it but the Federal Reserve will not give you anything for it even though it is a liability on their ledger.)

That is the definition of default. If you cannot trade the currency for goods and services, the currency is in default. However, because the currency is controlled by the United States government, it remains viable for as long as the United States government exists.

 

This was the case even in the past. Look at the resulting economics of the Civil War. The Confederate money was worthless as there was no government to back its worth.

 

At the present time, currency monopolies are probably necessary for the survival of the state as this is the basis of any government's economic power along with the ability to tax. The US government knows that the only thing holding up the value of the dollar is confidence and they are almost certainly acting to what they perceive as a potential threat that could undermine it.

This contradicts almost all of your previous statements. The economic power, ability to tax, and the backer of the currency makes the currency worth something in commerce, which is the purpose of money!

 

As a US citizen, I support the government on balance even though there are many things I do not like that it does. As an economic optimizer, I do what I can to maintain the value of my savings. If the US government woud just manage the currency properly, there would be no need to have a conflict between these two goals.

And on that, we agree!

 

Scott

[pendragon1998]

I bow to superior knowledge

 

I would clarify my point # 2 - I am happy on the balance with the government's handling of their monopoly on legal currency. I would just like to be able to barter with anything and everything I might happen to want to use. My understanding of the article was that the mint says the liberty dollar is illegal to use as currency.

 

Any misunderstanding I'm having here is likely just because of my lack of formal economic instruction (I was a biology major - we didn't have to take economics)

[DC Dawg]

I bow to superior knowledge

Just more researched. My interest is in how technology affected public policy at the turn of the last two centuries to see if we learned anything. There are some very interesting parallels, especially the economic impacts and the impact as to how it effects money.

 

I would clarify my point # 2 - I am happy on the balance with the government's handling of their monopoly on legal currency. I would just like to be able to barter with anything and everything I might happen to want to use. My understanding of the article was that the mint says the liberty dollar is illegal to use as currency.

It is illegal to use as currency. You cannot walk into an establishment and expect them to accept this token as they would accept a common quarter. There are no laws that say you could not barter with this token.

 

Any misunderstanding I'm having here is likely just because of my lack of formal economic instruction (I was a biology major - we didn't have to take economics)

That's ok... I was a computer science major who did his masters in public policy. I love this kind of stuff!!

 

Scott