Liberty Dollar
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| Liberty Dollar | |||
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| ISO 4217 Code | None | ||
|---|---|---|---|
| User(s) | Individuals and businesses primarily in the United States | ||
| Symbol | $ or ALD (non-ISO 4217; used for multicurrency accounting) | ||
| Issuing authority | Liberty Services | ||
| Website | libertydollar.org | ||
| Mint | Sunshine Mint | ||
| Website | sunshinemint.com | ||
The Liberty Dollar is a private currency embodied in minted metal pieces (referred to as rounds) and gold and silver certificates (ALD), and electronic currency (eLD). ALD certificates are warehouse receipts for real gold and silver formerly owned by ALD certificate holders which was warehoused at the Sunshine Mint in Coeur d'Alene, Idaho prior to an FBI raid (see below). The Liberty Dollar is distributed by Liberty Services (formerly known as NORFED), based in Evansville, Indiana. It was created by Bernard von NotHaus, the co-founder of the Royal Hawaiian Mint Company.[1]
The Liberty Dollar warehouses were raided and the contents confiscated by the FBI & Secret Service on 15 November 2007. The FBI states this confiscation is intended to prevent people mistaking Liberty Dollars for legal tender; the Liberty Dollar organisation are accused of illegally presenting the currency as a legal alternative to the United States dollar.
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[edit] Philosophy
[edit] Inflation compensation
From the debut of the Liberty Dollar on October 1, 1998 until November 23, 2005, NORFED exchanged one troy ounce silver Liberties valued at ten Liberty Dollars for USD$10. On November 24, 2005, the silver base was raised to USD$20 because of the rising price of silver as measured in United States Dollars. Rounds of ten dollars per troy ounce can be exchanged for a small fee. Ten dollar-base paper certificates can be exchanged for the new $20-base certificates at no cost.
In January 2007, Liberty Services began an exchange service to convert Liberty Dollars into U.S. dollars. A partial list of merchants accepting Liberty Dollars can be found online.[2] According to the U.S. Department of Justice, "the use of these gold and silver NORFED 'Liberty Dollar' medallions as circulating money is a Federal crime."[3]
[edit] Ron Paul
On December 13, 2007, Representative Ron Paul introduced the Free Competition in Currency Act of 2007 in the U.S. House of Representatives, saying:
One particular egregious recent example is that of the Liberty Dollar, in which federal agents seized millions of dollars worth of private currency held by a private mint on behalf of thousands of people across the country .... We stand on the precipice of an unprecedented monetary collapse, and as a result many people have begun to look for alternatives to the dollar .... I believe that the American people should be free to choose the type of currency they prefer to use. The ability of consumers to adopt alternative currencies can help to keep the government and the Federal Reserve honest, as the threat that further inflation will cause more and more people to opt out of using the dollar may restrain the government from debasing the currency.
The bill seeks to legalize the use of currencies — including the Liberty Dollar — that compete with the Federal Reserve's U.S. dollar.[4]
[edit] Function
[edit] Differences from other "alternative currencies"
A number of alternative currencies exist in the United States, including the Liberty Dollar, Phoenix Dollars, Ithaca Hours, and digital gold currency. Unlike some other alternative currencies, both Liberty Dollars and Phoenix Dollars are denominated by weight and backed by a commodity. Phoenix Dollars are backed exclusively by silver, while Liberty Dollars may be backed by gold, silver, platinum, or copper. Liberty Dollars differ from other alternative currencies in that they carry a suggested US dollar face value.
Community currencies may present problems for users because there is little to stop the issuer from producing more currency.[5] The primary difference between the Liberty Dollar and Hours is that Liberty Dollars are backed by an objective measure—a weight in metal.
Previous attempts at establishing an alternative currency in the United States focused on [6]: the value of the currency is tied to a specific unit of time; i.e 1 hour = 1 Time Dollar. The future value of the currency depends on the willingness of people to swap their labor time, regardless of the market value of the labor provided. Community currencies like Ithaca Hours are distinctly different from and not to be confused with the Time-based currency developed by Edgar Cahn, in which members of a "Time Bank" exchange services with one another in increments of time. Performing one hour of service to another member earns the provider a Time Dollar, which can be banked and spent later on an hour of any kind of service from another member. There is no US$ value assigned to the unit of exchange, goods (unless they are quantifiable in terms of time) cannot be purchased with Time Dollars, and they are backed only by a moral obligation to reciprocate at some future time. The purpose of the Time Dollar system is to encourage and reward the co-production of common goods - like healthy families, community justice, or education - by the members of a community. Therefore (unlike Ithaca Hours and other community currencies), Time Dollars are "inflation-proof," and are considered a complementary, rather than an alternative, currency.
The intended uses of currencies may vary. Trust-backed currencies are naturally limited to small areas and are intended to function only as local currencies, to be used in a specific city or region. A possible exception is the Time Dollar, which (given new technology) can be exchanged over large geographic areas. By contrast, commodity-backed currencies are intended for use on a much larger scale. Liberty Dollars are marketed as an alternative national currency in the United States. Phoenix Dollars are intended primarily for use as investments in silver, rather than as an alternative currency, and are marketed for worldwide use.
Liberty Dollars differ from digital gold currency in that online gold currency can be redeemed for dollars, euros or other national currencies through various online services at the actual spot price of the metal. eLiberty Dollars can be redeemed for silver Liberty rounds or for paper Liberty Dollars at par—currently one troy ounce silver Liberty round for twenty eLiberty Dollars.
[edit] Liberty Dollar Base Values, "MoveUps", and the "Discount" & "Commission"
Liberty Dollar is based on the Liberty Dollar "Base Value" created by Bernard von NotHaus. Currently the Base Value of Liberty Dollar is $50 Liberty Dollars to one ounce of silver. One ounce Liberty Dollar gold pieces are now denominated $1,000 with a maximum charge of 10% over spot price with membership. The previous Base Values were $10 silver ounce, $20 silver ounce and $500 gold ounce. Non-members pay full face value for all currency except for certain Special and Numismatic items. Members' discounts range from 0% to 50%+ (actually, for short periods during crossovers it is possible that even members cannot buy Liberty Dollars at cost or less).
Liberty Dollar Associates and Merchants used to exchange for Liberty Dollars "at a discount", so they could "make money when [they] spend money." To further distinguish how Liberty Dollar works, von NotHaus transitioned to a commission structure in June 2007 where Associates and Merchants receive a commission in the form of extra Liberty Dollars when they place their orders. Regional Currency Officers have always received larger discounts, since they are the regional distributors and official representatives of Liberty Services.
The Liberty Dollar Associate and Merchant discounts can range from 0.0%-50%+ (zero to more than fifty percent) depending on where the price of silver is, relative to the Liberty Dollar Base Value, the Liberty Dollar Base Value Crossover Points, and the time periods the price has stayed above varying moving-day averages over 30, 60 or 90 days in a fluctuating market, based on Liberty Dollar formulas worked out by von NotHaus.[7][8][9][10]
[edit] Regional Currency Office
A Regional Currency Office is a kind of distributor of Liberty Dollars. In exchange for a fee paid to Liberty Dollar they can purchase Liberty dollars for resale at a discount. They are also authorized to purchase, convert, or perhaps exchange Liberty Dollars for Federal Reserve Notes.[3]
[edit] Legal Arguments
[edit] Federal Government response
Numerous individuals within the US Government have been interviewed regarding the Liberty Dollar. One Secret Service agent stated "It's not counterfeit money" while remaining "skeptical" of NORFED. Another agent warned that the Liberty Dollar "appears to be in violation of ."[11]
The promoter of the Liberty Dollar asserts that Claudia Dickens, spokeswoman for the U.S. Treasury Department's Bureau of Engraving and Printing, had previously said American Liberty Currency is legitimate. Dickens was quoted as having said "There's nothing illegal about this," after the Treasury Department's legal team reviewed the currency. "As long as it doesn't say 'legal tender' there's nothing wrong with it."[12]
In 2006 the U.S. Mint issued a press release stating that prosecutors at the Justice Department had determined that using Liberty Dollars as circulating money is a federal crime. The press release also stated that the “Liberty Dollars” are meant to compete with the circulating coinage (currency) of the United States and such competition consequently is a criminal act.[13][14]
The Liberty Dollar organization responded to the Mint's press release by stating that "[t]he Liberty Dollar never has claimed to be, does not claim to be, is not, and does not purport to be, legal tender."[15] The promoters of the Liberty Dollar have asserted that the Liberty Dollar is not legal tender, and that legal tender and barter are mutually exclusive concepts. The promoter asserts that the Liberty Dollar is a numismatic piece or medallion which may be used voluntarily as barter.[16]
[edit] Lawsuit: von NotHaus vs the U.S. Mint
On March 20, 2007, Liberty Services owner Bernard von NotHaus filed suit in the District Court for the Southern District of Indiana against the U.S. Mint's claims regarding the Liberty Dollar. Defendants include Henry M. Paulson, Secretary of the Treasury, Alberto R. Gonzales, former Attorney General of the United States, and Edmond C. Moy, Director of the Mint.[citation needed] The suit seeks a declaratory judgment that circulating Liberty Dollars as a voluntary barter currency is not a federal crime and an injunction barring the Defendants from publicly or privately declaring the Liberty Dollar an illegal currency and to remove any such declarations from the U.S. Mint's website.[17]
[edit] FBI / Secret Service raid
The Liberty Dollar offices were raided by agents of the Federal Bureau of Investigation (FBI) and the United States Secret Service on November 14, 2007. Bernard von NotHaus, the owner of Liberty Services, sent an email to supporters saying that the FBI took all the gold, silver, and platinum, and almost two tons of Ron Paul Dollars. The FBI also seized computers and files and froze the Liberty Dollar bank accounts.[18] Von NotHaus's email linked to a signup page for a class action lawsuit to recover the assets. At the same time, all forms on his website relating to purchases of Liberty Dollars became nonfunctional.
Copies of the email and the warrant documents have been posted to the website.[19] The seizure warrant[20] was issued for money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy.[21]
The local Evansville Courier & Press reported the email, stating that "FBI Agent Wendy Osborne, a spokeswoman for the FBI's Indianapolis office, directed all questions on the raid to the Western District of North Carolina U.S. Attorney's Office. A spokeswoman there said she had no information on the investigation. Bernard von NotHaus, the group's monetary architect and the author of the e-mail, did not immediately respond to a message seeking comment."[22]
The Associated Press quoted von NotHaus on November 16, 2007, as saying that the federal government was "running scared right now and they had to do something .... I'm volunteering to meet the agents and get arrested so we can thrash this out in court."[23]
As of April 2008, the case has not yet gone to trial.
[edit] Criticism
Because of inflation, Liberty Dollars cannot be bound to a specific valuation in United States dollars over time; Liberty Services maintains the parity of one Liberty Dollar to one US$1 by re-basing Liberty Dollars as the purchasing power of the US Dollar (Federal Reserve Note) falls, leading to the circulation of two different versions during re-basing transition periods.[24] Liberty Services has plans for further re-basing as the dollar continues to fall.[25] Note that this only deals with newly-created Liberty Dollars; regardless of US$ inflation, Liberty Dollars already in circulation are not re-based unless shipped back to Liberty Services for that purpose.
A one troy ounce Liberty Dollar has a silver value of 16.67 as of May 13, 2008. This Liberty Dollar is sold to merchants and "Liberty Associates" at $35.85, which is $19 above the spot price of silver (as of May 13, 2008) and is intended to be spent at its ALD50 monetary value, for a $33 premium over its intrinsic value.[26] For comparison, a one troy ounce proof American Silver Eagle (US$1 monetary value) is currently sold for US$31.95 by the U.S. Mint[27], a premium of $15 above the spot price of silver. Liberty Dollar distributors are given a large discount when exchanging US Dollars for Liberty Dollars.[28] U.S. Mint distributors are given a large discount when exchanging US Dollars for American Silver Eagles. These discounts are used for transportation, marketing and storage costs[citation needed].
Liberty Dollars are purchased at par for US$1 each, yet conversion from ALD to US$ is at discount based on commodity spot price.[29] As the US$ decreases in purchasing power, the intrinsic value of the ALD remains relatively constant. But the ability of a holder of ALDs to barter based on their intrinsic value is inefficient because of the lack of a highly liquid exchange process. U.S. national banks are legally prohibited to directly lend in Liberty Dollars.
Critics of the Liberty Dollar include Carl Watner, who publishes the voluntaryist newsletter The Voluntaryist,[30] and Las Vegas libertarian writer Vin Suprynowicz, who refers to Liberty Services as a multi-level marketing system.[31]
Some critics, including Watner, agree with the concept of hard money but disagree with Liberty Services' implementation, saying the "silver base" is extremely rigid compared to the spot price of silver, and recommend instead the use of generic silver rounds as currency. Furthermore, critics assert that stamping a dollar amount on the Silver Liberty defeats the purpose of measuring money in terms of weights of specie, and that the design of the piece may confuse some people into thinking that the Liberty Dollar is legal tender (forced tender) rather than a voluntary private currency.[citation needed]
[edit] References
- ^ http://www.libertydollar.org/news-stories/pdfs/1166043540.pdf
- ^ Liberty Dollar
- ^ The United States Mint Hot Items
- ^ Paul, Ron. "Statement Introducing the Free Competition in Currency Act", Congressional Record, U.S. House of Representatives, 2007-12-13. Retrieved on 2008-02-08.
- ^ http://www.transaction.net/money/glossary.html Transaction Net "Important Terms and Concepts" (glossary)
- ^ http://www.timebanks.org Time Dollars
- ^ Liberty Dollar
- ^ Liberty Dollar
- ^ Liberty Dollar
- ^ Liberty Dollar
- ^ http://www.norfed.org/news-stories/pdfs/libertybucks.pdf
- ^ http://www.norfed.org/news-stories/pdfs/y2klooming.pdf
- ^ http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=press_release&id=710 Justice Determines Use of Liberty Dollar Medallions as Money is a Crime
- ^ http://www.usmint.gov/consumer/index.cfm?action=HotItems U.S. Mint: NORFED’s Liberty Dollars
- ^ See [1] (emphasis in original).
- ^ Id.
- ^ Liberty Dollar
- ^ theRabidQuill » Frontal Assault on Freedom: FBI Raids Liberty Dollar
- ^ Liberty Dollar
- ^ http://www.libertydollar.org/legal/pdf/seizure_warrant_20071114.pdf
- ^ http://www.johnlocke.org/site-docs/meckdeck/pdfs/USAVLibdoll.pdf
- ^ Lesnick, Gavin. "Liberty Dollar office raided", Evansville Courier & Press, 2007-11-15. Retrieved on 2008-02-08.
- ^ Ryan Lenz, "Feds raid 'Liberty Dollar' HQ in Ind.", Nov. 16, 2007, Associated Press Yahoo News, at [2]
- ^ Liberty Dollar
- ^ Liberty Dollar
- ^ Liberty Dollar
- ^ [http://catalog.usmint.gov/webapp/wcs/stores/servlet/CategoryDisplay?catalogId=10001&storeId=10001&categoryId=10120&langId=-1&parent_category_rn=10191&top_category=10191 US Mint Online Product Catalog
- ^ Liberty Dollar
- ^ Liberty Dollar
- ^ Watner, Carl. Fed up with the Federal Reserve. Retrieved on 2006-09-02.
- ^ Vin Suprynowicz (March 2003). Letters to the Editor. Retrieved on 2006-09-02.
[edit] See also
- Digital gold currency
- List of community currencies in the United States
- Silver standard
- Silver as an investment
[edit] External links
- Liberty Dollar official website
- "'Liberty Dollars' Can Buy Users A Prison Term, U.S. Mint Warns" Elizabeth Williamson, October 10, 2006, Washington Post
- Southern Poverty Law Center analysis of NORFED
