Liberty Dollar

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About

The Liberty Dollar was a precious-metal-backed private currency in the United States. Creator Bernard von NotHaus was found guilty on a number of charges on 2011-03-18 and is currently (June 2011) free awaiting sentencing.

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Arguments

Some of the charges seem clearly false, such as the charge of forgery: the coins did not have more than passing resemblance to US tender, and were clearly of different design, although the FBI release claims similarity:

...the Liberty coins were marked with the dollar sign ($); the words dollar, USA, Liberty, Trust in God (instead of In God We Trust); and other features associated with legitimate U.S. coinage.

NotHaus points out that the word "dollar" is used in currencies around the world, and yet they are not regarded as forgeries of US dollars.

One source says:

...apparently the Secret Service had approached them on multiple occasions over a period of months: at first in a friendly & informative manner, and then in an increasingly strict manner, before they were busted.

"Excuse me, do you realize that the coins you're minting could be easily confused with US currency? That would be considered counterfeiting and that's against the law."

"Hey, wake up! What you're doing is illegal! You really need to stop now or you're going to get busted!"

"Now we're warning you: if you don't stop now, we're going to get a warrant and pick you up!"

"OK, three warnings are enough. You have the right to remain silent...."

Whether or not the coin designs were too similar to US coinage, there was apparently (but only according to this source) plenty of warning and plenty of time to find an acceptable design.

The same source observes that this wasn't an attempt by the federal government to quash a rebellious ideology, because the people who started Ithaca Hours "were "a bunch of DFHs" ("Dirty F---ing Hippies") with the usual range of dissident ideas and protestful speech, but they have never gotten in any trouble because they did it right."

Another commenter on the same blog post adds that

the idea of the Liberty Dollar was to be in the face of the Federal Reserve System and get the law repealed. One way to do that is to 'violate the law' - and that is what Benard did.

If true, this would explain both the decision to mint coins and why the warnings were ignored.

The charge of issuing private coinage seems more clear-cut, although it's not clear why there would be a law against private coinage (USC 18 §486) and not one against private paper currency, or private currency in general.

NotHaus also points out that Liberty was very careful never to use the word "coin" in reference to the Liberty Dollar. NotHaus argues that the Liberty Dollar is actually a new invention -- private voluntary barter currency -- for which there is no legal term (though he accepts "medallion" as being the closest legal equivalent).

Conclusions

Although this argument is touched on only briefly (at most) in the documents we currently have available, it would appear that Liberty Dollar is clearly in violation of US Code Title 18 Part I Chapter 25 Section 486, which states:

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

Von NotHaus attempted to evade this law by describing Liberty Dollars as "medallions", but even so they were clearly being sold and used as "current money".

Fortunately, this law does not say anything about non-physical forms of currency such as BitCoin.

What is not clear is whether there is any legitimate need for this law, or whether the benefits outweigh the artificial dependency it creates.

Links

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Reference

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