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U.S. Mint Afraid of Competition from Alternative Money
Background - The Liberty Dollar:
The Liberty Dollar is an ingeniously simple alternative form of money created to compete with Federal Reserve Notes, also known as the fiat currency of the United States of America, by Bernard von NotHaus. What's so inventive about von NotHuas' money, you ask? Well, it's backed by gold and silver, and in many cases, it is gold and silver.
Brilliant!
Follow up:
Liberty Dollars naturally retain their value due to their tie to inherently scarce precious metals (Unless science finds a cheap way to change non-scarce atoms into scarce atoms a la alchemy, the total quantity of precious metals on planet Earth is limited by nature). Compare this to the widely circulated, hot-potato-esque fiat currency being printed at breakneck pace by the U.S. Bureau of Engraving and Printing, part of the U.S. Department of the Treasury. Our "Federal Reserve Notes" represent nothing more than the hollow promises of our governing officials. Why? Because their scarcity is tied to those promises and whims. When government is so often confused with control, what better refutation exists than to point out the so-very-uncontrolled nature of fiat currency! Would you risk tying your wealth up in dollar bills? I think not!
Therefore, a naturally valuable currency like the Liberty Dollar makes for a viable alternative.
Well, not everyone thinks so.
U.S. Mint Up in Arms over Competing Currency:
On September 14, 2006, the U.S. Mint, another branch of the U.S. Treasury, issued a press release decrying the Liberty Dollars. In a great example of persuasive writing gone wrong, the release starts as follows:
Washington, D.C. — The United States Mint urges consumers considering the purchase or use of “Liberty Dollar” medallions, marketed by the National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED), to be aware that they are not genuine United States Mint bullion coins, and not legal tender. These medallions are privately produced products that are neither backed by, nor affiliated with, the United States Government.
In other words, be sure to note that Liberty Dollars do not derive their value from the U.S. government!
Excellent!
The release goes on to say:
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.
The U.S. Mint might want to get their facts straight. Per the Liberty Dollar website:
Andrew Williams, a spokesman for the Federal Reserve in Washington, D.C.:
"There is no law that says goods and services must be paid for with Federal Reserve notes. Parties entering into a transaction can establish any medium of exchange that is agreed upon."
As far as the government is concerned, exchanging gold for a suit is just bartering goods. There's nothing illegal about that. And Liberty Dollars don't claim to be "legal tender" - quite the contrary, they make it clear they are not legal tender:
The Liberty Dollar and other precious-metal mintings distributed by NORFED, Inc., dba the Liberty Dollar, never have claimed to be, do not claim to be, are not, and do not purport to be, legal tender, or a coin.
From what I can discern from the U.S. Mint's release, they seem more upset that the Liberty Dollar "rounds" or "medallions" appear so official:
Consumers may find advertisements for these medallions confusing and should take note of several issues related to them. The advertisements refer to the product as "real money" and "currency." These medallions might look like real money ...
However, despite their misleading appearance, NORFED "Liberty Dollar" medallions are not genuine United States Mint coins, and they are not legal tender.
So what? If a consumer transacts with these coins, how are they harmed? If they willingly receive a Liberty Dollar in payment for a good or service, will they bear the same risk of inflation that comes with U.S. Dollars? Is there any risk that the silver coin they receive will suddenly become worthless? Of course not! That's the whole point!
Also notice the suggestion that Liberty Dollars aren't "real money." I can only conclude that either the U.S. Mint ironically has no concept of what money is or should be or they truly believe that money can only exist as ordained by fiat. Hogwash.
The WaPo article:
The Washington Post picked up the Liberty Dollar, NORFED - U.S. Mint story and published an article on October 10th. A hardly enlightening piece, the article has a few eerie soundbytes, not the least of which include:
True story [Regarding the story of von NotHaus's creation of the Liberty Dollar], phony money. So says the U.S. Mint, which would like to remind Liberty Dollar users that since the United States already has its own currency, the only thing Liberty Dollars buy in these parts is a jail term. ...
Norfed Executive Director Michael Johnson says the group isn't aiming to overthrow the American monetary system ...
But there's a potentially more sinister side to all this. A 1999 report by the Southern Poverty Law Center calls Norfed a far-right anti-government group that has "long claimed that American dollars are . . . part of a vast conspiracy by international bankers to defraud the rest of the world." The center links some Norfed devotees to far-right hate groups.
"That definitely is not the philosophy of the organization," Johnson [Representative of NORFED] said. "I've been a Republican for most of my life. . . . We are focused on the mainstream. . . . I guess we are libertarian. But definitely not anti-government."
What a mess. Elizabeth Williamson of the WaPo is not-so-subtly suggesting that NORFED is some kinda crazy, conpiracy theorying, cloak and dagger hate-group. She might as well have associated NORFED with Al Qaeda. NORFED sure sounds like a terrorist group.
I was disheartened by Johnson's response. Isn't anti-fiat-currency ipso facto anti-government? Even diet libertarians are inherently anti-government to some extent.
Quibbles with Johnson aside, the WaPo article is a great manifestation of the press becoming an arm for the government. What better way to support the state than to suppress the evils of inherently valuable money than to suggest that its use might land you in prison?!
Conclusion:
The moral of this story is tri-fold (Har, har):
- Private enterprise can produce alternative solutions to government monopoly.
- The government hates competition.
- The minters and printers of money have no clue what money is or what money should be.
I don't expect to see someone drop a Liberty Dollar in my hand any time soon. Bad money will continue to drive out good money so long as others are willing to accept the ever-inflating U.S. dollar. Nonetheless, it warms my heart to know NORFED is giving subtly subversive, inherently valuable currency a chance -- even if it is a chance in hell.
(H/T Lew Rockwell)
Other links on this story (All from The International Libertarian):