FBI Raids Liberty Dollar: Why Neocons Hate Complementary Currencies
On 15 November at eight in the morning, a dozen FBI and Secret Service Agents descended on the Liberty Dollar office in Evansville, Indiana. The agents sequestered all the gold, silver and platinum in the office, including some two tons of Ron Paul Dollars that had just arrived from the mint some days ago. They also took all records, files and computers and froze the bank accounts.
American Liberty Dollars - Image source: Wikipedia.
Liberty Dollars are a private or complementary currency, backed by the value of precious metals and expressed through coins, paper certificates and electronic digits for easy transfer.Bernard von NotHaus, the man behind the currency, says in a note to currency holders and supporters:
We have no money. We have no products. We have no records to even know what was ordered or what you are owed. We have nothing but the will to push forward and overcome this massive assault on our liberty and our right to have real money as defined by the US Constitution. We should not to be defrauded by the fake government money.But to make matters worse, all the gold and silver that backs up the paper certificates and digital currency held in the vault at Sunshine Mint has also been confiscated. Even the dies for mint the Gold and Silver Libertys have been taken.
This in spite of the fact that Edmond C. Moy, the Director of the Mint, acknowledged in a letter to a US Senator that the paper certificates did not violate Section 486 and were not illegal. But the FBI and Services took all the paper currency too.
The possibility of such action was the reason the Liberty Dollar was designed so that the vast majority of the money was in specie form and in the people's hands. Of the $20 million Liberty Dollars, only about a million is in paper or digital form.
I regret that if you are due an order. It may be some time until it will be filled... if ever... it now all depends on our actions.
Everyone who has an unfulfilled order or has digital or paper currency should band together for a class action suit and demand redemption. We cannot allow the government to steal our money! Please don't let this happen!!! Many of you read the articles quoting the government and Federal Reserve officials that the Liberty Dollar was legal. You did nothing wrong. You are legally entitled to your property. Let us use this terrible act to band together and further our goal – to return America to a value based currency.
A legal defense fund should be established soon.Anyone holding Liberty Dollar paper certificates or having claim to some bits of the electronic currency can sign up to join the legal action to recover their property. Even if you do not own any Liberty Dollars but want to join in the fun, there is no problem. According to von NotHaus:
There is still $20 million Liberty Dollars in circulation. Simply get some paper Liberty Dollars and sign up for the Class Action Lawsuit.
- - -
The action does not come completely out of the blue. After a similar raid on e-gold in December 2005, the company running that currency wascharged with money laundering in April this year. Then in September 2007, came a stern government warning urging consumers and businesses to stay away from Liberty Dollars. Becky Bailey, spokeswoman of the U.S. Mint, said that "the United States Mint is the only entity that can produce coins".
Von NotHaus and other proponents of alternative currencies do not agree. Citizens, they argue, have the right to arrange their economic and contractual relations, which includes the establishment and distribution of symbols that signify value to facilitate economic exchange.
Why squash this currency?
For one, alternative currencies such as the Liberty Dollar are an attractive way for many to say no to what is perceived a disastrous economic policy. The dollar has been falling from grace internationally and is losing its status as the exclusive reserve currency and the mediator of international trade.
Inflation and a general decline of the US currency are often blamed on the fact that in 1971, then president Nixon abandoned the gold standard and opened the door to the creation of dollars as "fiat money", currency that is not backed by precious metals but issued by government decree. So gold backed money such as the Liberty Dollar is a way of repudiating what is perceived as a step in the wrong direction.
War economy
The capacity of the US government to borrow by simply having the Fed print more dollars and by allowing banks to create the electronic bits is an important pre-condition for its capability to maintain a large military presence in numerous countries around the world and to fight wars abroad. Some time ago I asked in an article: "Will Oil End The War Economy?". The move to the Euro as a trading currency for oil was only beginning then. Iraq was the first country to make the change, but now other countries are following suit.
The significance of a move away from the dollar to other currencies as a medium for international trade is first and foremost a loss of value of the dollar on the international market. As a consequence, military action will come more and more costly for the US economy.
And now there is a presidential candidate who has clearly stated that he would bring America's troops home and instead of aggression on foreign countries he would prefer diplomacy and trade. Ron Paul would also, he says, put the dollar back on some kind of a gold standard. And remember, two tons of Ron Paul Liberty Dollars were taken by government agents in the raid in Evansville.
Store of value vs. Circulation
Currencies in general are suffering from a problem that is not immediately obvious. We expect them to fulfill two functions. One is in conflict with the other.
On the one hand, we expect a currency to provide a way to store value 'for a rainy day'. We tend to save money and put it away, expecting to use it when we need to. Metal-based currencies are ideal for this as the material itself that the currency is made of has commercial value, so once you have a coin of gold it practically can never get cheaper.
On the other hand, the more immediate expectation we have of a currency: it must circulate with ease and stay in circulation, because that is what allows us to use money for the daily exchange of goods and services. Unfortunately, a gold-based currency won't be easily available for use as a mediator of our daily buying and selling. In part because metal is heavy and gets somewhat unwieldy once you deal in larger sums, and a bit because we tend to hang on to the beautiful shine of it, so we tend to spend it reluctantly.
So while a metal-based currency, such as the Liberty Dollar is an excellent hedge against inflation, it isn't ideal for that other use - the daily buying and selling, the economy of exchange. Yet we generally expect one currency to be good for both functions.
Inflation vs. Deflation
Inflation is the loss of relative value of a currency. Since the value of anything is based on a balance of supply and demand, a currency tends to inflate when there is too much of it in circulation in relation to the value of goods and services the currency is used to trade.
One argument of those who would prefer a precious-metal based currency is that money based on gold and silver tends resist inflation. That is true. Indeed metal-based money tends to deflate, meaning its value goes up. However deflation may be just as disruptive to the economy or even more so than inflation. Deflation leads to economic stagnation and eventually recession. Factories closing, people going hungry, not enough money to go around. Misery.Balance
What we need in monetary matters, as in everything else, is balance. Balance is a matter of supply and demand. It means adjusting the total available monetary mass to match the total available value of goods and services to be traded. And for that, a paper based currency or a digital currency is vastly preferable to a metal-based one. The supply of money can be adjusted with ease. A paper based and even better a bit-based currency can be kept free of inflation if only the balance of supply and demand is respected.
Free Market
Perhaps the future will bring a variety of currencies, some that we rather invest in to keep for the long term, and some we use for everyday exchange. Why should we be bound to use only one - the one imposed by a state-enforced banking monopoly?
So while I think that gold and silver currencies like the Liberty Dollar are not ideal, they should be allowed to exist, as should be paper and internet-based currencies that merely exchange electronic bits. In a truly free market, we should be able to choose our currencies freely. After all, it's only fair.
More recent coverage:Unfair seizure of coins (link no longer active)
The company has been in business for 10 years and they have not been targeted by the U.S. government until now. In fact, both the United States Mint and the Federal Reserve have admitted that what the company was doing was perfectly legal. What is the reason for the raid by the FBI if the company had been operating lawfully for nearly 10 years?Earlier this year the company began minting two new coins, the 2008 "Peace Dollar" with the words "STOP THE WAR" on the reverse side and the 2008 coin commemorating the presidential campaign of Ron Paul. The Feds just have to stop Representative Ron Paul somehow, since he is the only presidential candidate who is pro-liberty.
June 2008: US Government Is Sued Over Seizure of Liberty Dollars
A dozen people around the country filed suit in U.S. District Court in Idaho this week demanding the return of all the copper, silver, gold, and platinum coins — more than seven tons of metal in all — that the FBI and Secret Service seized in November during raids of a mint in Idaho and a strip mall storefront in Indiana.The Justice Department had decided that the coins, many of which bear the familiar symbol of Lady Liberty and the phrase "TRUST IN GOD," were being illegally marketed as government-sanctioned currency...
posted by Sepp Hasslberger on Saturday November 17 2007
updated on Friday October 15 2010URL of this article:
http://www.newmediaexplorer.org/sepp/2007/11/17/fbi_raids_liberty_dollar_why_neocons_hate_complementary_currencies.htm
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