Liberty dollar (private currency)

From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by Alexbot (talk | contribs) at 18:16, 6 December 2008 (robot Adding: fr:Liberty Dollar). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Liberty dollar
American Liberty Dollars
ISO 4217
CodeNone
Unit
Symbol$ or ALD (non-ISO 4217; used for multicurrency accounting)‎
Demographics
User(s)Individuals and businesses primarily in the United States
Issuance
Issuing authorityLiberty Services
 Websitelibertydollar.org
MintSunshine Mint
 Websitesunshinemint.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 a raid by the Federal Bureau of Investigation (FBI) and the U.S. Secret Service (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] Von NotHaus retired from Liberty Dollar in October 2008, to found the Free Marijuana Church in Hawaii.[2] [3]

The Liberty Dollar warehouses were raided and the contents confiscated by the FBI and Secret Service on 15 November 2007. The FBI states that this confiscation is intended to prevent people mistaking Liberty Dollars for legal tender; the Liberty Dollar organization is accused of illegally presenting the currency as a legal alternative to the United States dollar. To date, no one has been accused of any crime. The gold, silver, and copper seized has been accused of being proceeds of crime, but no criminal charge is pending. [4]

Philosophy

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.

NOTE: On Easter Sunday, March 23, 2008 the Liberty Dollar moved up from the $20 base to the $50 Silver Base with the introduction of the new one ounce $50, two-fifths ounce $20, one-fifth ounce $10 and the one-tenth ounce $5 Silver Liberty

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.[5] 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."[6] In response, Liberty Dollar filed suit to demand that the US Mint stop making this claim of criminal conduct. [7]


Function

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.[8] Only the allocation of precious metals stands in a coiners way. 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 [9]: 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.

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.[10][11][12][13]

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]

Legal Arguments

Federal Government response

Numerous individuals within the US Government have been interviewed regarding the Liberty Dollar. One U.S. 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 18 U.S.C. § 514."[14]

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."[15]

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.[16] The Justice Department also stated that the Liberty Dollar was confusingly similar to actual U.S. currency, and the language used on NORFED's website was deceptive.[17]

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."[18] 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.[19]

Lawsuit: von NotHaus versus 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.[20]

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 customers and 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.[21] Most of the precious metal seized was not owned by von NotHaus or Liberty Services, but was being warehoused by Liberty Services on behalf of its customers.[citation needed] Von NotHaus's email linked to a signup page for a class action lawsuit so that the victims might recover their 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.[22] The seizure warrant[23] was issued for money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy.[24]

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 email, did not immediately respond to a message seeking comment."[25]

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."[26]

On December 14 2007 von NotHaus sent out another email, alerting his customers and supporters that the FBI was "moving aggressively to forfeit 'their' seizure for auction". On June 17 2008 twelve of the class action lawsuit's plaintiffs filed a Rule 41(g) motion to retrieve their property. [27] The 41(g) motion cites violations of law and of the Fourth Amendment rights of the plaintiffs.

As of November 2008, the case has not yet gone to trial.[28]

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$1 by re-basing Liberty Dollars as the purchasing power of the US Dollar (Federal Reserve Note) falls, leading to the circulation of two different versions during re-basing transition periods.[11] Liberty Services has plans for further re-basing as the dollar continues to fall.[29] Note that this only deals with newly-created Liberty Dollars; regardless of US$ 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.[30] 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[31], 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.[32] 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.[33] 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,[34] and Las Vegas libertarian writer Vin Suprynowicz, who refers to Liberty Services as a multi-level marketing system.[35]

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]

See also

References

  1. ^ http://www.libertydollar.org/news-stories/pdfs/1166043540.pdf
  2. ^ Thomas, Rick (September 19, 2008). "Legal issues still dog Liberty Dollar". Coeur d'Alene Press.
  3. ^ von NotHaus, Bernard. "My Story to Higher Consciousness".
  4. ^ http://www.gata.org/node/5748
  5. ^ Liberty Dollar
  6. ^ The United States Mint Hot Items
  7. ^ http://www.libertydollar.org/ld/legal/updates.htm
  8. ^ http://www.transaction.net/money/glossary.html Transaction Net "Important Terms and Concepts" (glossary)
  9. ^ http://www.timebanks.org Time Dollars
  10. ^ Liberty Dollar
  11. ^ a b Liberty Dollar
  12. ^ Liberty Dollar
  13. ^ Liberty Dollar
  14. ^ http://www.norfed.org/news-stories/pdfs/libertybucks.pdf
  15. ^ http://www.norfed.org/news-stories/pdfs/y2klooming.pdf
  16. ^ 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
  17. ^ http://www.usmint.gov/consumer/index.cfm?action=HotItems U.S. Mint: NORFED’s Liberty Dollars
  18. ^ See [1] (emphasis in original).
  19. ^ Id.
  20. ^ Liberty Dollar
  21. ^ theRabidQuill » Frontal Assault on Freedom: FBI Raids Liberty Dollar
  22. ^ Liberty Dollar
  23. ^ http://www.libertydollar.org/legal/pdf/seizure_warrant_20071114.pdf
  24. ^ http://www.johnlocke.org/site-docs/meckdeck/pdfs/USAVLibdoll.pdf
  25. ^ Lesnick, Gavin (2007-11-15). "Liberty Dollar office raided". Evansville Courier & Press. Retrieved 2008-02-08.
  26. ^ Ryan Lenz, "Feds raid 'Liberty Dollar' HQ in Ind.", Nov. 16, 2007, Associated Press Yahoo News, at [2]
  27. ^ http://www.dgcmagazine.com/index.php?q=node/116
  28. ^ http://www.libertydollar.org/legal/pdf/10_30_08_letter_to_claimants.pdf
  29. ^ Liberty Dollar
  30. ^ Liberty Dollar
  31. ^ [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
  32. ^ Liberty Dollar
  33. ^ Liberty Dollar
  34. ^ Watner, Carl. "Fed up with the Federal Reserve". Retrieved 2006-09-02.
  35. ^ Vin Suprynowicz (2003). "Letters to the Editor". Retrieved 2006-09-02. {{cite web}}: Unknown parameter |month= ignored (help)
Retrieved from "https://en.wikipedia.org/w/index.php?title=Liberty_dollar_(private_currency)&oldid=256265928"