Friday, November 16, 2007

FBI Raids Liberty Dollar: What The Hell is Going On?

Ron Paul has been talking up the gold standard for years, and early this year a fellow named Bernard von NotHaus decided to honor him by creating a--well, let's say a "coin-like object" called the Liberty Dollar with Paul's likeness on it. The price for this one troy ounce silver--ah, "piece" is $25, of which $5 is going to the Paul campaign.

[Thanks to for the image.]

Apparently, someone over in Big Government doesn't like this idea. Watch this fun video from for a run-down:

Liberty Dollar Video

I find this rather scary. What could be illegal about creating a collectible--oh let's just call it a medallion? Is it the campaign angle that the FBI didn't like? Or is it something Mr. von NotHaus did?

Well, yes, if the government is correct. According to TheStreet, the raid was "aimed at stamping out an illegal currency."

Here's more on the story from the Associated Press. From this article, we find out that NotHaus is the "founder of the National Organization for the Repeal of the Federal Reserve Act & Internal Revenue Code."

Further down in the article we read this:

"The organization, which is critical of the Federal Reserve, has repeatedly clashed with the federal government, which contends that the gold, silver and copper coins it produces are illegal. NORFED claims its Liberty Dollars are inflation free and can restore stability to financial markets by allowing commerce based on a currency that does not fluctuate in value like the U.S. dollar."

Now, there's a claim that's difficult to prove in today's economic environment. Silver and gold have both been all over the map since 2000 and even before. But that doesn't disprove his underlying thesis, in spite of this apparent inconsistency with reality. (More on that in another post.)

The article says that his organization "has produced an estimated $20 million of its own paper currency in the past two decades, claiming its $1, $5 and $10 denominations were backed by silver stored in Coeur d'Alene, Idaho." Eight months ago, he also "filed a lawsuit in federal court in Evansville seeking a permanent injunction to stop the federal government from labeling the Liberty Dollar an illegal currency."

Apparently, that didn't work.

NotHaus seems to be sacrificing himself for a fight. He's definitely the David trying to irritate Goliath to prove a point--one that is well taken, if you ask me. I applaud this endeavor; but I'm not sure he's going about it in a way guaranteed to win, or even to solicit public support, and even if he takes it to the Supreme Court. That doesn't mean his premise is immoral, or that it's not desirable to change our present laws regarding legal tender.

Other attempts to use private money, whether coined or paper, are going on at the moment. However, the government has raided or challenged none of these. Obviously, von NotHaus has struck a nerve. This case deserves watching closely. We'll have to wait until the courts decide who is overstepping the bounds, NotHaus or the feds. What seems certain is that NotHaus has gotten the fight he was aiming for.

Here's another article on the subject.

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