On the morning of Wednesday, November 14, 2007 the FBI and the Secret Service raided Liberty Services, an Evansville, Indiana-based organization. The organization has issued gold, silver, platinum and copper coinage (as well as paper notes backed by these said metals) for use as voluntary, private barter instruments. Search and seizure warrants were served, and literally tons of gold, silver, platinum and copper were confiscated--some of which bore the likeness of presidential candidate Ron Paul. Computers, files and records were also taken, and the organization's bank accounts were frozen. However, as of the time of this article, no arrests have been made. While the Ron Paul campaign is not officially affiliated with Liberty Services or the Liberty Dollar, they acknowledge its existence.[1] Liberty Dollars have been issued since 1999, and currently there are over 100,000 "Liberty Associates" (Liberty Dollar users) and twenty million Liberty Dollars in circulation.[2]

In September 2006, the United States Mint publicly claimed Liberty Dollars to be "illegal currency," issuing warnings about these coins and certificates on its website.[3] Liberty Services meanwhile claimed that Liberty Dollars are not illegal because they are not "currency"--they are intended for transactions between mutually agreeing parties. The coins share some similar characteristics with coins issued by the US Mint because they bear the words Liberty, USA and Trust in God. Such notations are consistent with the principles of the US Founding Fathers who advocated a gold and silver backed currency. In response to the declaration by the United States Mint, Liberty Services filed suit in March 2007 against the Director of the US Mint and the US Treasury Secretary, ordering a retraction of the statement that Liberty Dollars are "illegal currency."[4] At the time of the raid, that lawsuit was still pending.

Liberty Services has issued statements conveying that the use of Liberty Dollars does not eliminate any tax liabilities of its users, nor are Liberty Dollars counterfeit--since they make no claim of being either US coinage or Federal Reserve Notes.[5] There is, however, a political agenda behind the organization--formerly called NORFED--the National Organization for the Repeal of the Federal Reserve Act. Yet, issuing Liberty Dollars for use as an alternative option for "willing spenders and vendors" is no different than using Disney Money or gift certificates of any kind. Their use is completely voluntary--which makes them distinct from legal tender such as Federal Reserve Notes. According to Liberty Services founder Bernard von NotHaus, because the inflationary policies of the Federal Reserve have resulted in a 96 percent loss in the value of the US Dollar since the 1913 inception of the Fed, new alternatives are necessary.

The basis of the United States Mint's claim is that they (the Mint) alone have the right to coin money as authorized by Congress. Again, this does not preclude anyone from bartering with anything they wish--including gold, silver, platinum or copper coins that bear the engraving of Liberty Dollar--so long as these coins are not misrepresented as "legal tender" or "current money." In fact, a Federal Reserve spokesperson corroborated this viewpoint by saying in response to the Liberty Dollar that, "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."[6]

What makes this issue particularly pressing today (after all, Liberty Services has operated successfully for nearly ten years) is that a decline in the value of the US Dollar is occurring simultaneously with (and no doubt causing, in part) a meteoric rise in precious metals prices. And a similar rise is occurring in the campaign of Ron Paul, who is on the record for being a hard money Constitutionalist, and who at one time wrote a book entitled The Case for Gold. It is likely for this reason that Liberty Services had a vested interest in his campaign.

The Liberty Dollar was designed precisely to protect its users from such aforementioned declines in value--which Federal Reserve Notes (US Dollars) are subject to as a result of inflation. Inflation is defined here not as rising prices, but as an increase in the supply of money resulting in higher prices--the Monetarist definition. As an interesting aside, Liberty Dollar detractors regard these coins made of precious metals with intrinsic value as "funny money" arguing instead for the legitimacy of paper Federal Reserve Notes which are backed by nothing, printed at will, and declining in value as a result.[7] This is also the basis for Ron Paul's opposition to paper currencies and to the Federal Reserve itself. In fact, Congressman Paul has continually confronted Federal Reserve Chairman Ben Bernanke on the issue of inflation during House Banking Committee sessions.[8]

In truth, Liberty Services has had an agenda of providing an alternative to Federal Reserve Notes by creating a new option. It is a simple matter of supply and demand: If there is demand for a new alternative there will likely be less demand for the existing option(s). Yet, the crucial question remains: Does this make the Liberty Dollar illegal? Put another way, is it illegal to compete with the government? The answer to both questions is definitively no--this is the free market in action. Is it illegal for the private company Federal Express to cut into the business of the United States Postal Service? Of course not. Are private schools in violation of the law for "competing with" public schools? Once again, no! Competition against the government is not illegal. The possession of and use of Liberty Dollars as a free market alternative to Federal Reserve Notes and United States coinage is not in violation with the law, and this is why a blatant violation of freedom and liberty occurred on the 15th of November. The FBI seized--outright stole--goods that were not only the property of Liberty Services, but of their customers as well, who were awaiting shipment of their products.

So are the creators of the Liberty Dollar--and its users--simply a bunch of anti-government nut jobs? Are they criminals? Or do they have every right to promote and use an alternative means of exchange if they so wish? It is my opinion that not only do they have that right, they are very prudent to do so. After all, the Liberty Dollar has doubled in value since its inception due to rising precious metals prices, while the US Dollar has lost--and continues to lose--considerable value. Under these circumstances, the Liberty Dollar has increasingly illuminated the inherent weakness of its main competitor, the US Dollar. This being the case, it has likely become a very unwelcome beacon to some government officials. Thus, an intimidating raid took place. It is unfortunate that new and viable alternatives that would ultimately benefit US citizens are being targeted. And while it is also extremely concerning that such authoritarian (and illegal) measures are being used against the free market and individual choice, it is at the same time vindicating that the strength of the movement for liberty and the free market is such a serious and credible threat that it must be quashed. Fortunately, such countermeasures against liberty are destined to fail in the long run.

References:

1. ^ http://www.nysun.com/article/66542
2. ^ http://www.libertydollar.org
3. ^ http://www.usmint.gov/consumer/index.cfm?flash=yes&action=hotitems
4. ^ http://www.gata.org/node/5285
5. ^ http://www.libertydollar.org/ld/faqs
6. ^ http://www.americanfreepress.net/html/federal_reserve_fears_honest_c.html
7. ^ http://blogs.usatoday.com/ondeadline/2007/11/feds-seize-two.html
8. ^ http://www.youtube.com/watch?v=nj9KHJRRUbQ

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© 2007 Chris Geerlings

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