Money on TrialBy Doug Hornig
We know that our readers are probably riveted by the trials and tribulations of Charlie Sheen and Lindsay Lohan. This is important stuff, no doubt. Chas and LiLo, they’re like, y’know, family.
But while their personal trials are playing out in sunny Southern California, on the other side of the continent another trial just wrapped up. Not for TV, nor the flash of still cameras. No microphones shoved in faces. In fact, virtually no media coverage at all. Yet this utterly ignored event just might have been the trial of the new century.
The defendant, in a sense, was money itself.
The question of what constitutes “money” was raised back at the dawn of human trade, when people first began to realize the limitations of a barter system. Over the centuries, many things were used as money, such as shells, cattle, salt and dozens of others, including human beings. But wherever they were available, gold and silver became the standard, for a host of reasons – rarity, durability, divisibility, portability and so on – with which readers of this letter are quite familiar by now.
In the end, money serves two key purposes. It’s a unit of exchange upon which two parties agree, thereby allowing it to be swapped for tangible goods and services. And it should be a store of value, allowing it to have roughly the same buying power next year as it does today, creating confidence in the user and permitting the accumulation of wealth. Precious metals meet both criteria, and meet them well.
What we use for money today, fiat currency unbacked by gold or silver, is adequate for the first purpose, but it fails miserably with the second, simply because there is no limitation on the amount of paper that government (which holds a monopoly) can print, and no possibility that it can hold its value.
When its authors came to write the U.S. Constitution, they gave to Congress the power to “coin Money, regulate the Value thereof, and of Foreign coin, and fix the Standard of Weights and Measures.” Immediately following comes the power to “provide for the Punishment of counterfeiting the Securities and current Coin of the United States.”
These provisions may seem straightforward enough, but they’re not. Though there is plenty of debate on the subject, many interpreters of the Constitution believe that when the Founders wrote “coin Money,” they meant exactly that, and that when they omitted the term “print,” that was on purpose. Those in this camp contend that the authors were specific about this because they had experienced the ruinous inflation that preceded the demise of the Continental, a paper currency that helped finance the Revolutionary War but became all but worthless by the end of it.
And of the second stipulation, the question is: what exactly constitutes a counterfeit coin?
Both of these were in play in the aforementioned trial – U.S. vs. BVNH, which opened on March 7 in federal court in Statesville, the county seat of Iredell County, in western North Carolina.
BVNH is Bernard von Nothaus. Some of our readers will no doubt be familiar with Bernard. He is the founder of Liberty Services (formerly known as NORFED, the National Organization for the Repeal of the Federal Reserve Act). And, more importantly, he is the creator of the Liberty Dollar, the act for which he is now under prosecution.
The Liberty Dollar – first created in October of 1998 – was intended to give Americans freedom of choice. It was for use by people who wanted to conduct their transactions in something of tangible value, rather than inherently worthless paper. Von Nothaus sees himself as a true patriot, offering a product that can function as a citizen’s defense against the ravages of inflation brought on by the systematic debasement of the greenback.
Thus was born his “money,” consisting of silver “rounds” – which are perfectly legal, as opposed to “coins,” which would not be – and certificates redeemable in silver. (There is a smaller number of gold dollars and certs, too.) I have a Liberty Dollar in my hand right now. (Does this make me a potential co-conspirator?) It was minted in 2006, has a face value of $20, and contains an ounce of .999 fine silver. A real bargain at today’s prices.
It’s a thing of beauty with an obverse of Miss Liberty that, on a very passing glance, might suggest an official silver dollar from the U.S. Mint. But even a minimal closer look reveals that it isn’t one. It even bears the maker’s Web address, and it ain’t usmint.gov (although if you go to libertydollar.org today, all you’ll find is a single banner that says: Site Removed Due to Court Order).
Alternative paper currencies are not exactly unknown elsewhere in the U.S. these days. BerkShares, for example, are a currency designed and issued for the Berkshire region of Massachusetts, intended to keep money in the area when locals trade amongst themselves. Launched in September of 2006, BerkShares are issued from 12 branch offices of five local banks, which will also convert them back into Federal Reserve Notes. They incorporate anti-counterfeiting features, are accepted by more than 370 businesses in Berkshire County, and over 2 million shares are in circulation.
In addition to BerkShares, we also have the Ithaca (N.Y.) HOURS (original model for them all), the Burlington (Vt.) Bread (whose motto is “In Each Other We Trust”), the Traverse City (Mich.) Bay Buck, and several more either in operation or planned.
None has been busted. But von Nothaus has. Why? Because he both produced coin-like rounds and backed his dollars with metal. Neither of which the government could tolerate as competitors to fiat dollars and coins worth less than their metal content. Also annoying was the Liberty Dollar’s wide acceptance, with about US$20 million worth – in gold-and-silver specie, redeemable certificates, and digital form – in circulation worldwide.
The mint warned him to stop. He didn’t.
On November 14, 2007, the feds took to the field. Agents from the FBI and Secret Service swarmed the Liberty Dollar Company’s (LDC) Indiana offices and Idaho production facilities. They seized everything in sight, including 9 tons of gold, silver, platinum and copper, along with all the company’s files and all its computers. They froze LDC’s bank accounts. They confiscated the gold and silver bullion that backed up the paper certificates and digital currency, and was securely held in a commercial vault on behalf of the LDC by Coeur d’Alene, Idaho’s Sunshine Mint. Even the dies for minting the Liberties were taken.
It was one of the larger and more egregious confiscations of private property in U.S. history. And no one cared. Outside of the Internet and a handful of right-wing talk shows, virtually no one spoke out publicly against this atrocity. Including, ironically, Ron Paul, whose image had been featured on some of Liberty’s rounds and who was then gearing up for his presidential campaign.
Despite the lack of resemblance between his products and official U.S. coins, von Nothaus was charged with counterfeiting, along with three colleagues, who are being tried separately later on this spring.
The intervening years brought a tangle of legal shenanigans too convoluted to go into here, but the takeaway is this: von Nothaus was offered a plea bargain and turned it down, saying that this raid “was a direct assault against the U.S. Constitution and your right to own and use gold and silver in any way you choose,” and vowing to fight the charge all the way to the Supreme Court.
(As an aside, it’s worth noting that North Carolina is the site of the trial because that’s where the initial complaint against Liberty currency was sworn out. All in the “public interest,” of course. According to a government spokesperson, “Merchants and banks [around the country] are confronted by confused customers demanding they accept Liberty Dollars.” For anyone needing a clear illustration of the difference between a reason and an excuse, there it is.)
The face-off down in Statesville was a classic confrontation between a single individual and the full might of the U.S. government, over some pretty basic rights.
Most gave von Nothaus little chance from the get-go. But considering public sentiment about our fiscal mess these days, a conviction was by no means a slam dunk. It was not inconceivable that twelve good folks and true would take the side of liberty.
You may remember a column I wrote not long ago in which I detailed the efforts of legislators here in my home state, the Commonwealth of Virginia, to launch a study into the possibility of developing our own currency. Among other things, they put their philosophy down in writing, and it’s a credo that puts them on a collision course with the feds every bit as inevitable as Bernard von Nothaus’s: “Americans may employ whatever currency they choose to stipulate as the medium for payment of their private debts, including gold or silver, or both, to the exclusion of a currency not redeemable in gold or silver that Congress may have designated 'legal tender'.” That must’ve warmed Bernard’s heart.
I remember my colleague David Galland once opening a Casey conference by saying: “So who is Lindsay Lohan, anyway, and why do we care how much she drinks?” Good question. I’m sure, given the intellectual quality of our readership, your answer would be, “We don’t.” But far more Americans are fascinated by her trials than have even heard of the supremely important one down in North Carolina. And that’s sad. Because von Nothaus’s fate matters, to all of us, an awful lot more than whether LiLo is headed for jail or rehab.
As I was finishing this article last Friday, the verdict came down, and von Nothaus sent a message to his email list:
God help you and our country as America descends into a hellish hyperinflationary future without the benefits of the Liberty Dollar.
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