Liberty Mint Raid

November 20, 2007 11:00 AM

Secret Service and FBI raid Liberty Mint, arguments of counterfeiting versus constitutional right to commerce ensue!I caught this on NPR this morning. It seems the US Mint doesn't like alternative currencies circulating within the US. The organization in question wants to abolish the Federal Reserve and the US mint and claims that both are the cause for the excessive inflation.

At the risk of sounding shrill and/or sarcastic; these folks amuse me. The basic premise of their mint seems to be one of tax dodging and they love Ron Paul so much that they released currency with his face on it. This has been done before by less.... professional... people.

The Liberty Mint seems to feel that the only constitutional and moral solution to our current economic is to print money actually backed by real valuable metals. And they claim that the US Mint making money is unconstitutional despite some evidence to the contrary (scroll down on last link).

I'm pretty sure I don't buy their arguments. But at least they weren't actually counterfeiting... or so it seems. Were they violating the constitution or laws of this land? Or are they patriots? hmm...

posted by Sam.Burdick (97 comments total)

Their website explicitly details how to trick people into accepting it as currency, so yeah, I'd call it a criminal enterprise.
posted by Pope Guilty at 11:06 AM on November 20, 2007

Also, "Liberty Mint" sounds like a candy sold during WWII.
posted by Pope Guilty at 11:07 AM on November 20, 2007 [2 favorites]

Help our Troops! Buy Liberty Mints Kids! (action figure not included)
posted by Sam.Burdick at 11:09 AM on November 20, 2007

Article 1, Section 8:
"The Congress shall have Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;"

Hardly a question about freedom.

The problem is that they minted coins in dollar denominations, instead of the amount of the metal. Only the government can decide whether something is a dollar or not.

And backing money in metals is stupid, for a wide variety of reasons.
posted by Pastabagel at 11:10 AM on November 20, 2007

I like how they're selling their dollars for normal dollars. You know -- the ones they don't like. But apparently want. I'm so confused.
posted by jacquilynne at 11:10 AM on November 20, 2007 [1 favorite]

Anyway, if it was really "inflation-proof", they'd be selling at the current value of the gold rather than by American dollars.

...except that gold changes value over time! OMGIES!
posted by Pope Guilty at 11:13 AM on November 20, 2007 [3 favorites]

perhaps I should have added the mountebank tag...
posted by Sam.Burdick at 11:13 AM on November 20, 2007 [2 favorites]

"constitutional right to commerce"?

I note they aren't liberated from their belief in a supernatural creator.
posted by DU at 11:15 AM on November 20, 2007

Their website explicitly details how to trick people into accepting it as currency, so yeah, I'd call it a criminal enterprise.

Your definition of "trick" appears to be quite broad.

The merchant you are about to use the Liberty Dollar with must know that the Liberty Dollar is private, non-government currency; so it cannot be deposited in a bank. It is not 'legal tender', a 'coin', or United states government money like Federal Reserve Notes (FRNs)

posted by me & my monkey at 11:16 AM on November 20, 2007

*I* like how the entire argument on the front page is "remember when candy bars cost a nickel?"

Liberty Dollar: Finally, Those Kids Will Get Off Your Lawn
posted by DU at 11:18 AM on November 20, 2007

I'm curious if Ron Paul is offended, bemused or annoyed by this group. I think that this ranks right up there with getting a tattoo of Elvis.
posted by Sam.Burdick at 11:19 AM on November 20, 2007

And backing money in metals is stupid, for a wide variety of reasons.

I've always wondered why the proponents of asset-backed currencies always seem to choose precious metals. Do they consider backing currency with other assets, such as semiconductor-grade silicon, real-estate deeds, or water rights?
posted by RichardP at 11:20 AM on November 20, 2007

"One of the most difficult parts in developing the Liberty Dollar was how to design a currency that was based on precious metals that changed every day, often every minute, and spiked upward unexpectedly. Not only did the Liberty Dollar need to accommodate intraday trading, but also how does such a "free market currency" accommodate greatly increased prices? For as certainly as the government will continue to inflate the paper money supply, the precious metals will respond and increase in US Dollars value."

that might be what you're looking for.
posted by Sam.Burdick at 11:23 AM on November 20, 2007

The fundamental flaw that I see in all of this is that you have to buy precious metals at market rate with market accepted currencies.

Can we go to hemp-script?
posted by Sam.Burdick at 11:24 AM on November 20, 2007

Haven't civic orgs in a number of small cities all over the US been printing their own currency for years? In Ithaca, NY, for example, you used to be able to trade goods and services in "Ithaca Hours". I know there was a threat of legal challenge at one point, but I thought they survived it.

The key difference here seems to be one of arrogance: They call it a dollar, they encourage people to inject it into the normal economy (the point of regional currencies is to keep the spending regional, not modify the national money supply), they make strange claims about value.

Any thoughts on the relationship between these two things?

It looks to me as though the real crime they'll be charged with is racketeering. They're clearly also making false claims for their product ("inflation free" is not something they can guarantee).
posted by lodurr at 11:24 AM on November 20, 2007

LOLBERTARIANS
posted by DU at 11:25 AM on November 20, 2007 [1 favorite]

*sigh*

I remember the first time I started my own currency. Sadly I found that most places didn't want to accept sacks of mice in exchange for goods.

Fortunately, my currency had the benefit, that if you dropped it on the floor and screamed, "My god, they have rabies!" most people would clear out and you could just take what you needed.

Beat that Liberty Dollar!
posted by quin at 11:25 AM on November 20, 2007 [17 favorites]

lodurr,

It's only arrogance if you don't have big guns to back up your claim. Or at least it seems to be that way.
posted by Sam.Burdick at 11:27 AM on November 20, 2007

It's only arrogance if you don't have big guns to back up your claim. Or at least it seems to be that way.

MEN WITH GUNS MEN WITH GUNS
posted by Pope Guilty at 11:29 AM on November 20, 2007

The official currency of the Montana Freemen?
posted by Thorzdad at 11:30 AM on November 20, 2007

This alternative currency is bad but this alternative currency is good.

Other than the fact that one was made by feel-good local business types, and the other by loony-sounding tax dodgers, they seem functionally similar to me. Can anyone explain why one deserves an FBI raid and the other doesn't?
posted by ook at 11:31 AM on November 20, 2007

(I mean the legal distinction; obviously the common-sense intent behind the two is quite different.)
posted by ook at 11:32 AM on November 20, 2007

importantly I think that the berkshares, as an example, are locality-only accepted currency. Whereas the US Gov't gets involved when it's interstate commerce.
posted by Sam.Burdick at 11:35 AM on November 20, 2007

MEN WITH GUNS MEN WITH GUNS

KIDS WITH GUNS.
posted by sparkletone at 11:43 AM on November 20, 2007

How's the liberty mint pay for overhead costs? The US mint is funded by tax payers, so I understand how it can pay for the cost of manufacturing/securing etc... Does Liberty take a cut? When you buy $1 in liberty mint coins, does it only really reflect $0.90 in precious metals? If it does, why not just buy precious metals directly and save the middle man? If it doesn't, how can they fund their operation?
posted by ShadowCrash at 11:45 AM on November 20, 2007 [1 favorite]

What's the exchange rate between this and Canadian Tire money?
posted by drezdn at 11:47 AM on November 20, 2007 [2 favorites]

Other than the fact that one was made by feel-good local business types, and the other by loony-sounding tax dodgers, they seem functionally similar to me. Can anyone explain why one deserves an FBI raid and the other doesn't?
posted by ook at 2:31 PM on November 2

For starters, they aren't dollars, they are Berkshares, which seems like a gift certificat type thing for that region.

The Liberty mint was making coins in denominations of "20 Dollars". In other words, they were adding new, fake, dollars into circulation.
posted by Pastabagel at 11:48 AM on November 20, 2007

KIDS WITH GUNS

COWS WITH GUNS
posted by Pope Guilty at 11:50 AM on November 20, 2007

COWS WITH GUNS

PRETTY GIRL YOUNG MAN OLD MAN MAN WITH A GUN
The rules do not apply.
posted by Horace Rumpole at 11:54 AM on November 20, 2007

I've always wondered why the proponents of asset-backed currencies always seem to choose precious metals. Do they consider backing currency with other assets, such as semiconductor-grade silicon, real-estate deeds, or water rights?
posted by RichardP at 2:20 PM on November 20

Because thousands of years ago, it was not a trivial matter to increase the gold supply. Mining achieved a primitive status in the 16th century, but before that, most metals were obtained through war or chance discoveries on the surface.

Now, a gold-backed security would be moronic. Gold mining companies would simply replace those nefarious banks the conspiracy theorists are so concerned about. Think of how OPEC countries can influence the price of oil simply by lowering production. Mining companies would be able raise the price of money, i.e. choke of growth, by extracting less from the ground.

And like you point out, there's nothing magical about gold. I might as well be copper or palladium or uranium. What these people don't get is that if there is a free exchange, a currency market, it doesn't matter, because anything can be converted into everything else.
posted by Pastabagel at 11:57 AM on November 20, 2007 [3 favorites]

Now, a gold-backed security <- should be "a gold-backed currency"
posted by Pastabagel at 11:59 AM on November 20, 2007

if there is a free exchange, a currency market, it doesn't matter, because anything can be converted into everything else.
posted by Pastabagel at 1:57 PM on November 20 [+] [!]

forgive my ignorance, but isn't that what we have now?
posted by Sam.Burdick at 12:01 PM on November 20, 2007

BIG MAN WITH A GUN
posted by Pope Guilty at 12:03 PM on November 20, 2007

Water rights seem like a more solid backing than gold. Because, you know, you can live a week without gold.
posted by mullingitover at 12:05 PM on November 20, 2007

Yeah, but if we used water rights the general mental crash that would result from trying to parse any one of the many jokes about boating might slaughter many innocents.



ie...

Want to experience sailing? Step into your shower with all your clothes on, turn the spray on as cold as you can get and start ripping up $100 bills.
posted by Sam.Burdick at 12:09 PM on November 20, 2007

The Liberty mint was making coins in denominations of "20 Dollars". In other words, they were adding new, fake, dollars into circulation.

That doesn't seem sufficient; if that were the case all you'd have to do is name your alternative currency something other than "dollar" to avoid being raided by the Feds.

I totally understand why Liberty Dollars would be called illegal; that whole "congress has the exclusive power to coin money" thing. What I don't understand is why similar schemes like berkshares or Ithaca Hours aren't considered "money," since they appear to function exactly the same way that "real" money does.

(And I'm having a hard time finding any solid information that might explain it, since most search results for 'alternative currency' or the like are clogged up with libertarian websites claiming that nuh huh the liberty dollar is too legal so there.)
posted by ook at 12:17 PM on November 20, 2007

Their website explicitly details how to trick people into accepting it as currency

Um, it *is* a currency. Though not necessarily one with much of a future. Not much of a trick to convince people of that.

I wouldn't be surprised if it turned out to be technically illegal somehow, I've no opinion on that, but I can't see how it has anything to do with the Constitution. Where in there does it say that the right to coin money is exclusive to the Congress? It seems harmless, it's not like anyone's really going to mistake it for US Dollars. There are already other "dollars" routinely accepted as money in parts of the USA, the Canadian ones; people have no trouble dealing with that. Besides which, Gresham's law says it's not going to work.

Pastabagel: And backing money in metals is stupid, for a wide variety of reasons.

I'm undecided, but so far I find Alan Greenspan more persuasive than you on this subject.
posted by sfenders at 12:23 PM on November 20, 2007

Are these the guys that rerleased the 9/11 coin with the pop-up world trade center in *real silver*? I would have thought Giulliani would be their man.

Also, given that in the current, non roncentric system the dollar value of precious metals fluctuates, is making something out of said metals and then stamping it with "twenty dollars" or whatever not kind of stupid?
posted by Artw at 12:26 PM on November 20, 2007

ook: That doesn't seem sufficient; if that were the case all you'd have to do is name your alternative currency something other than "dollar" to avoid being raided by the Feds.

And yet, they called it that anyway. I wonder why? [/sarcasm]
posted by lodurr at 12:29 PM on November 20, 2007

Hey, RonPaulites, why not just start using Euros instead?
posted by Artw at 12:35 PM on November 20, 2007

Ahh.... the Liberty Mint buys US dollars (backed by the Debt of the United States) and gives you Silver for it. Therefore if their contention is correct, this would mean that they own part of the US debt.

Maybe that's why The Fed called their bluff.
posted by Sam.Burdick at 12:35 PM on November 20, 2007

And yet, they called it that anyway. I wonder why?

For the same reason they put a picture of Ron Paul on it and used an ill-defined tri-metallic standard?
posted by sfenders at 12:35 PM on November 20, 2007

I love these Ron Paul libertarian wackjob idiots who want to privatize everything, including money, which they want to resell for official U.S. currency!
posted by fandango_matt at 12:35 PM on November 20, 2007

That doesn't seem sufficient; if that were the case all you'd have to do is name your alternative currency something other than "dollar" to avoid being raided by the Feds.

They could even call them "Ron Paul dollars" and they'd be covered. By calling them regular plain old "Dollars" it would lead somebody to conclude that they were issued by the U.S. government and are legal tender. They would be confusingly similar to the American Eagle gold coins which are actually produced by the US mint, as well as the Liberty gold coins minted by the U.S. government almost a century ago, which also happened to be denominated as $20.

why similar schemes like berkshares or Ithaca Hours aren't considered "money," since they appear to function exactly the same way that "real" money does

They are money, in the general sense that it serves as a medium of exchange, but they are really just like gift certificates you'd buy from a mall for use in any store in that mall. The difference is that I know those things are not dollars. I can't pay my phone bill with them.

The Liberty coins create an impression by someone who takes them that they can be used as real money. Note that a downstream user of the Liberty coin has not read the website. They see "20 Dollars" and they think they can deposit it in a bank like a $20 bill. Once you accept one of these coins as $20, you are never going to get your actual $20 back, because no metal or coin dealer ever buys back coins at their full value.
posted by Pastabagel at 12:48 PM on November 20, 2007

The site refers to "Paul Harvey, well-known and respected news commentator."

Well-known yes, respected no. And now you know the rest of the story.
posted by grouse at 12:53 PM on November 20, 2007 [5 favorites]

Ahh.... the Liberty Mint buys US dollars (backed by the Debt of the United States) and gives you Silver for it. Therefore if their contention is correct, this would mean that they own part of the US debt.

Maybe that's why The Fed called their bluff.
posted by Sam.Burdick at 3:35 PM on November 20

No, the feds "called their bluff" because they are counterfeiting U.S. currency. The Fed is the Federal Reserve Bank and has nothing to do with this.

Dollars are not "backed" by the United States. You don't get anything for them by turning them into the mint, except maybe a replacement bill or coin. And what the hell does Silver have to do with the U.S. debt? I can buy gigantic 40lbs bars of gold if I want, I don't need these idiots to do that. But nobody accepts gold or any other precious metal as currency.

I want the Ron Paulies to think very carefully about that. If you are starving and crawl to a McDonalds for a burger, and you pay with a brick of platinum, they will not accept it as payment. The brick of platinum is worthless as a medium of exchange, get it?
posted by Pastabagel at 12:55 PM on November 20, 2007

I'll get you a burger for a brick of platinum.
posted by pompomtom at 1:03 PM on November 20, 2007 [1 favorite]

[obligatory Settlers of Catan reference] Ahh... but can I get wood for sheep?

more seriously... You're right... the Federal Reserve Bank has nothing to do with this. But, the FBI and the Secret Service do, as does the US Mint. I should have said Feds.

I do, however, seem to recall that the United States Dollar is backed by the US Gov't. Pick up a note and see for yourself. If memory serves there will be a line that says "Backed by the full faith and etc etc of the United States Government" or some such.

I could be wrong though. *shrugs*
posted by Sam.Burdick at 1:16 PM on November 20, 2007

This is all woefully lacking with the affidavit [pdf] filed by an undercover agent investigating their activities. These are some seriously shady people.
posted by 0xFCAF at 1:37 PM on November 20, 2007

Ahh.... the Liberty Mint buys US dollars (backed by the Debt of the United States) and gives you Silver for it. Therefore if their contention is correct, this would mean that they own part of the US debt.
posted by Sam.Burdick at 3:35 PM on November 20

No, they take your us dollars, buy the equivalent in silver, and then give you a copper based coin for $20 worth of silver. If they tried to issue $20 silver coins, they would need to resize the coin constantly to ensure it's really worth $20 at the time of the sale.

Stamping $20 on their currency is stupid, if it really is a metal backed currency. They should be stamping the type of metal and mass that's backing it.

I still don't understand how the liberty dollar is financed. Who pays for the dollars to be minted? Who secures the silver (well, the feds do now, but who did it before they got raided)? The only way I think this works (from the mints point of view) is if they issue certificates for $20 worth of silver. This way, if the value of the silver goes up, they make a profit. But if that's the case, it's not a metal-backed currency at all (since the only thing they're promising you for your liberty $20 is $20 US).
posted by ShadowCrash at 1:38 PM on November 20, 2007

They see "20 Dollars" and they think they can deposit it in a bank like a $20 bill.

Yeah, I guess so. At fist glance I stupidly assumed people would value them appropriately. Using it fairly requires knowing the spot price of silver, or whichever variety of metallic Ron Paul coin you're using, when you convert it to US Federal Reserve Dollars, and/or knowing something about seigniorage or coin collecting, or etc. And most people wouldn't even know that they'd have to know that. In a way it'd be a great educational tool for people to learn about what money is... too bad most of them would learn about it by getting ripped off by people passing a "Twenty Liberty Dollars" coin for $20US.

So, I guess the illegal bit is that they're suggesting people represent their 20-dollar coin as worth $20 US dollars, when that claim is evidently false since they're selling it for considerably less. Does sound rather like fraud, though not IMO counterfeit.

But nobody accepts gold or any other precious metal as currency.

I think you mean "relatively few people" accept gold as currency. Personally, I will gladly take Krugerrands at spot price plus 1%, and have encountered many who would do the same. But I ain't taking no Ron Paul dollars at face value.
posted by sfenders at 1:38 PM on November 20, 2007

If this went down a bit sooner, Stephen Mihm could have included it in his new book A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States.
posted by anathema at 1:40 PM on November 20, 2007

Ha, ha, money. It's so silly.
posted by grubi at 1:57 PM on November 20, 2007

For what it's worth, I'm not at all arguing in support of the liberty dollar; looking at their website it seems plain that they're being deliberately misleading, and the case for counterfeiting seems relatively clearcut.

It's the other side of the Mint's argument, that they have the exclusive right to coin currency, which interests me; mostly because it's one of those things I remember being taught in grade school but I can't find any evidence that supports it. (The constitution doesn't say 'exclusive;' the National Banking Act established a common national currency but doesn't appear to have ruled the other state-based currencies at the time illegal per se; and there appear to be a number of alternative currencies out there now that are chugging along just fine.) Curious.

I'm obviously not a legal scholar, and would be glad to be proven wrong here; I just find it an interesting issue.
posted by ook at 2:09 PM on November 20, 2007

most metals were obtained through war or chance discoveries on the surface

Dunno about that. . . the Athenians developed a rather extensive mineworks to produce their silver.

I'm not seeing "full faith and credit" anywhere on this Federal Reserve Note I've got in my hand. Mebbe its written in a microdot font under the all-seeing eye or something.

The strongest basis for a national currency is a debt instrument that the IRS will accept for tax payments to Uncle Sam. Oh, wait, that's what we have now.

To avoid counterfeiting confusion, they should have called their base unit "Paulars" or something.

If I had to choose a metallic basis for my currency, I'd choose Iridium. Densest metal on the planet, doesn't corrode, extremely rare, and industrially useful.

As a Georgist "Single Taxer" I find sales and income taxes philosophically odious, so I wish these reprobates well in the quest to take themselves out of the dollar economy.
posted by Heywood Mogroot at 2:22 PM on November 20, 2007

What the Congress has mandated over the years is one thing, the more interesting question is whether We the People have the right to opt out of the dollar economy, given how many tax sinks our government has hooked into it.
posted by Heywood Mogroot at 2:25 PM on November 20, 2007

"the people who actually produce all the real wealth in the world are in debt to those who merely lend out the money that represents the wealth"

Sure, libertarians are crazy, but the Fed is pure evil.

Laugh all you want at people and their new currencies; the banks are laughing even harder at you. I'm not saying the "Liberty Dollar" is a solution, but defending centralized currency is like defending that bullet in your foot.
posted by regicide is good for you at 3:00 PM on November 20, 2007 [3 favorites]

At one level, these people are right. The fiat currency we have now has been terribly abused for the last twenty years. Anytime the economy has signaled pain, the Fed has injected liquidity.... painkiller, in essence. This has meant that the pain hasn't been dealt with, it's just been hidden.

Without any pain signals to stop it, our economy went off in some highly destructive directions. Because of that currency abuse, we've had three enormous bubbles. First was the stock market, which tried to collapse in Y2K. The Fed prescribed more of what had been making us sick, and injected enormous sums of cash to try to stop the bubble from popping. They partially succeeded, but in so doing, they inflated two more, much larger, bubbles: the housing market and consumer debt. Those are trying to pop now, and once again the Fed has stepped in, with truly massive liquidity injections... but whether or not it will be enough to forestall the pop... who knows?

Bubbles have been called financial nuclear weapons, and that's a pretty good description; the fallout as they pop is devastating. There are no good solutions to bubbles except not to have them in the first place. They cause massive misallocation of resources. It can take generations to recover from the economic damage that bubbles can cause ... and we have three of them.

These folks are trying to provide a sound currency. They were foolish to call it 'dollars', however. Legally, they may be all right, because they're not saying "US Dollars"... Canada and Australia both use that term for currency. They're not counterfeiting, because they're not calling them US dollars, but with modern jurisprudence being what it is, I think it's very unlikely that they'll escape jail time. If they'd called them, say, pesos, I don't think it would have been a big problem.

Fundamentally, this is something we desperately need... some kind of commodity backing of currency. Why? Because fiat currency lets the government disconnect the economy from reality... it has let them blind us to what was coming. We're going into the deepest winter we've ever experienced as a country, purely and simply because of fiat currency.

As you continue to watch the mortgage collapse spread, you'll start to see it spread into derivatives soon. We have a gigantic house of cards built on fiat currency, and we've stacked one card too many on top. A commodity currency would have reduced the damage a great deal, because we'd have seen the problems in the movement of the commodities long ago. We'd still have had problems, but they would have been far, far less severe than the pure hell we're about to go through.

Commodity-backed money helps prevent government abuse. And to Pastabagel, who upthread talks about the evil mining companies 'choking off' our supply of gold, were we to choose that again.... bah. There's a huge amount of gold above ground, and all the mining in the world adds something like 2 or 3% a year. At most they could stop adding new gold, but there's still lots in the ground and other companies would be happy to fill the gap.

Fiat currency is a disaster, and has been every time it's been used. We're about to find that out, yet again, firsthand. We were immensely wealthy when it started, so it took an entire generation to bleed the country dry.
posted by Malor at 3:49 PM on November 20, 2007 [3 favorites]

Also, given that in the current, non roncentric system the dollar value of precious metals fluctuates, is making something out of said metals and then stamping it with "twenty dollars" or whatever not kind of stupid?

Well, when you define a 'dollar' as '1/20th of an ounce of this metal', then that's what a dollar is. A dollar of a unit of measurement, like a quart; a quart of liquid, a dollar of a commodity. Dollars that have no backing are a promise to pay nothing on demand, which is a promise you can be sure will be kept.

Mises, I think, had it right when he defined money as 'the most marketable commodity'... it can be anything, it's just whatever enough people in the economy want. Historically, that was gold, but it can be anything.

Assuming no shenanigans on the part of the Mint, when you hold a silver dollar, you hold something that has real value. That value will fluctuate, as all values do, but fundamentally it will never trade under its cost of production for an extended period of time. If it does, the commodity stops being produced until the price rises enough to make it profitable.

When you hold a fiat dollar, you're holding debt, not an asset. The economy owes you some undetermined amount of production in exchange for that fiat dollar. That's basically like commodity dollars, but there's a difference; it has no actual, inherent value, and more can be created at will for virtually no cost. You are competing for resources with entities that can make any amount of currency at will.

The value of all commodities tends inexorably toward their actual cost of production plus a small profit, so when you have a currency with a zero production cost, that also tells you what it's worth over the long term.
posted by Malor at 4:07 PM on November 20, 2007 [2 favorites]

I didn't make one thing clear: if you have a dollar of silver or gold, and it's trading for less value than you believe it's worth, you can just save it; it will tend back toward its cost of production.

If you don't like what you can get for a fiat currency, well, too damn bad. Over time, they always go down.
posted by Malor at 4:10 PM on November 20, 2007 [1 favorite]

Anybody here read The Creature from Jekyll Island?

http://www.realityzone.com/creature.html
posted by ronin21 at 4:13 PM on November 20, 2007

Oops, sorry...

http://www.realityzone.com/creature.html
posted by ronin21 at 4:14 PM on November 20, 2007

This is all woefully lacking with the affidavit [pdf] filed by an undercover agent investigating their activities. These are some seriously shady people.
posted by 0xFCAF

Ooooh... thanks for that. Interesting reading.

From what I've read so far (I'm on page 11 of 38). NORFED (the company now known as The Liberty Mint) is basically a pyramid sales scheme. Just masquerading itself as a political movement.

I am simplifying.
posted by Sam.Burdick at 4:22 PM on November 20, 2007

What I want to know is if Liberty Dollar's printed notes contain features like microprinting or embedded Mylar strips to deter counterfeiting...
posted by Tube at 4:27 PM on November 20, 2007

ook:

It's the other side of the Mint's argument, that they have the exclusive right to coin currency, which interests me; mostly because it's one of those things I remember being taught in grade school but I can't find any evidence that supports it.

US Code Title 18 Part 1 Chapter 25 Section 486:

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

I assume that these people would argue that this law is unconstitutional. If so, I would suggest that they bring suit.

But in any case, I hope this answers your question.
posted by Flunkie at 5:10 PM on November 20, 2007

Is there any medium of exchange that can't be manipulated? Others have pointed out why gold is no better, but we can't just let the Federal Reserve continue to rob us, can we?

Here's a nice exchange between Ron Paul and Ben Bernanke. Paul doesn't really catch it, but Bernanke admits at the end that the policy of the Federal Reserve hurts Americans that have all their assets in dollars and buy imported goods (5:28). Does that sound like anyone you know?
posted by betaray at 5:19 PM on November 20, 2007

fandango_matt writes "I love these Ron Paul libertarian wackjob idiots who want to privatize everything, including money, which they want to resell for official U.S. currency!"

If you are going to throw that stuff around, it helps if you know what you're talking about. The Libertarian argument against the Federal Reserve is that it is privatized. They do not want the nation's bank in the hands of private banks, which is the way it is now.
posted by krinklyfig at 5:50 PM on November 20, 2007

Anyone hear of the Phoenix Dollar getting one of THESE?
posted by augustweed at 5:58 PM on November 20, 2007

fandango_matt writes "I love these Ron Paul libertarian wackjob idiots . . ."

Zogby said "WHAT?" If you read to the end: "The blind bio question was also posed to a larger pool of 1,009 likely voters nationwide, including Democrats and independents, and Paul was the big winner among that universe of voters, winning 33%, compared to 19% for Giuliani, 15% for Romney, and 13% for Thompson."
posted by augustweed at 6:06 PM on November 20, 2007

People who object to using precious metals as currency fail to realize that currency should be portable, valuable, and durable. Paper fails two. Precious metals fulfill all three. They always rail that precious metals aren't valuable any more calling them trinkets or rocks, all the while ignoring their tremendous value per size/weight as industrial commodities.

The other factor that is ignored was covered above, the irresponsibility that is built in to an easily inflated money supply. Combine the two and currency failure is obvious. People always explain it away as being part of some cycle, but do they understand that cycle? What we have going is some kind of evil genius of a banker's and or politician's wet dream of how money should work, and it is an experiment that is not even a century old.

It's also fundamentally dishonest. Trade for goods or services should be made for something that is valuable in kind.
posted by Sukiari at 7:18 PM on November 20, 2007 [1 favorite]

They do not want the nation's bank in the hands of private banks, which is the way it is now

Bob Brinker laid the smackdown on an anti-Fed caller who proposed that perhaps the Congress should directly control the money supply.

I think the true libertarian argument against the Fed is that it is politicized, secondarily that it is centralized, not that it is quasi-privatized.

The fact of the matter is that any monetary system will devolve into a unified, centralized, and eventually politicized system. It's how we humans roll.
posted by Heywood Mogroot at 7:20 PM on November 20, 2007

Trade for goods or services should be made for something that is valuable in kind

SOMEbody needs to play Sid Meier's Civ again. A well-managed fiat money system will always blow away an intrinsic value system, since the intrinsic system has its own special fatal faults -- shaving, insecurity of physical savings, reduced velocity of money, and the lack of money creation through debt issues to match a growing economy of goods and services.

The problem is not our evil Fed, the problem is *us*.
posted by Heywood Mogroot at 7:25 PM on November 20, 2007

Beads dammit!
posted by Artw at 7:26 PM on November 20, 2007

oops, ignore my latest except for the last point about debt issue. I clearly am arguing out my ass here and simply forgot about "silver certificates" and the like.
posted by Heywood Mogroot at 7:28 PM on November 20, 2007

We were immensely wealthy when it started, so it took an entire generation to bleed the country dry.

We're still immensely wealthy. Unfortunately, the lion's share of that wealth now consists of aircraft carriers, big-ass bombers, etc.

Bicycling around Tokyo in the 90s, I sometimes marvelled at the immense elevated freeways they built there, of solid steel. Being a WW2 buff, I thought about how many Yamato-class ships that investment represented, and how much capital -- and engineering smarts -- we Americans have consumed on "defense" program-related activities.

We are a nation of rentiers, wanna-be rentiers, crooks, and dumbasses. Not entirely, but sufficiently so to have screwed the pooch lo these past 30-odd years.
posted by Heywood Mogroot at 7:39 PM on November 20, 2007 [1 favorite]

Insecurity of physical savings can be solved with a good bank, with the right kind of money. What's happening now is the banks themselves are stealing the money by inflating it into worthlessness.

Paper money is good for taking resources from brown people, until they start to catch on.
posted by Sukiari at 7:50 PM on November 20, 2007

Libertarians want the supply of money to NOT be privatised? Can they make up their damn minds?
posted by Pope Guilty at 8:05 PM on November 20, 2007

In preparing my post, I realized that Williams Jennings Bryan pretty much summed up my arguments in 1896 in his Cross of Gold speech. To summarize:
-The progressive income tax is good
-The gold standard was responsible for terrible economic policies and problems.
-The power to create money is the exclusive right of government.

If you look at history and compare the gold standard with the current system things are much better now. We had bubbles and recessions, and even a great depression all while we had a gold standard. The only difference is now we can print our way out of the problem rather than wait for a big war or something to force us to print our way out of the problem.
posted by humanfont at 8:05 PM on November 20, 2007 [1 favorite]

The only difference is now we can print our way out of the problem

No, no we can't. You can't ever print your way out of a problem. All you do is defer the problem and make it worse.

I haven't studied farther back, but the Depression was caused by monetary disorder in the 20s. (they were called the Roaring 20s for a reason). The gold standard meant that the excesses were, relatively speaking, quite limited, and the ability to paper over the problem was limited too. After ten years of recession and depression in the 30s, the economy had gotten incredibly efficient, and just needed a jumpstart to get spending going again... that was what the war provided.

The bubbles we've blown up this time are huge beyond imagination, and the economic problems underneath are as well. Everywhere you look, things are wildly maladjusted, from here at home to overseas. We can't print our way out of the problem, because that just makes bigger problems. Printing our way out of the relatively minor problems of the 80s and 90s directly led to the triple bubble of 98-2007: when those pop, the devastation will be worse than anything in living memory.

Money is not wealth. Printing money is just issuing additional claims on existing wealth. It steals money from savers and gives it to borrowers. Do that long enough and you raise a class of people that don't know how to save money anymore, because saving isn't rewarded.

Commodity standards force the money system to stay connected to the economy, and they force the economy to respond to problems in the present, instead of delaying them and making them worse.
posted by Malor at 8:27 PM on November 20, 2007 [2 favorites]

Libertarians want the supply of money to NOT be privatised? Can they make up their damn minds?
posted by Pope Guilty at 10:05 PM on November 20


nope... as far as I can tell the only thing consistent about the Libertarian party is its inconsistency. and a few dangerous habits.
posted by Sam.Burdick at 8:47 PM on November 20, 2007

Malor why does a commodity standard force the system to stay tied to the economy? In the 1500s Spain discovered a huge new supply of gold in the new world and the result was hyper inflation. All a commodity tie to money does is force some asset of relative value to become the marker by which everything else moves. Therefore you have no control over your monetary policy. Inflation and deflation can happen at a moments notice because someone discovered a new source for the commodity, or some new industrial removes a huge chunk of the commodity from the open market. Look at what happened to the price of palladium when one day it was thought to be the key ingrediant in cold fusion, and a short while later someone discovered you didn't need it for catalytic converters. Had we priced our money to palladium we would have seen a financial meltdown from these two events.
Money is an illusion. It is a conveince that allows for the exchange of goods an services. If you stuff it in a mattress it will lose its value over time and that's a good thing. Money must be forced back into circulation through lending, investmet, or otherwise. You can't save a dollar for 20 years and get back the same value you put in 20 years ago unless you invest that dollar in something, or lend it to someone with interest.
posted by humanfont at 9:14 PM on November 20, 2007 [2 favorites]

Printing money is just issuing additional claims on existing wealth. It steals money from savers and gives it to borrowers. Do that long enough and you raise a class of people that don't know how to save money anymore, because saving isn't rewarded.

Republicans?
posted by Pope Guilty at 9:28 PM on November 20, 2007

Damnit. I was going to FPP this...
I was waiting for more stuff to develop...

...except that gold changes value over time! OMGIES!
posted by Pope Guilty

No. one ounce of gold is worth one ounce of gold. Just as sure as it weighs an ounce.

A dollar today isn't worth a dollar yesterday, or a dollar ten years ago.

Here's some of the links I was going to include:

Liberty Dollar office raided.
Are they better than Monopoly money?
Will they land you in jail for using them?
Is this all a virus to up the value of Ron Paul currency?
Why aren't they confiscating the assets of the Ameros or the several "hour"based barter systems already in place.

Is it legal for them to confiscate the assets if this system? Is it different than creating "art pieces" with an ounce of silver? Is there a real law governing this? They say "dollar" but they don't say federal reserve note, or "good for all debt, public or private."

What's the deal?
posted by Balisong at 9:37 PM on November 20, 2007 [1 favorite]

Balisong: an oz of gold is worth an oz of gold, TODAY, just like paper money.

Alternatively, give me a tonne of gold and I'll give you a tonne of gold some time next year.
posted by pompomtom at 10:02 PM on November 20, 2007

Just as sure as it weighs an ounce.

That's not very sure at all.
posted by aeschenkarnos at 10:17 PM on November 20, 2007

A couple months ago an old man selling South Asian coins on the street in Darjeeling sold me a 1 Euro coin for thirty rupees.

Does that blow your mind?
posted by Hollow at 12:11 AM on November 21, 2007

Pope Guilty writes "Libertarians want the supply of money to NOT be privatised? Can they make up their damn minds?"

It is possible that libertarian ideology is more subtle than you realize.
posted by krinklyfig at 7:20 AM on November 21, 2007

Malor why does a commodity standard force the system to stay tied to the economy? In the 1500s Spain discovered a huge new supply of gold in the new world and the result was hyper inflation.

Sure it was. Absolutely. What happened there is just like having fiat currency, which is the ability to handwave more money into existence whenever the issuing body wants it. That's what happens when your money supply gets out of control, and I believe we're headed down a similar path now.

There _probably_ aren't any huge new gold supplies available, so if we went back onto a gold standard, it would likely be very stable money. Even the biggest of strikes wouldn't inflate the supply very much, because we have so very much above ground already, and it takes a huge amount of effort to mine and refine more. Would it disrupt the economy if that happened? Absolutely. But it wouldn't even come close to the kinds of disruptions and malajustments we're seeing with the Fed's fiat currency.

As far as 'limited growth!' goes... the fiat argument is always that the limited growth of new money supply will limit growth of the economy, but that appears to be false. Economists in the mid-60s were having this argument, because over two decades, the GNP (an earlier and more honest version of the GDP) had grown by some huge figure, something like 200%, but the money supply had grown by only 18%. They thought it might be slowing growth, but it sure doesn't look like it, in hindsight. We had the most powerful true growth we've ever had when the money supply was very constrained, so I just don't buy that commodity standards will reduce true growth.

They probably do reduce FALSE growth. The business cycle is basically that the banks detect good times coming, and lend out a bunch of new money (they can actually create the stuff on their own volition), which overstimulates the economy. This causes high growth for awhile, but too many of the wrong things get built because of the bad signals sent by the excess of money. So many of the businesses fail. You end up with a few years of 8% growth, and then a couple of years of contraction, where in a commodity standard, those cycles seem much less intense. 5% growth every year beats three 8% years and 2 no-growth years.

One of the other major arguments is that gold makes economies unstable, but that appears to be a function of starting economies, which are prone to crashes in any monetary regime. Again, for the one period in this country's history with truly well-managed money (post-WW2 up to 1965 or so), things worked like a well-oiled machine.

Commodity standards aren't perfect, but no standard is. They're harder to abuse, and they arrest one of our worst proclivities early... wishful thinking.
posted by Malor at 8:17 AM on November 21, 2007

_probably_ aren't any huge new gold supplies available

Sea gold is "available", the economics of it depend on the cost of the energy input.
posted by Heywood Mogroot at 9:51 AM on November 21, 2007

You end up with a few years of 8% growth, and then a couple of years of contraction, where in a commodity standard, those cycles seem much less intense. 5% growth every year beats three 8% years and 2 no-growth years.

This contradicts the entire path of American economic history.

Plot real GDP per capita growth rates over time and what you see is exactly the reverse -- swings that start big and get bigger and bigger until WW2, and then immediately damp to a small fraction of what they had been.
posted by ROU_Xenophobe at 10:50 AM on November 21, 2007

In his own defense.
posted by Balisong at 4:05 PM on November 21, 2007

We were on the gold standard until 1971. The numbers get rather poorer after that.
posted by Malor at 6:25 PM on November 21, 2007

No, in fact they don't. You can easily grab gdp per capita for 1800-2000 from here, and then calculate annual growth rates from it. They have more than that, but I like round numbers.

If you then plot the growth rates over time, you get this. It's just a screendump, so it's ugly. Less ugly versions of this figure would also be familiar to anyone who had ever cracked any textbook on the economic history of the US.

The economy swung wildly from boom to bust 1850--1900 like a rapid-cycling manic-depressive, while we were in the full grasp of commoditized money. Since WW2, we have not even approached the fluctuations of that period, to say nothing of the tumult of 1900--1940, while we were also on commodity-based money. And there is no obvious change post 1971.
posted by ROU_Xenophobe at 8:32 PM on November 21, 2007

We were on the gold standard until 1971. The numbers get rather poorer after that.

*The* gold standard only lasted to 1913 or so. It just wasn't the same by 1971. At least one set of numbers did get markedly worse once it was gone; those measuring inflation.

The dominant feature of more easily legible charts of 1800-2006 US economic performance is the Great Depression. It was way larger than anything that came before or since. Alan Greenspan blamed it on the departure from the traditional gold standard. But then, he also recently said that his success in managing the economy was due to behaving as if there still was a gold standard, and that's a bit hard to believe.

Certainly there was a big change after WWII, which I suppose is one reason why you often hear "since 1950" when people make comparisons of current economic events to the past. I suspect it was mostly a matter of big structural changes to the economy and the nature of electronic communications, world trade, not just monetary policy. Though obviously Bretton Woods was a pretty big deal. I never did figure out exactly what changed.
posted by sfenders at 9:28 PM on November 21, 2007

I forgot to mention the big changes that did start in the early 1970's. For one example, there's a nice chart at the top of this blog post from Menzie Chinn on Fixing the Current Account Deficit.
posted by sfenders at 6:01 AM on November 22, 2007

Mickey can have "dollars", but not Ron Paul.
posted by Balisong at 12:52 PM on November 22, 2007

"No, in fact they don't. You can easily grab gdp per capita for 1800-2000 from here, and then calculate annual growth rates from it. They have more than that, but I like round numbers."

When you calculate REAL inflation into the increases in GDP (you know, inflation figures that count food and oil and energy, not just barbie dolls and hair scrunchies) you see that we are quite a bit poorer.

www.shadowstats.com is the place to get the real figures on inflation and money supply. The ones the bean counters in the Federal Government give to us are massaged into uselessness.
posted by Sukiari at 5:00 PM on November 28, 2007