Topic: Monetary Policy
U.S. Mint Calls Liberty Dollar "Criminal" The website of the U.S. Mint has a page where they discuss the Liberty Dollar. It claims that the Liberty Dollar violates the Constitution and that NORFED, the company which sold Liberty Dollars, is guilty of a Federal crime.by Walt Thiessen
(libertarian)
Friday, November 16, 2007
It appears that the U.S. Mint has already weighed in on the controversy regarding the Liberty Dollar, which until recently was sold by a company called NORFED, Inc. in Indiana. A raid this week by the FBI seized millions of dollars worth of NORFED property, although apparently no exact charges have been filed by Justice Department prosecutors as yet. Included in the items taken by the Federal Government were a supply of gold coins which the company marketed as Ron Paul dollars, although they did so without any explicit permission from Dr. Paul himself or the Paul campaign.
The Mint's website includes the following commentary on the Liberty Dollar:
"However, under the Constitution ( Article I, section 8, clause 5 ), Congress has the exclusive [my emphasis] power to coin money of the United States and to regulate its value."
The arrogance of this statement is quite shocking when one actually reads Article I, Section 8, Clause 5, which states:
"The Congress shall have Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
Nowhere in that clause is there a single reference to an exclusive power held by Congress. Rather it is a delegated, non-exclusive power. And as the 10th Amendment to the Constitution makes quite clear:
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
Thus, there is no Constitutional authority for the U.S. Mint's claim. In fact, their claim should be taken to be yet another usurpation of power that the Constitution does not grant to either the Congress or to the Mint itself. This is one of the clearest power grabs that the Federal Government has taken in modern times beyond what the Constitution permits. It is a naked abuse of power, and the director of the U.S. Mint should be called before the American people to explain and justify his clear violation of that sacred document. The Mint's claims are a serious threat to the liberties of all the American people, and not just the owners of NORFED, Inc.
But the Mint doesn't stop there. They go on to say the following:
"By statute ( 31 U.S.C. § 5112(a) ), Congress specifies the coins that the Secretary of the Treasury is authorized to mint and issue and requires the Secretary to carry out these duties at the United States Mint (31 U.S.C. § 5131). Accordingly, the United States Mint is the only entity in the United States with the lawful authority to mint and issue legal tender United States coins."
But a quick check of both of those sections cited under the U.S. Code again show no exclusive authority as claimed by the Mint. Rather, they are a directive to the Mint to carry out the authority that is designated the Mint by the Congress, as authorized by the Constitution.
It isn't until the Mint's article arrives at the following paragraph that the Mint's position is finally made crystal clear.
"Under 18 U.S.C. § 486, it is a Federal crime to utter or pass, or attempt to utter or pass, any coins of gold or silver intended for use as current money except as authorized by law."
The link to that section of the Code says:
"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."
This is the crux of the Mint's claim. Congress itself usurped power beyond its Constitutional authority many years ago when it codified this law. Additionally, the Mint article states:
"Prosecutors with the Department of Justice have determined that the use of these gold and silver NORFED 'Liberty Dollar' medallions as circulating money is a Federal crime."
This makes clear what Bernard NotHaus, the Founder of NORFED, meant when the New York Times quoted him as saying after the raid:
"They're 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.''
While I have no specific access to NotHaus's legal team, it doesn't take Johnnie Cochran to deduce what NotHaus's argument in court is going to be. It seems highly likely that they are going to argue that 18 U.S.C. § 486 is an unconstitutional power grab by the U.S. Congress.
Yet there is great reason for concern. The Supreme Court (and the Federal court system in general) have not exactly been friendly toward the Constitution and individual rights in recent years. Conservative claims to the contrary, the conservative Supreme Court is not likely to be friendly in this instance either. With a few exceptions, most conservatives are supporters of the Federal Reserve System and opponents of privately coined money. Thus, there is very little reason to believe that the courts will hold Congress accountable for its prior actions. It's much more likely that they'll skip over the Constitution entirely on the key point of having an "exclusive" power and simply rely on existing case law to provide precedents for ruling that Congress was within its power to outlaw the private coining of gold and silver money.
This leaves NotHaus in a very precarious situation. Without Constitutinoal protection, at most he can try to argue that he wasn't actually coining money, but that's going to be tough to prove to the court's satisfaction. Thus, we are very likely to see a horrible defeat for liberty when this finally clears the court system.
Once again, the only real hope on the horizon would be the nomination and election of Ron Paul to the presidency. While the Ron Paul dollar was coined without Paul's explicit consent to lend his name to it, Paul is definitely a hard-money guy, and he is definitely a strict interpreter of the Constitution. It seems quite likely that his election would signal to the courts that there is a new wind blowing in this country, and that they would be well advised to pay heed to it. Of course, this assumes Paul's election, and that's still a long shot. I hope that Paulites who are actively supporting his campaign will redouble their efforts to get him elected president, and that the seizure of Liberty Dollars by the FBI and coming prosecution of Mr. NotHaus by the Justice Department will serve as a motivation to that end.
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The views expressed in this
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I woudn't be surprised at all to see NotHaus lose, no matter how indomitable his case. I mean, egad, what a terrifying precedent that would set. Pretty soon, they may start divining legality of the IRS or the FRB — according to the Constitution!
Posted By: Louis Nardozi
Date: 2007-11-16 14:55:43
The thing that disturbs me is the timing of this incident. Why choose now to shut down Liberty Dollar? I believe it is because the coins coming out now bear Dr. Paul's likeness. Even though Dr. Paul does not support or authorize these coins, millions of them being held (and displayed and given as gifts, etc) by millions of people across the US would be a powerful form of political speech. It is this speech I feel is being halted. Why else are American Mint and Franklin mint not being raided? I'd be willing to bet the most authoritarian regime ever known to the US is responsible for crushing this political speech. What kind of raid takes place with no warrants and no charges? A patently unconstitutional one, I'll bet.
An excellent article filled with real journalism. What a rare find. It is amazing to me that the current government blatently ignores the constitution. Vote Ron Paul!
For background, Liberty Dollars are coins backed by silver and gold that can be used to engage in regular commerce. Current Federal Reserve Notes (FRNs) as printed by the Treasury and issued to the illegal Federal Reserve, are backed by the illusion of the labor of the American people. In other words, fiat currency.
The Treasury Department, the Mint's parent agency, and the Secret Service, its sibling agency, and its bastard uncle, the In-Justice Department (who remarkably gets one right for once, in a case of Stopped-Clock Syndrome), all in the past have disagreed with the Mint.
The Mint is just plain looney tunes on this one. If they are right, then all non-FRN means of doing transactions are also illegal. That means everything from subway and arcade tokens to casino chips, from baseball cards to booze and firearms is illegal as well.
Problem is that the Mint forgets just what currency is. All currency is is a proxy used in place of a barter trade that is commonly accepted as having value in the absence of a true barter. To make sense of it, consider the following examples:
1. Tom can build fences but has no eggs. Jerry needs a fence to hold in his chickens. They meet and Tom agrees to build Jerry a fence in exchange for several dozen eggs. This is a barter trade, the very basic building block of free economics.
2. Same example, but now Jerry's chickens aren't laying at the moment. Tom accepts a note from Jerry promising him eggs once they lay later in exchange for fixing the fence now. That note is a proxy in place of the eggs. If Tom trades that note to Spike so Spike can get the eggs in exchange for fixing Tom's stove, then Jerry honors that note with Spike instead. That note has become a barter proxy in absence of the real thing. This note is a basic voluntary contract, and the note is also currency since all three people accept it as having value in the trade.
The whole point of this is that anything at all can be used as a barter proxy as long as the parties to the barter agree it has appropriate value. That anything includes personal property and one's labor. That is why when two parties agree to exchange labor for barter proxy (in other words, money!) it is an agreed exchange of equal value. That is, THERE IS NO GAIN! THERE IS NO INCOME!
This is why they are scared--if people realize that the value of FRNs only exists because they believe it so, and the logical extension that its value can cease to exist if they don't, then the entire Federal Reserve System is in trouble. Besides that, if people use currency other than FRNs to barter goods and services, such as Liberty Dollars, then the feds can't tax what is not transacted in their system or is readily translatable into their system (such as foreign currency as determined by the international currency markets). Since the feds illegally tax a property exchange as income already, any further erosion of that scam is something that they can't handle, hence the Mint's pronouncements, since Liberty Dollars, like all other alternative barter proxies, serve to shatter that myth that they feds and the Mint cling to--that only *their* currency is the valuable one. Only *their* barter contracts are valid. Yeah, right.
Every barter proxy that is not taxable since it it outside the tax system is easily seen as a property exchange. Only within the confines of the federal system is reality warped to make a property exchange produce phantom income (or alternatively, our labor is worthless and the cash production actually is gain, which may be closer to the truth of our financially bankrupt federal system and their fiat monopoly money!). The Liberty Dollar, like other alternative barter proxies, is a return to reality and the real free market economy, free of regulation and taxation, and that is what truly scares the federal government--it is outside of their control and in fact destroys their control.
Think about it. The best cashless society is the barter society, not where currency is replaced by electrons. The barter system will never go away, and it needs to resume its rightful place as the true economy, not some shadow economy or black market because it is outside the tax system.
Posted By: Brad Linzy, Evansville, IN
Date: 2007-11-17 01:04:45
Here is the line that should be taken...
Everytime they accept or give Federal Reserve Notes as payment of debts, the 50 States THEMSELVES are in violation of Article 1 Section 10 of the Constitution!
"Section 10 - Powers prohibited of States
No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts"
PERIOD! END OF STORY! There it is right there in black and white. In fact, the Liberty Dollar is more LEGAL than FRNs!
This company has been doing business since 1998 - I wonder why they waited until 2007 to take action ???? (Not really , we know why they took action now , 50 days before IOWA.)
"Under 18 U.S.C. § 486, it is a Federal crime to utter or pass, or attempt to utter or pass, any coins of gold or silver intended for use as current money except as authorized by law."
"Prosecutors with the Department of Justice have determined that the use of these gold and silver NORFED 'Liberty Dollar' medallions as circulating money is a Federal crime."
"Current money" refers to any article that is deemed legal tender. Liberty Dollars are not intended for use as legal tender, so they are not currency or circulating money. They are collectables, and the law does not make it illegal for citizens to take collectibles as forms of payment.
Legal tender is just a way to allow the government to assess fines and collect fees and taxes. Without legal tender, you might attempt to pay your taxes in wheat or demand your tax refund in molybdenum. But legal tender laws do not make it illegal for citizens to pay each other with wheat. Since this company was not attempting to pay their taxes with Liberty Dollars, then they have commited no more of a crime by stamping precious metal and selling it than jewelers do by selling stamped metal rings.
Anyone who ownes Liberty Dollar Certificates (backed by precious metal) or has an unfilled order with the company should engage the government in a class action suit to reclaim your metal or order money since this is clearly not the companies assets but your stolen property. Of course, when you win expect to receive retribution in legal tender - since that is the purpose of legal tender laws.
@rhys: Let's hope they go that route for a defense instead of the constitutional one. If they do they could easily gain support from several other quarters.
For example, people are suing each other over virtual dollars ("lindens") that are created and sold by Linden Labs for use in the game Second Life. Linden labs sets the exchange rate and facilitates trades between lindens and legal tender. People generally use these pesudo dollars in the game - but often trade them for goods or services that are generated in the real world with real monitary value. If you use a debit card, it is considered "current money" - so the lack of a physical "coin" object seems to be a tenuous distinction (the law doesn't explicitly mention paper either).
There are many other examples of nonstandard exchange practices that would be put in jeopardy by such an interpetation of the law. Everyone should pause for a second.
Rhys wrote : << Since this company was not attempting to pay their taxes with Liberty Dollars, then they have committed no more of a crime by stamping precious metal and selling it than jewelers do by selling stamped metal rings. >>
As an interesting counterpoint to that argument (great points you made, b.t.w) consider this case, in which a company paid its employees at the face value of gold and silver coins of the US mint. This kept their nominal income below the level required for declaring income tax. The signal event is that the IRS lost case!
Posted By: Walt Thiessen
Date: 2007-11-21 16:05:07
Steven: Is it really relevant to the Constitutionality of the statute in question whether the same clause prohibits the states from coining money? I don't really see that that clause makes any difference in the context we're discussing. The fact that the clause prohibits the states from coining money is truly irrelevant to whether the Federal Government can rightfully claim an exclusive right to issue money, and in this case that's all that really matters.
I too appreciate the article. But Ron Paul cannot undue what Congress has done. Only Congress can do that. Too many are looking for Ron to do things as President that he simply will not have the power to do. That is why I wrote The 5th of November 2008 (published on this site 11/26/2007). Ron's supporters simply must focus on the Congressman from their own and surrounding districts.
If the Congress has the exclusive authority to mint coins/create money, why does the Constitution state, In Article One, Section Ten that "no State shall..." It doesn't say "Congress shall not..." Clearly, the Founders intended that there be non-federal currencies and they MUST be backed by gold or silver. There is no other way to interpret this. Has the government even read the Constitution?!
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