Where The Liberty Dollar System Failed And Why.
The Liberty Dollar was a noble experiment. While the idea, to bring silver and gold money back to the United States, is a very good idea, the Liberty Dollar was doomed for failure from its inception.
I spoke with Bernard von NotHaus over the phone one day and tried to explain to him why his system would not work in the long term. He didn’t want to hear any of what I had to say.
The first flaw was that their “money” has a fixed “denomination”. Every time the ratio of silver to Federal Reserve Notes changed, they had to change all their “money”. When they went from the “$10.00 Base” to the “$20.00 Base” all the coins had to be turned in to be re-minted (for a fee) and the paper had to be turned in for exchange (for free). When the ratio went down, all the “money” had to be exchanged once again from the $20.00 Base to the $10.00 Base. Not very convenient, would you say?
The second flaw is the most important flaw. They violated Federal Law. Now, anyone can have silver and gold coins minted for commemorative purposes. There is no law against that. Here is the law they violated;
TITLE 18 > PART I > CHAPTER 25 > § 486
§ 486. Uttering coins of gold, silver or other metal
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. (Emphasis mine)
“To Utter” means “To put into circulation”. This is why the Liberty Dollar was doomed even before it started. The Liberty Dollar website was filled with tips and ideas on how to put the Liberty Dollar into “Circulation”. This is what I tried to explain to Bernard von NotHaus. He was so intent on having “his own money”, that he didn’t want to hear it. It makes me wonder what his real intent and purposes were.
What I also tried to explain to him was that you cannot fix the value of the silver coin. The exchange rate between silver and Federal Reserve notes fluctuates day-by-day and hour-to-hour. You need to let store owners, and individuals, decide for themselves how much value to give to the silver. The consumer will shop where they receive the most “value” for their “money”.
Besides, the United States currently has available both silver and gold coin to use. These coins are Legal Tender, minted by the US Mint, and are authorized by the United States Congress to be minted in sufficient quantity to meet demand. These coins are the Silver Liberty and Gold Eagle. We also have the pre-1965 Halves, quarters and dimes which are 90% silver. There is no need to “create” your own money. We already have it!
Needless to say, Bernard von NotHaus didn’t listen to my advice and is now in jail. I agree that we do need to follow the Constitution and use only silver and gold as payment. Unfortunately for Bernard von NotHaus, he did it the wrong way.