Economics is Boring, Money is Cool

Even though screeds against fiat currencies aren’t entirely convincing (see Stephen Zarlenga’s work at http://www.monetary.org/ ), the Bernard NotHaus/NORFED story is an important chapter in America’s history of, not only money, but the rule of law and Constitutional imperatives. The Liberty Dollar case challenges the Money Power of the Federal Reserve and deserves wider exposure. 

MAD MONEY by Daniel S. Comiskey

From an Evansville strip mall, Bernard von NotHaus ran the most successful alternative currency in the country. Then the FBI raided his headquarters, arrested him, and seized eight tons of gold and silver backing the notes. But even as he awaits sentencing, the $65 million question remains: Was it really counterfeiting?

Silver and gold. They have staying power. Civilizations have been using them as currency for thousands of years, and for most of the last two centuries, American cash was backed by one or the other. The U.S. started using silver dollars in the late 1790s, a period in which hundreds of banks were still printing their own money. When the country began issuing greenbacks during the Civil War, you could trade them in for gold at any time. The wisdom of that system has been fiercely debated ever since. Although Franklin Roosevelt effectively ended the gold standard in 1933, freeing up the country to print as much cash as necessary without requiring stockpiles of metal to back it, opponents persist to this day. Presidential candidate Ron Paul has advocated for a return to money backed by precious metal. He even mentioned the Liberty Dollar on the floor of Congress in March 2011.

But what was life like under the gold standard? “It was awful,” says Richard Cooper, a professor of economics at Harvard University and former chairman of the Federal Reserve Bank of Boston. “The American public today would find it completely unacceptable. So I’m bemused by these people who want to get back on it. If you can only issue money against gold or silver, you’re depending on the production of those metals. And what determines production? Availability of ore and price. So you’re completely dependent on the accidents of discovery. It’s a foolish standard.”

Liberty Dollar coins are now classified officially as contraband—illegal even to own—although legions of them are likely stashed away in drawers and fire safes across the country. Some continue to trade on eBay, where they sell at a hefty markup. A Silver Liberty can go for about $60, twice its silver value. Some of the rarer ones bring $1,000. The prosecution in this case has indicated it won’t go after individuals who simply own some of the currency, but that selling it puts a person at risk. Like many of the regional currency officers are likely doing, Indy’s McConnell is sitting on an untold amount of it, waiting to see how this all plays out. His support for his old business partner does not fear hyperbole. “No one has sacrificed as much for freedom as Bernard,” he says. “He’ll see this through to the very end.”

Full text at http://www.indianapolismonthly.com/features/Story.aspx?ID=1725808

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