LIBERTY DOLLAR

The 'Liberty Dollar' is a private currency embodied in minted metal pieces and gold & silver certificates (ALD), and electronic currency (eLD). It is distributed by Liberty Services (formerly NORFED), based in Evansville, Indiana. The company that mints and warehouses Liberty Dollars is Sunshine Mint in Coeur d'Alene, Idaho. The Liberty Dollar was created by Bernard von NotHaus, the co-founder of the Royal Hawaiian Mint Company.[1]

Inflation Compensation

From its debut on October 1, 1998 to November 23 2005, NORFED exchanged one troy ounce silver Liberties valued at ten Liberty Dollars for US$10. On November 24, 2005, the silver base was raised to US$20 because of the falling purchasing power of Federal Reserve Notes (i.e. the rising FRN price of silver). $10-base/tr.oz. rounds can be exchanged for a small fee. $10-base paper certificates can be exchanged for the new $20-base certificates at no cost. In January 2007, Liberty Services began an exchange service to convert Liberty Dollars into U.S. dollars. A partial list of merchants accepting Liberty Dollars can be found online [2].

Denominations

Liberty Dollar before $20/ounce base change

Liberty Dollar before base change.
Year 2000, 1 oz pure .999 silver piece.

Medallions:


Overview of current $20-base Liberty Dollar medallions
$ Face Value (ALD monetary value)	Diameter (mm)	Thickness (mm)	Weight & Composition (intrinsic value)	ISO 4217 equivalent
$1 Copper Liberty			one avoir dupois oz. round, pure copper
$1 Silver Twentieth Liberty			one-twentieth tr. oz. round, .999 fine silver	XAG0.05
$5 Silver Quarter Liberty			quarter troy oz. round, .999 fine silver	XAG0.25
$10 Silver Half Liberty			half troy oz. round, .999 fine silver	XAG0.50
$20 Silver Liberty			one troy oz. round, .999 fine silver	XAG1.00
$1000 Gold Liberty			one troy oz. round, .9999 fine gold	XAU1.00
$2000 Platinum Liberty			one troy oz. round, .999 fine platinum	XPT1.00
$1, $20, $1,000, $2,000 Ron Paul Dollars			in copper, silver, gold & platinum, respectively

Certificates:

★ $1 silver certificate (brown)

★ $5 silver certificate (magenta)

★ $10 silver certificate (blue)

★ $20 silver certificate (red)

★ $1000 gold certificate (gold and blue)
Since Thanksgiving Day, 2005, the old silver notes and $10 Silver Liberty are obsolete. There is a reminting fee to melt down old one-ounce $10 Silver Libertys and remint them into $20 Silver Libertys, but the paper certificates can be exchanged at no charge.
Like the euro but not the U.S. dollar, the certificates' size and color varies with the value. However, unlike the euro, only the long dimension varies, similar to Japanese yen bills. The higher the value, the longer the certificate.
The copper, silver, gold and platinum Liberty rounds have a similar design except for particulars such as mint date, weight and currency value. Gold is denser than silver, so the Gold Liberty is smaller, with about 5/6 the diameter of the Silver Liberty round. Both rounds have reeded edges, like on the U.S. quarter and dime, intended to discourage coin clipping.
Each piece of currency (whether certificates or medallions) bears, in addition to its specific weight and its denomination in Liberty Dollars, a toll-free US phone number (888-LIB-DOLLAR) and a web URL (www.libertydollar.org) intended to allow bearers to make contact with Liberty Services or a local Liberty Dollar representative. Liberty Dollar Regional Currency Officers and Liberty Dollar Associates are not required to exchange Liberty Dollars for U.S. dollars under their contract with Liberty Services after the customer or merchant originally agreed voluntarily to accept them. Liberty Dollar distributors are instructed never to refer to Liberty Dollars as legal tender or "coins", and if questioned are to claim that Liberty Dollar silver are silver pieces backed by silver and gold, and a private, non-government currency.

Collector's value

Some people collect circulating Liberty Dollar rounds and certificates for their potential collector's value, including issues denominated in the current $20-base and especially the obsolete $10-base/troy ounce. Numismatic collectors also trade limited-edition rounds in $10-base denominations of $1, $2, $5, $20, and $50 which were not intended to circulate because they cost more per ounce of specie than circulating denominations.

Ron Paul Dollar

Gold Ron Paul Dollar
1 oz pure .9999 gold piece.

On July 3 2007, Bernard von NotHaus announced that he and Liberty Dollar Associate Nic Leobold were creating The Ron Paul Dollar (RPD),^[1] to honor libertarian Republican Congressman Ron Paul on account of Paul's long-time advocacy of a return to the gold standard and his 2008 presidential campaign. Limited editions of the RPD with a Bill of Rights Scroll hallmark and numbered hallmarked series are being issued. It is currently made in copper, silver and gold. A platinum version has been confirmed and is currently being ordered.

Anti-counterfeiting features

The paper Liberty Dollars include security features such as holograms, microprinting, UV fluorescent ink trim, hot gold and silver foil stamping, and an invisible synthetic DNA security thread.
The outer edges of the certificates contain the following:

★ Top - Preamble to the United States Constitution

★ Bottom - United States Declaration of Independence

★ Left side - Pledge of Allegiance

★ Right side - First Amendment to the United States Constitution
They appear as dots to the naked eye, but are visible with a magnifying glass.

eLiberty Dollars

eLibertyDollars (or digital Liberty Dollar) are electronic money which are intended to be used for online transactions. These are identical to Liberty Dollars except the currency exists as online trading credits rather than as paper currency. They are purchased with US dollars or Liberty Dollars but can only be redeemed for Liberty Dollar silver certificates or rounds.

Differences from other "alternative currencies"

A number of alternative currencies exist in the United States, including the Liberty Dollar, Phoenix Dollars, Ithaca Hours, and digital gold currency. Unlike most other alternative currencies, both Liberty Dollars and Phoenix Dollars are denominated by weight and backed by a commodity. Phoenix Dollars are backed exclusively by silver, while there are both gold and silver backed Liberty Dollars. Liberty Dollars differ from other alternative currencies in that they carry a suggested US dollar face value.
Community currencies have trouble because there is little to stop the issuer from producing more currency.^[2] The primary difference between the Liberty Dollar and Hours is that Liberty Dollars are backed by an objective measure -- a weight in metal.
Previous attempts at establishing an alternative currency in the United States focused on Time Dollars: the value of the currency is tied to a specific unit of time; i.e 1 hour = 1 Time Dollar, so it depends on people in the future willing to swap their labor time, regardless of the market value of the labor provided. Community currencies like Ithaca Hours are distinctly different from and not to be confused with the Time-based currency developed by Edgar Cahn, in which members of a "Time Bank" exchange services with one another in increments of time. Performing one hour of service to another member earns the provider a Time Dollar, which can be banked and spent later on an hour of any kind of service from another member. There is no US$ value assigned to the unit of exchange, goods (unless they are quantifiable in terms of time) cannot be purchased with Time Dollars, and they are backed only by a moral obligation to reciprocate at some future time. The purpose of the Time Dollar system is to encourage and reward the co-production of common goods - like healthy families, community justice, or education - by the members of a community. Therefore (unlike Ithaca Hours and other community currencies), Time Dollars are tax-exempt and "inflation-proof," and are considered a ''complementary,'' rather than an ''alternative,'' currency.
Major differences exist between how the different currencies are intended to be used. Trust-backed currencies are naturally limited to small areas and are intended to function only as local currencies, to be used in a specific city or region, with the possible exception of the Time Dollar, which (given new technology) can be exchanged over large geographic areas, while commodity-backed currencies are intended for use on a much larger scale. Liberty Dollars are marketed as an alternative national currency in the United States. Phoenix Dollars are intended more for use as investments in silver than as an alternative currency, and are marketed for worldwide use.
Liberty Dollars differ from digital gold currency in that online gold currency can be redeemed for dollars, euros or other national currencies through various online services at the actual spot price of the metal. eLiberty Dollars can be redeemed for silver Liberty rounds or for paper Liberty Dollars at par--currently one troy ounce silver Liberty round for twenty eLiberty Dollars.

Liberty Dollar Base Values, "MoveUps", and the "Discount" & "Commission"

Liberty Dollar is based on the Liberty Dollar "Base Value" created by Bernard von NotHaus. Currently the Base Value of Liberty Dollar is $20 Liberty Dollars to one ounce of silver. One ounce Liberty Dollar gold pieces are now denominated $1,000 with a maximum charge of 10% over spot price with membership. The previous Base Values were $10 silver ounce and $500 gold ounce. Non-members pay full face value for all currency except for certain Special and Numismatic items. Members' discounts range from 0% to 50%+ (actually, for short periods during crossovers it is possible that even members cannot buy Liberty Dollars at cost or less).
Liberty Dollar Associates and Merchants used to exchange for Liberty Dollars "at a discount", so they could "make money when [they] spend money." To further distinguish how Liberty Dollar works, von NotHaus transitioned to a commission structure in June 2007 where Associates and Merchants receive a commission in the form of extra Liberty Dollars when they place their orders. Regional Currency Officers have always received larger discounts, since they are the regional distributors and official representatives of Liberty Services.
The Liberty Dollar Associate and Merchant discounts can range from 0.0%-50%+ (zero to more than fifty percent) depending on where the price is of silver is, relative to the Liberty Dollar Base Value, the Liberty Dollar Base Value Crossover Points, and the time periods the price has stayed above varying moving-day averages over 30, 60 or 90 days in a fluctuating market, based on Liberty Dollar formulas worked out by von NotHaus. [3] [4] [5] [6]

Federal Government response

Numerous individuals within the US Government have been interviewed regarding the Liberty Dollar. One Secret Service agent stated "It's not counterfeit money" while remaining "skeptical" of NORFED. Another agent warned that the Liberty Dollar "appears to be in violation of Title 18, Section 514 of the United States Code."[7]
Claudia Dickens, spokeswoman for the U.S. Treasury Department's Bureau of Engraving and Printing, had previously said American Liberty Currency is legitimate. "There's nothing illegal about this," Dickens said after the Treasury Department's legal team reviewed the currency. "As long as it doesn't say 'legal tender' there's nothing wrong with it."[8]
In 2006 the U.S. Mint issued a press release stating that prosecutors at the Justice Department had determined that using Liberty Dollars as circulating money is a federal crime. The press release also intonated that the “Liberty Dollars” are meant to compete with the circulating coinage (currency) of the United States and such competition consequently is a criminal act. ^[3]^[4]
Using a currency as "circulating money" means treating and presenting it as legal tender. The Liberty Dollar organization responded to the Mint's press release by stating that "[t]he Liberty Dollar never has claimed to be, does not claim to be, is not, and does not purport to be, ''legal tender''. The Liberty Dollar repeatedly has emphasized that it is not ''legal tender''. ''Legal tender'' and ''barter'' are mutually exclusive. The Liberty Dollar is a numismatic piece or medallion which may be used voluntarily as ''barter''."[original emphasis][9]

Lawsuit: von NotHaus vs the U.S. Mint

On March 20 2007, Liberty Services owner Bernard von NotHaus filed suit in the District Court for the Southern District of Indiana against the U.S. Mint's claims regarding the Liberty Dollar. Defendants include Henry M. Paulson, Secretary of the Treasury, Alberto R. Gonzales, Attorney General of the United States, and Edmond C. Moy, Director of the Mint. The suit seeks a declaratory judgment that circulating Liberty Dollars as a voluntary barter currency is not a federal crime and an injunction barring the Defendants from publicly or privately declaring the Liberty Dollar an illegal currency and to remove any such declarations from the U.S. Mint's website. [10]

Criticism

Due to inflation, Liberty Dollars cannot be bound to a specific valuation in United States dollars over time; Liberty Services maintains the parity of one Liberty Dollar to one US$1 by re-basing Liberty Dollars as the purchasing power of the US Dollar (Federal Reserve Note) falls, leading to the circulation of two different versions during re-basing transition periods. [11] Liberty Services has plans for further re-basing as the dollar continues to fall. [12] Note that this only deals with newly-created Liberty Dollars; regardless of US$ inflation, Liberty Dollars already in circulation are not re-based unless shipped back to Liberty Services for that purpose.
A one troy ounce Liberty Dollar is intended to be spent at its ALD20 monetary value, for a premium over its intrinsic value.[13] Liberty Dollars are currently sold or exchanged for about US$7 over the spot price of silver (as of July 15, 2007). A de-monetized one troy ounce American Silver Eagle (US$1 monetary value) is currently sold for US$22 by the U.S. Mint, yet can be bought for about US$2 over the spot price of silver [14]. Liberty Dollar distributors are given a large discount when exchanging US Dollars for Liberty Dollars [15]. U.S. Mint distributors are given a large discount when exchanging US Dollars for American Silver Eagles. These discounts are used for transportation, marketing and storage costs.
Liberty Dollars are purchased at par for US$1 each, yet conversion from ALD to US$ is at discount based on commodity spot price.[16] Although every US$ converted into ALD reduces the national debt burden by improving the money supply, U.S. national banks are economically and politically unable to directly lend in Liberty Dollars.
Critics of the Liberty Dollar include Carl Watner, who publishes the voluntaryist newsletter ''The Voluntaryist'',^[5] and Las Vegas libertarian writer Vin Suprynowicz, who refers to Liberty Services as a multi-level marketing system.^[6]
Some critics, including Watner, agree with the concept of hard money but disagree with Liberty Services' implementation, saying the "silver base" is extremely rigid compared to the spot price of silver, and recommend instead the use of generic silver rounds as currency. Furthermore, critics assert that stamping a dollar amount on the Silver Liberty defeats the purpose of measuring money in terms of weights of specie, and that the design of the piece may confuse some people into thinking that the Liberty Dollar is legal tender (forced tender) rather than a voluntary private currency.

References

1. Ron Paul Dollar
2. Transaction Net "Important Terms and Concepts" (glossary)
3. Justice Determines Use of Liberty Dollar Medallions as Money is a Crime
4. U.S. Mint: NORFED’s Liberty Dollars
5. Fed up with the Federal Reserve Watner, Carl
6. Letters to the Editor Vin Suprynowicz

External links

★ Liberty Dollar website

★ eLibertyDollar

★ Ron Paul Dollar

★ "Fed Up With the Federal Reserve" by Carl Watner

★ The Indomitus Report

★ "'Liberty Dollars' Can Buy Users A Prison Term, U.S. Mint Warns" Elizabeth Williamson, October 10 2006, ''Washington Post''

★ ALDForums.org : Unofficial (currently) discussion forum for American Liberty Dollar consumers

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