Prison May Be the Next Stop on a Gold Currency Journey

http://www.nytimes.com/2012/10/25/us/liberty-dollar-creator-awaits-his-fate-behind-bars.html?hp&gwh=&_r=0

by riffraff • 14 years ago

43 83 14 years ago

This article, and the concept of Liberty Dollar are interesting to compare with BitCoin.

Whereas the head of the created currency is looking at hard prison time (20 yrs), there is no real one entity involved in BTC.

My next question: will BTC be popular or threatening enough that the US treasury take hold and launch lawsuits on counterfeiting as they did in the Liberty Dollar case? And if so, how might they go about it?

bluedanieru5• 14 years ago

No, they'll go after the exchanges and, failing that, users of the currency.

I think any assault on Bitcoin would have a lot more in common with the tactics of the copyright cartels, than this. The decentralized nature of peer-to-peer sharing and Bitcoin is more relevant than the fact that the Liberty Dollar and Bitcoin are both 'currencies' depending on who you talk to. Numerous lawsuits, harsh penalties bordering on unconstitutional (not that it really matters), and selective media exposure of same.

hristov5• 14 years ago

Bitcoin is clearly not a counterfit. It is not at all similar to us currency. I doubt any us attorney will even launch a suit against bitcoin. They only file suits they are pretty sure they can win. So bitcoin is very different than the liberty dollar in this respect.

raverbashing2• 14 years ago

Gold backed currency is overrated

If you disagree with me you can go and convert your savings into gold (but you are probably doing it already)

Remember, you still need US dollars to buy oil.

http://en.wikipedia.org/wiki/Petrodollar

mseebach12• 14 years ago

> Remember, you still need US dollars to buy oil.

Good thing, then, that gold is very easy to convert into US dollars.

"the fluctuating value of the dollar makes it very hard to gauge whether oil prices themselves are rising or falling… Oil today at 2 grams, is about the same as it was in the early 1950s; but if you measure the price in US dollars, you would get the impression that it is about 30 times more expensive today!"

http://pricedingold.com/crude-oil/

bluedanieru5• 14 years ago

How many Big Macs for a barrel? Honest question.

netcan• 14 years ago

This whole "you need US dollar to buy oil" is a silly argument. You need US dollars to buy ipods too. Luckily money is fungible.

mseebach12• 14 years ago

It's also wrong. Yes, the spot markets are priced in dollars, but for an example, almost the entire Saudi production is sold directly to large clients. I'm sure they'd be happy to negotiate settlement in whatever currency or commodity they can use.

ekianjo3• 14 years ago

Convert your dollars in gold. Wait 10 years. If all goes well you will have gained a good percentage of US dollars once you decide to sell your gold to buy stuff again. It's difficult to predict the future value of Gold, but there's no way a paper money, backed by inflationary FED, is not going to lose value against something as solid as Gold.

beagle35• 14 years ago

Funny! You think you can win the game!

Well, first of all, gold can be confiscated from you. It happened in the 30s, it can happen again.

Second, unless you are very well equipped and knowledgeable, it is not easy to buy gold - you may buy a bar, but it might be tungsten, with increasing probability as time passes (and I wouldn't be surprised if the probability is already non-negligible; most trade does not go to great length to verify real goldness).

And third - if you managed to hold on to real gold,, in 10 years, you would have gained a good percentage of US dollars when you convert it -- and the tax man will be waiting to take 35% (federal) + 13% (state, if you live in NYC) off your profit. (Capital gain taxes are very low at 15% - don't expect them to stay that way for commodities, perhaps not even for job-generating investments)

hristov5• 14 years ago

There is a way and it has already happened many times. You goldbugs need to learn some history and gain a bit of perspective.

wintersFright10• 14 years ago

"you still need US dollars to buy oil" well as long as the oil producers are happy exchanging the world's economic lifeblood for paper IOU's which Ben Bernanke is devalueing as fast as he can. I wouldn't bet the current situation will continue much longer.

raverbashing2• 14 years ago

"as long as the oil producers are happy exchanging the world's economic lifeblood for paper IOU"

You can be sure they're still happy, especially producers like Saudi Arabia and Kuwait (and Canada, of course)

Can they replace it? Sure, but there may be collateral effects, the harshest ones including 'Democracy delivery missiles' to said country.

"which Ben Bernanke is devalueing as fast as he can"

No problem! Barrel of oil yesterday was $X today it's $X+Y

brc6• 14 years ago

I am certain that many oil producing nations would be only too happy to exchange their oil for gold.

boon3• 14 years ago

Two of which did: Iraq and Libya. Iran does too. Notice a pattern here?

bluedanieru5• 14 years ago

Whatever asshole compared this guy to Rosa Parks needs to get some perspective.

bluedanieru5• 14 years ago

Downvoted, eh? Yeah I suppose we can compare the struggle of an entire race to break free from systemic and institutional oppression and exploitation, to a bunch of illiterate college students playing at economics.

bitops10• 14 years ago

The issue here is the tone, not the content.

hristov5• 14 years ago

I upvoted you myself, but please do not complain about downvotes.

Kliment• 14 years ago

I feel sorry for people whose parents force eccentric names upon them. Random and Xtra? Really?

s_henry_paulson• 14 years ago

"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation."

- John Adams in a letter to Thomas Jefferson

mseebach12• 14 years ago

This bit confuses me:

At his federal trial, witnesses testified to the Liberty Dollar’s criminal similitude to standard American coins. They said his coins included images of Lady Liberty and cheekily reversed “In God We Trust” to “Trust in God.” Then again, his coins were made of real gold and silver, as American coins are not, and came in different sizes and unusual denominations of $10 and $20.

They may be similar to US coin, which is, if nothing else, dumb. But if they're made from gold and silver, wouldn't they be more valuable than the coins they were confused with? Is that not solid proof against mens rea? Gold is $55/g, silver is $32/g. A US dollar coin is 8.1g, a quarter 5.6g.

TheAmazingIdiot2• 14 years ago

After doing a tiny bit of research (google and wikipedia), it seems mens rea does not apply if said crime is considered a strict liability crime. Examples are selling alcohol to underage, or statutory rape. Counterfeiting is another strict liability crime.

His real crime is, of course, competing with the government. You will lose, unless you take up arms. The government has no problems using excessive force to stop you.

bitops10• 14 years ago

This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache. It would definitely have political and social implications.

[EDIT: I welcome downvotes on comments that are not constructive. If you think this is totally off the wall, please give a good explanation why.]

bitops10• 14 years ago

> But if they're made from gold and silver, wouldn't they be more valuable than the coins they were confused with?

Sort of, but not really. The issue here is mixing the ideas of "a dollar" with "a piece of gold worth a dollar" or "a piece of silver worth a dollar". They are not the same thing.

There's an abstract notion of 'Value: $1.00' that both a piece of paper and a piece of gold links up to.

Hopefully that is a clear explanation.

mseebach12• 14 years ago

No, I get they're not the same thing, that's why I stated that it's dumb they've been issuing coins that resemble dollars. But it would appear that the counterfeit coins are actually worth more than the real coins - that's usually not the point of counterfeiting, and that makes it unclear who the victim of this crime really is.

hristov5• 14 years ago

He did not use pure gold or silver. The coins had less gold or silver than their respective face value.

By the way, there are gold and silver american coins that are still legal tender. There are many different legal tender gold and silver us coins that have a woman on them and the word liberty and they are often referred to as liberty dollars.

One side of his coin is especially similar to a silver coin called the peace dollar (but also often referred to as the liberty dollar).

bunderbunder2• 14 years ago

> He did not use pure gold or silver. The coins had less gold or silver than their respective face value.

Putting in an amount of gold equal to its supposed monetary value would have been a losing business proposition. He'd have been losing money every single time he traded a Liberty dollar for US dollars. If the Liberty dollar is worth exactly the amount of gold that's in it, then the only way he could even break even is if the cost of minting coins were zero. He'd essentially be turning himself into an easy way for currency speculators to avoid brokerage fees, and losing his shirt in the process. (This is assuming he weren't using gold that he had previously stockpiled when it was at a lower price.)

Putting only a little precious metal in the coins is a much better business decision. Having some precious metal in there would be reassuring to members of his target demographic. Having less than the coin's stated value in there means that he had some shot at maintaining control over the market and having a viable business plan.

That, and I suspect that keeping the actual value of gold at arm's length would be an absolute necessity. Just look at what the price of gold was doing over the time that Liberty dollars were being issued. A currency that's constantly strengthening against all others at a double-digit rate is not a currency on which one could base a stable economy. cf.) Dutch disease.

cubicle67• 14 years ago

this is where your US infinite detention becomes interesting. Both Obama and Romney support the infinite detention of American citizens without trial, but most people aren't worried as it's "only for the bad guys"

What happens when you get on the bad side of the gov, like this guy? Declare someone a Domestic Terrorist and you can lock them away for good. Sure, it almost certainly won't be used in this case but that's not the point; the option shouldn't event exist

anyway, good on the guy. Rosa Parks hyperbole aside, what's the problem with people trading in gold coins if they like? more power to them

jQueryIsAwesome• 14 years ago

Democracy (+Capitalism) is not working for many countries and USA is the best example, I honestly think that even monarchy would be better; there is a small chance a prince would happen to grow up to be an intelligent good person but in your system the only 2 candidates are cherry picked by the people with very deep pockets trying to make those deeper.

boon3• 14 years ago

Spot. On.

When the laws can be used to put anyone in jail for just "annoying" the "civilized and obviously good for you" status quo, you are in big trouble.

seacond• 14 years ago

"...with his sons Random and Xtra..."

carsongross• 14 years ago

One thing is clear: the government really hates gold.

Good enough for me.

bunderbunder2• 14 years ago

I'm not sure I buy the idea that this is as simple as the Federal government wanting to ban all currencies that are not the dollar. I don't buy it because there's still no sign of them trying to crack down on other alternative currencies such as Ithaca Hours. And Ithaca Hours are, I believe, older and more well-established.

It wouldn't be the implication that the alternative currency has a cash value in US dollars, because Ithaca Hours are pegged at $10 per Hour.

I wonder if it's that the Liberty Dollars were issued by a for-profit organization rather than being community organized like other alternative currencies I'm aware of. If I remember right, the "dollar monopoly" was originally enacted in response to the fracas around Civil War tokens. During the war companies had been issuing their own scrip that started to be used as currency in the surrounding communities. There were a number of minor financial catastrophes that happened whenever the issuing company would stop honoring its scrip, thus causing the currency to collapse. And the scrip issuer essentially made off with however much US currency they had received in exchange for the script. So the government decided to ban that as a form of (at the time clearly much-needed) consumer protection.

Anyone who's more knowledgeable about the applicable law and its history who can comment?

Prison May Be the Next Stop on a Gold Currency Journey

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