Early Thursday morning federal agents from the Secret Service and FBI raided the Evansville, Indiana offices of NORFED, makers of the Liberty Dollar and other alternative 'barter' currencies of which they claim to have $20 million dollars in circulation. The business, owned by Bernard von Nothaus, mints copper, gold, silver and platinum coinage and produces paper certificates with fixed values based on their reserve of gold and silver.
Their products have become popular with those concerned about the instability of greenback paper currency issued by the Federal Reserve and with the falling value of the dollar relative to foreign currencies. Beyond just providing novelty coinage like their recently minted 'Ron Paul Dollar', the company promotes the idea of moving away from using federal paper money as a medium of exchange and using real-value coinage instead, in what is legally considered a barter system, but basically amounts to an alternative monetary system. They have enjoyed substantial success and sales through the internet, and thousands of businesses nationwide accept their coins and paper money.
In Thursday morning's raid about a dozen agents showed up and seized most of the company's assets, including computers, paperwork and a large amount of gold, silver, platinum and copper including two tons of just arrived copper Ron Paul dollars. They also froze their bank accounts and seized specie being held in a secure location to guarantee their paper money. The warrants which were served along with some information from the company are available on their website. What is not clear from the documents are the exact reasons for the raid, although the warrant cites money laundering, mail and wire fraud. The argument for the seizure seems to rest in a statement about the Liberty Dollar issued by the US Mint last year, which cites the recommended uses and the design of the 'medallions' as intended specifically to set them up as a competing currency to the US Dollar in violation of constitutionally guaranteed exclusive right to mint coinage granted to the federal government. More details are probably in the affidavits associated with the warrants, but they are not yet available.
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Article comments
— go to most recent comments1 - Dave Nalle
Just a quick note to follow up on this. I've got calls in to the federal prosecutor for the district which issued the warrants to try to obtain more information, so a followup article ought to be in the works soon.
Dave
2 - RJ
Great piece. This could be an example of yet another federal government raid aimed at silencing a "fringe" political movement. There have been quite a few examples over the last couple decades...
3 - Clavos
So, it sounds like the feds are trying to nail them to a "cross of gold..."
4 - Clavos
Damn! Just saw your featured book, Dave. And I thought I was being so clever...:>)
5 - Dave Nalle
Aha, beat you to the punch. But seriously, it was Bryan who launched the greenback movement into national prominence, so he belongs in this discussion somewhere.
Of course, his brilliant idea was to double the amount of money in circulation, instantly halving the value of every dollar held in savings, making the rich of the nation instantly half as rich. Bad craziness.
Dave
6 - Clavos
He definitely does.
I've heard a lot of back-and-forth about the gold, later silver (I remember the "Silver Certificates"), backed currency, including an econ prof i had who hammered on the point, noting that the key to unbacked currency is confidence in the government that issues it.
Given the state of the world, and especially the generalized lack of confidence in their gov. currently being voiced by so many Americans, it DOES give one pause.
7 - Dave Nalle
My main problem with NORFED is that their coinage - although very nicely produced and quite cool - did not carry a nominal value or sell at a price which was close enough to its true specie value. When I can buy gold or silver in bar form with a relatively reasonable service charge, why would I want to pay 20-30% per dollar to get von Nothaus' coins instead? And the copper Paul dollars were particularly bad, with a markup of almost 80%. Copper is at 22 cents an ounce and he's calling a 1 ounce copper coin a dollar? Come again?
Another odd aspect of this case is that the feds haven't arrested anyone or shut down the website. Going to see what more I can find out tomorrow.
Dave
8 - Darren
When the MSM news channels get ahold of this, it's going to be more free publicity for Paul. He'll be called up for interviews on the subject of competing currencies.
9 - Ian
Greetings from the frozen north...far north.
From my recollection of the Liberty Dollar web site, it is not presented as a way to buy simple bullion and in fact, it’s stated there that if you want bullion, buy bullion. These are sold as tokens with an intrinsic value meant for facilitation of trade. Simple. If the bullion content is really an issue for you, I would invite you to take 4 US quarters out of your pocket and realistically value the metal content of the mint’s own tokens.
At 22.8 grams of COPPER, neglecting whatever material it is sandwiched between, the metal content of one dollar (4 quarters) US is worth something in the order of $0.16. SIXTEEN CENTS at today’s price of $3.10 per pound. But most people would accept it as One Dollar. I guess that metal content isn’t really an issue.
10 - Dave Nalle
All understood, Ian. But the point is that for a currency to be backed by specie, it needs to have a value at least somewhat similar to the value of its specie content. Being marginally better than fiat currency isn't really enough of an improvement to be meaningful.
Interesting that the copper content of 4 government quarters is about the same as the copper content of 1 Ron Paul copper dollar.
Doesn't that make it all kind of meaningless?
Dave
11 - Christopher Rose
"Dave Nalle has been a magazine editor, freelance writer, capitol hill staffer, game designer and taught college history for many years." But can't spell affidavits! Fixed it for you...
12 - Anthony
"But the point is that for a currency to be backed by specie, it needs to have a value at least somewhat similar to the value of its specie content."
-Your point makes absolutely no sense because if the 1 Dollar Federal Reserve Note was to be backed by 1 Dollar worth of Silver how much would it weigh? The one oz. Silver American Eagle coins are stamped "One Dollar" when we all know an oz. of silver is about 15 Federal Reserve Notes now.
If X is the currency, and Y is the specie then what you just said was " X = Y if X = Y ". It seems to make sense at first but when we examine it in light of what I wrote earlier then 1 = 15 ... we all know 1 does not equal 15.
"Being marginally better than fiat currency isn't really enough of an improvement to be meaningful."
-You may be correct, however Liberty Dollars cannot be considered "marginally better" -- they are leaps and bounds better if you apply this same rule to any other circulated fiat-note.
"Interesting that the copper content of 4 government quarters is about the same as the copper content of 1 Ron Paul copper dollar.
Doesn't that make it all kind of meaningless?"
-Actually it only gives it more meaning, when a small private company can rival the exceptionally larger private Federal Reserve we have to ask ourselves "What really is the difference?"
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I have been witnessing the Federal Reserve Note loose value closely for the past 2 years now, so I am glad I have kept my value in real money instead of Debt-backed Promissory Notes. Let us think critically about the issue and play devils advocate for a moment...
1. There is obviously a demand for value backed currency or the Liberty Dollar would not exist.
2. The Liberty Dollar does not have to be accepted for the Dollar Value stamped on it.
3. Products priced in Federal Reserve Notes do not have to be sold for an even exchange of Liberty Dollars, or for Liberty Dollars at all!
4. I have the right to choose what form of payment I accept, and once the feds remove that right we have a serious issue.
5. Article I Sec. 10 of the US Constitution.
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13 - Ian
Dave;
Their claim is that the system is backed by silver, not copper. I suspect that the copper piece was simply an attempt to complement the paper One Liberty Dollar, so; if I understand their redemption system, 20 could be converted to one ounce of silver worth $14.50 today. That would be as you say, "value at least somewhat similar to the value of its specie content" and as the US dollar slides, the relative value of the silver will increase.
A couple of years ago, Liberty had a silver One Dollar coin about the size of a dime containing 1/20 ounce of silver.
14 - Paul
I'm Just annoyed that the fed raided them in the first place. I guess it means that I won't be getting my already paid for 2008 copper $1 coins :-(
We don't use these coins as currency, just for selling to collectors here in Australia, as they are nice items!
15 - troll
the last time Ron Paul and Chavez did lunch they discussed basing the oil trade on Liberty dollars...that's what I heard anyway
16 - Jeremy Trudell
This is SO MUCH bigger than many people realize. ALL corruption in this country is built around the fraudulent ponzi scheme of the Federal Reserve (google Fiat Empire). They saw the Liberty dollar gaining momentum and knew with a falling dollar they didn't want the public to have an alternative. The powers that be need to be able to control us through the currency, so that the fraud is too complex for the average Joe. Liberty dollar threatened that plan...they hit at the root of our governments evil and hit a nerve. Keep chopping at that evil!!
17 - Rob
The Liberty Dollar is a private business, and cannot pass off operating costs to taxpayers.
Just as retailers buy wholesale, and sell at retail value to stay in business and make a profit (hopefully), the Liberty Dollar must also operate in the same fashion. Spot price is WHOLESALE.
The difference between the spot price of silver (wholesale), which can ONLY be obtained when purchasing a 1000oz silver bars, and the face value, is minting costs (adds value), administrative operation costs of a private business, warehouse storage, and fire and theft insurance fees, and insertion fees. Most of these costs add value to the end product. Otherwise, the LD would never make it into the hands of consumers, period. You can't purchase bullion without a 10 - 20 percent premium because you are purchasing it from a retailer! Likewise, you should not expect to purchase a privately minted medallion LDs at wholesale. As such, there is no inherent fraud involved in passing along costs to the consumer. If the opposite were true, then the Fed would be even more guilty to the commission of committing fraud, since the Federal Reserve Notes they print, costs them only 4 cents! They then print whatever denomination they wish, $1000, 1,000,000. Folks, that is the real fraud. A Dollar was formerly defined by The Conage Act as so many fine grains of silver. Your greenbacks today have NO silver backing.
The fact that a copper Liberty Dollar only has about 20 - 22 cents worth of copper, is not relevant. It only means there is inherent, or speculative value, added to the product. The costs involved as described above, add additional value, and is passed along to the consumer.
The Liberty Dollar is NOT a coin. A "Coin" is something the government puts out, based on gold or silver. Modern day dimes, nickels and quarters are NOT coins, they are legally referred to as "Token Money". See terms in Blacks Law Dictionary.
The American people have been hoodwinked by the banking cartel.
18 - Some Wage Slave
So now Ron Paul is a "radical monetarist." Oh goody. Sound money backed by gold and silver is radical, but money that is printed out of thin air with no backing is just fine and dandy! Keep that propaganda going! The days of the federal reserve are numbered.
19 - Mark Herpel
As you point out this was very interesting timing on the raid with the falling dollar. I have some of the silver 'discs' I've been collecting and I'd kill for a copper RP dollar, but when using them to buy products, I always referred to the spot price of silver, never the face value I believe people understood the difference.
"the raid came as a result of customer complaints because of delayed delivery of the new Ron Paul coinage for which orders were taken in advance. Another concern may be the discrepancy between the nominal face value of the coins and their actual specie value" ....I don't think either of those were the legal reasons for the raid.
"those holding paper money which ought to be redeemable for silver" ...Sign up for their class action suit to get the bullion back, he said about a million in paper and digital backing had been seized.
Thanks for the great post and the info Dave. We all look forward to hearing more from what the prosecutor said-
Mark
DigitalMoneyWorld
20 - gonzo marx
ok..reading this i fail to see the weirdness..
the LD is just another fiat currency without meaningful backing...or do they claim you can turn in their currency for specie at market value?
if not, what's the point?
if memory serves, during FDR's administration, this kind of thing (bank notes and the like) were done away with, having been considered part of the causes for the Depression (around the time we got off the gold standard, Historians, correct me if i messed up the time line)
bottom line, as far as i am Aware...a private business is prohibited by Law to compete with the Federal Reserve...
note places like the Franklin Mint have gotten around this by issuing their coins as "collectors items" NOT as currency
Excelsior?
21 - Dave Nalle
"Dave Nalle has been a magazine editor, freelance writer, capitol hill staffer, game designer and taught college history for many years." But can't spell affidavits! Fixed it for you...
Never claimed to be a lawyer, snarkyboy. It's not a word I use a lot and the spellchecker didn't catch it, so thanks for fixing it and sod off.
Dave
22 - Dave Nalle
Likewise, you should not expect to purchase a privately minted medallion LDs at wholesale. As such, there is no inherent fraud involved in passing along costs to the consumer
Rob, I never said anything about people getting pure silver coins at a wholesale price. It's perfectly reasonable to expect costs of production and other expenses to be included in the face value. I was merely looking for possible reasons why accusations of fraud might be leveled at the company, and the most likely seemed to me to be the discrepancy in value between their copper coins and paper money and whatever they had in reserve to back them up.
If they claim the coins and paper money are backed by silver and don't have enough silver to cover what they issued, then an argument that they are committing fraud could easily be made to a friendly judge.
And yes, I realize that technically the LD is not 'currency', but putting the legal fiction aside, that's what it was intended to be used as for all practical purposes.
Dave
23 - Les Slater
Gonzo,
U.S. went off gold standard on August 15, 1971.
Les
24 - gonzo marx
thanks Les...
i was a bit confused having remembered this bit -
n 1933 President Roosevelt nationalized gold owned by private citizens and abrogated contracts in which payment was specified in gold.
but have found that it's final demise was , as you stated, under Nixon in '71
a bit confusing at first, i had thought that the FDR nationalization of gold in '33 ended it...but reading up i found it as you stated...citizens couldn't hold, but the government did and redeemed currency for gold until '71
Excelsior?
25 - Dave Nalle
BTW, I've updated the third paragraph of the article with an additional link which provides some information on the governmment's reasoning behind the raid.
Dave