Libertarian Thoughts on the Liberty Dollar

There was a piece on discussing the Liberty Dollar.  It contains an interview with Bernard von NotHaus, who is the creator of the Liberty Dollar, which is supposed to be a private currency that is backed by a commodity.  In this case, the commodity is silver. Bernard von NotHaus has been convicted and even labeled a “terrorist”.  He will most likely spend quite a few years in prison.

From a libertarian perspective, von NotHaus should not go to jail.  It would be hard to mistake his currency for the bills that we regularly use for money.  For that, he is not engaging in fraud and he is certainly not forcing anyone to use his currency.  Therefore, if I were on the jury, I would have voted not to convict him.  Regardless of whether he broke a law on the books, I still would not have convicted him based on the power of jury nullification.

I have a certain admiration for people like von NotHaus.  It seems like he is fearless, although I’m sure he is not.  He is basically taking one for the team, so to speak.  However, I wouldn’t advocate that anyone do something like this.  It is just like not paying your income taxes.  You can come up with all of the reasons, legally and morally, for not doing it, but there is still a good chance you will go to jail.  You are better off fighting for liberty outside of prison in most cases.

I also have one major criticism of von NotHaus and it may have prevented him from going to jail.  One of the major reasons for his prosecution (and yes, I know it is all political) and his conviction is that he put a dollar denomination on his currency.  His certificates that were backed by silver said “5 dollars” or some other denomination on them.

The problem here is that the certificates labeled “5 dollars” were not really worth 5 American dollars.  The U.S. dollar is not fixed to the price of silver.  It is a floating price.  The certificate labeled “5 dollars” was really worth a certain weight of silver, which could be more or less than 5 dollars as most people know it.  It would depend on the price of silver.

The ironic thing is that von NotHaus talks about this about halfway through the story linked above.  When they are talking about a Mexican citizen named Hugo Price, von NotHaus criticizes his plan because “he doesn’t have a denomination on it”.  But shouldn’t that be the whole point?

If non NotHaus is so against the current monetary system, why is he trying to link up to it by putting dollar denominations on his currency?

If he had simply put the weight of the silver on his currency, then there is a good chance he could have avoided conviction, or even prosecution in the first place.  In addition, it would be more accurate and it would be beneficial in teaching people that it is the weight of the metal that should matter, not the denomination.

If his currency had simply said that it was worth so many ounces of silver, then it would have been a tougher case for the prosecution.  Instead, it is easy to convince a jury that his currency could easily be misleading as a 5 dollar bill was not really worth 5 dollars.  Although most holders of the Liberty Dollars probably realized that a 5 dollar bill was not really worth 5 dollars, one could still see how it could be highly misleading.

So while von NotHaus should not go to jail, he was not very smart in how he ran his operation.  He should not have competed directly with the government.  He should not have used the term “dollar”.  He should have just issued certificates for a certain weight in silver.

One thought on “Libertarian Thoughts on the Liberty Dollar”

  1. I think you’re on-point regarding von NotHaus’ implementation of the Liberty Dollar. Nevertheless, I admire his efforts. With any luck, Ron Paul will be elected President and would very likely pardon this man.

    I also respect Hugo Price’s Mexican Libertad silver currency idea. I’d be very interested in seeing it in action. My concern is the legal tender value pricing. The legal tender value of the Libertad would constantly fluctuate if the price of silver increased. However, if the price of silver decreased, the legal tender value of the Libertad would remain pegged to its highest value, thus never decreasing. My concern is should the price of silver decrease (particularly should it decrease dramatically), there would be a gap between the price of silver and its legal tender value. While this would provide some stability, there would remain an un-backed portion of the legal tender value and therefore a fiat-like trust in government backing. Regardless, it would still be better than any global fiat currency currently in circulation.

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