The Coin Police

Last month, Bernard von NotHaus was convicted in federal court on conspiracy and counterfeiting charges following an investigation into his successful enterprise selling “Liberty Dollars”.  Now, according to the AP, federal prosecutors are attempting to seize $7 million worth of these silver coins, despite the fact that they do not remotely resemble U.S. currency.

Von NotHaus has argued it’s not illegal to create currency to privately trade goods and services. He also has said his organization took pains to say the Liberty Dollars shouldn’t be called “coins” and shouldn’t be presented as government-minted cash. Among other benefits, Michel’s motion argues, the Liberty Dollars were a means to help keep currency in local communities by creating networks of merchants and consumers who used the money.

Numerous cities and regions around the country have experimented with local currency, but laws restrict them from resembling U.S. bills or from being passed off as money printed by the federal government.

My guess is that most people who read about this story, instead of applauding the courageous acts of the federal prosecutors, will quickly search the Web for a way to pick up a couple of these Liberty Dollars.  Not only are these coins desirable, but they lack the element of deception which seems to be the entire basis of counterfeit currency.  Mr. von NotHaus has not deceived his customers into buying coins that advertise a certain weight in silver, while actually containing a different metal altogether.  He simply took valuable metals, molded them into coins, and sold them to customers to satisfy a demand for a certain product.  U.S. attorney Anne Tompkins went so far as to compare this service to terrorism:  “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism.” Unique, indeed.

In a recent video blog, economist Peter Schiff was quick to point out the absurdity of calling such an endeavor ‘counterfeiting’ since there was no deception involved, unlike the coining of actual U.S. currency.  Apparently dimes and quarters have ridges to prevent crafty tricksters from filing or clipping silver from the edges and still passing the coin off as if it had the same weight and value–ridges meant it had not been tampered with.  But now that these coins are no longer made of silver, what purpose do these ridges serve?  Furthermore, what is the point of plating these copper quarters with nickel in order to make them look like silver?  Fact is, fake ridges and clever nickel plating seem much more deceptive and damaging to legitimate currency than does creating an honest coin that may serve an investment or bartering purpose.  Its no surprise that the coins are popular:

The concerns raised by von NotHaus and his group are finding resonance among some state lawmakers, too. About a dozen states have legislation that would allow them to produce their own currency backed by gold or silver in the event of hyperinflation striking the U.S. dollar. North and South Carolina are among those states.

That’s partly why von NotHaus’ group has been followed for years by the Southern Poverty Law Center, a group that tracks political extremism. Long before the government began its investigation into von NotHaus, the group was raising concerns about the popularity of Liberty Dollars among fringe groups on the far right.

“He’s playing on a core idea of the radical right, that evil bankers in the Federal Reserve are ripping you off by controlling the money supply,” said Mark Potok, spokesman for the group. “He very much exists in the world of the anti-government patriot movement, whatever he may say. That’s who his customers are.”

Von NotHaus is currently free on bond. If the conviction against him is upheld, he faces up to 25 years in prison and a fine of $750,000. A sentencing date has not been set yet.

So, Mr. von NotHaus provides his customers with a service that is not in any way deceptive or fraudulent, but the watchdogs at the  Southern Poverty Law Center have been on the case for years, spearheading this cause of action because they don’t like who the customers are?  These busybody watchdogs and do-gooder prosecutors must be patting themselves on the back for a job well-done.  But in reality, there was no victim in this scenario until they showed up to protect everybody.

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