The Precedent for the Ron Paul Dollar
On Wednesday, November 14, 2007, federal agents raided the Indianapolis headquarters of a company called NORFED, the National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code, and seized its holdings of gold, silver, and copper, much of it in the form of coins bearing the likeness of US Congressman Dr. Ron Paul of Texas, a candidate for the Republican nomination for President of the United States.
The search warrant for this raid alleges fraud and money laundering, and a supporting affidavit refers to provisions of the US Code that prohibit the emission of any coins intended to circulate as money, and the emission of anything in the likeness of the currency of the United States.
The details of the case are complicated, but there are two issues that I can address without going into all the claims and counterclaims. How is it that the US government has the power to prohibit people from using alternative forms of money (i.e., the first provision), and how is it that the coins of NORFED resemble those of the United States (the second)? FULL ARTICLE
Comments (19)
Great article. I hate to pick nits, but actually, the organization that distributes the Liberty Dollar isn't called NORFED anymore. Bernard Von Nothaus decided to no longer use this name (not sure why) and its now just called "Liberty Dollar".
Check out www.norfed.org
Scott
Published: November 26, 2007 10:25 AM
Published: November 26, 2007 12:09 PM
In addition to the information cited in the piece, you all will be interested in the current cover story at Liberty Watch: Good as Gold, which tackles another aspect of this issue. Very germane.
Also, a couple of interesting tidbits:
Several of the Ron Paul coins have ended up on ebay. One is currently selling for over $3500.
Be sure to also check out a couple of essays by BK Marcus on this issue ("Fiat metal" and "A buck is a buck is a buck")
And lastly, for the history buffs, Executive Order 6102 is the edict signed off by Franklin Roosevelt (as mentioned in the article), to effectively criminalize private holdings/collections of gold.
Oh, and ironically Ron Paul is the author of a minority report for a Congressional investigation on role the of gold in monetary systems. Perhaps the Feds will soon confiscate that publication too: The Case for Gold. Here is an old FEE review of it.
Published: November 26, 2007 1:09 PM
The Feds must really be scared of something to take such drastic action. Such as repudiation of the US Dollar as thus the run on the dollar as citizens of the US and other nations begin to dump dollars by purchasing assets before the dollar sinks further, thereby creating more demand for dollars, then the resulting hyper-inflation as the FED pumps out more money to keep up with the falling dollar and then the collapse of the US Dollar completely and the return to a barter economy in which the Ron Paul Dollar re-surfaces as the recognized standard in the market (but not recogized officially by the US government). Perhaps is closer at hand then we realize.
Published: November 26, 2007 3:52 PM
Of course it is really the government coins that are counterfeit - for they are neither gold nor silver.
Government was supposed to protect the people from criminals who would produce base metals coins - and perhaps even steal the gold of ordinary people.
But what do the people do when the government are the criminals?
Go to the courts? But as the Supreme Court judgement in this area show, courts where the judges are appointed by the criminals can not be relied upon.
Published: November 26, 2007 4:32 PM
The constitution does not allow states to accept anything other than Gold or Silver as payment. I've been trying to figure out for a what that means in light of our current dollar not being a proxy for gold or silver in any way shape or form. Seems to me that all state taxes are unconstitutional.
Published: November 26, 2007 7:27 PM
Cliffor, nice post, but your closing paragraph is weak:
1. Legally, the case is very much "about the company or the details of its specific business practices, [including] whether and to what extent it might have misled customers on what they were buying." The case is primary about how close the Liberty Dollar skated to being a "counterfeit" coin that NORFED and its purchasers tried to pass off as if it were US coinage and with a face value equivalent to its silver value, instead of engaging in open and clear barter transactions with it. NORFED was openly trying to create an alternative coin currency - and the chief question is whether this is legal. In other words, they increased their own vulnerability by moving away from the "commemorative medallion" business model to self-decalred "direct competition" while appearing to encourage users to pass the medallions as coins to merchants without clearly spelling out that they were not legal tender.
But part of the case seems to be based on a fraud on purchasers of some of the medallions - particularly those who bought after the medallions were "moved up" (recalled and reminted from $10 to $20 face value), while containing the same amount of silver.
2. You allude to the seizure of the gold and silver backing the certificates, but fail to explore this further. There seems to be no legal case against the issuance of gold or silver certificates (backed by Liberty dollars or equivalent gold), other than that the sale of the certificates was also fraud, or indistinguishable/non-segregated proceeds of the sale of the medallions. The government's seizure of these stocks, to the extent that they werre intended to back certificates, does indeed seem like theft by the government (and hardly a "protect the investor" move). It's your post, but a puzzle that you don't explore this further.
Published: November 26, 2007 11:30 PM
They went after e-gold a year ago, now they've gone after the liberty dollar. There is clearly a pattern emerging here. My question is what's next? Gold storage? Safety deposit boxes? Coin dealers?
Published: November 27, 2007 12:42 AM
Neocons motto "All your wealth are belong to us"
The question is will "We the People" take our Gov't back before our dollar crashes or not.
Published: November 28, 2007 12:55 AM
I will give you the answer to the questions that you asked, with nothing but truth.
I hate the Federal Reserve system and its debt based currency. I also hate the way they did this.
But the Lberty Dollar is a SCAM! The 20$ coin has one ounce of silver in it. That is worth less than $15 right now. They are not coins, they are tokens. They are not legal tender, but they sure do look a lot like US money, and not by accident.
They run a multi-level marketing scam. Dealers buy them for less than face value.
Wouldn't it be wonderful if you could buy money at a discount? No one would do anything else if it were possible.
People may trade. You can take a goat to the grocery store and try to trade it for eggs, milk, and other things. If both parties agree there is no problem and the trade happens. In order to use LD's you must ask the other if they agree to trade, and you may NOT say that it is $20, because that would be a federal crime called 'Passing a Forged Instrument'.
Some trade them instead of paying cash because it makes them feel better. Stores that trade them really love it, because they make money. More will go out than come back.
And then there are the victims who accept LDs not understanding what it is. They go to the bank, tax office, grocery store, etc... only to learn they got stuck with a $15 token that no one will accept instead of a $20 bill they could have spent easily.
If you want to trade use the most amazing device in the world, US mint silver and gold coins. The one ounce silver dollar is printed with one dollar, but is worth much more because of the silver content. When you use paper dollars you are purchasing by passing a note forward and debt backwards. If you use LD's, or any other metal tokens you are trading. You are still responsible for the taxes as it is not a transaction.
But, if you use US mint coins you pass value forward with the metal, and debt backwards with the note stamped upon it. This is called a transaction and the laws can hardly touch it.
YOU ONLY PAY TAX ON FACE VALUE!
If your boss paid you with US silver your income taxes might be zero. If you can buy goods with them your sales tax is reduced 15 fold.
If you accept Liberty dollars at face value you are a fool. If you support this company for anything other than resolving their debts you may be a criminal.
I would have had no problem with this company if they had not made their coins look so much like the others and had not printed face values higher than the value of the metal content. You have all been duped, and I can see why. Everything they say sounds really nice, but when did you meet a scammer who did not?
BTW- Ron Paul did not give them permission to use his likeness, but thats not a crime...
Michael
Published: November 28, 2007 6:02 PM
Someone said:
"The constitution does not allow states to accept anything other than Gold or Silver as payment. "
You do not pay with US dollars. You purchase, which is a act that passes a note forwards with the debt going backwards.
The debt based Federal Reserve note breaks no laws.
And, the Fed is not part of the Government. It is a private corporation that has the power to make money from nothing as long as its all loaned out. Nor did it exist at the time the Constitution was forged.
Which means that it is impossible for all of the American debt to ever be repaid because every dollar is borrowed, and there is interest.
But you can't use anything other than the dollars to pay the debt, unless you want to give them silver for your debts, at the rate of one dollar per ounce.
The rabbit hole is far deeper than you imagined, and I don't have the time, nor does this blog have the space for me to explain it all.
But, this is enough, I hope.
Michael
Published: November 28, 2007 6:11 PM
Michael,
1. Someone who had been "dumb" enough to take a $10 Liberty Dollar a couple years ago would now have his one ounce coin worth over $14 in FRN . . . that's not counting any numistic value. People pay more than intrinsic material value for all sorts of things . . . not the least of which are "commemorative coins." Some may genuinely believe that having physical metal discs circulating as barter tokens in as wide a cross-section of the economy as possible is a worthwhile endeavor . . . who are we to argue otherwise? If you run a typical retail business with substantial volume of "cash" payment . . . say $2000 in your cash drawer on average day . . . that's $2000 FRN not collecting any interest, or $100 interest (assuming 5%) loss in a year before counting inflation . . . for the same business if you have $20k sitting in a typical checking account that pays next to no interest for liquidity requirement, that's another $1000 interest loss, once again before counting inflation. Now let's toss in the inflation consideration, currently running around 12% in real terms (not the BLS funny numbers, but based on M2 and M3 numbers) . . . the $2k and $20k not collecting interest would cost you $2500 a year . . . the $100k sitting in 4-5% CD's and short-term government bonds as the next step cash reserve would cost you another $6-7k a year in terms of purchase power loss. Now, compare all that Liberty Dollars that you could have bought for $10 per ounce two years ago even if you were "dumb" enough to have paid face value, and can now sell for $15/oz even at intrinsic silver melt value . . . not to mention $300/oz on Ebay for numistic value. Sure, not counting the numistic appreciation, one could have done even better by buying regular silver rounds . . . however, some people may attach special value to the spread of use of precious metal coins . . . after all, you have a much better chance of keeping your silver and gold if silver and gold bullion ownership is so widespread that the politicians would not contemplate confiscation again.
2. I sure hope accounting US Mint silver and gold coins at face value is still legal in this land, but I have no intention to test it myself . . . as it's been mentioned a few times on this website and other freedom-minded website, some Colorado business owner and his family and associates had machine guns pointed at their heads while forced to stand in the 100+ degree desert heat for doing exactly . . . before IRS hit them with 160+ charges. Only a hung-jury saved them from years of rotting in jail. Apparently, IRS considers gold and silver coins from the US Mint barter tokens, not face-value coins, whereas FRN is the real money. Go figure . . . we live in an upside down world.
Published: November 28, 2007 10:52 PM
The attempt of FDR to pack SCOTUS is quite well known. He had success with the attempt, although the attempt in itself failed.
However, according to Prof. van Creveld, POTUS Grant did actually pack SCOTUS to prevent the use of private money.
Does anyone have details on this affair?
Published: November 29, 2007 6:07 PM
I just put a big chunk of my net worth into "gold" specifically an Exchange-Traded Fund whose price is supposed to track that of gold.
I am very mindful of the precedent in 1934 where the government voided contracts of the kind I have with this fund. They may acquire the right - indeed, be forced to - return my investment in a government-depreciated form (like dollars at some new exchange rate the government chooses), just like in 1934. Or - hell, this is 2007, and we've come a long way - maybe they'll just seize it and that will be that.
There's another "gotcha" that's been on the law books for quite a while. In the event I realize a "gain" in the dollar value of my holding (a decline in the value of the dollar, the way I see it), I will be dunned for 28% of this "gain" upon cashing out, rather than the lower rates that pertain to other capital gains.
And this rate can be changed anytime in the future, too. I wonder which way it's likely to be changed.
Published: November 30, 2007 11:17 AM
Mr Potts,
If you fear the US government why not park your investments offshore out of their knowledge and reach?
It's not hard to open an offshore bank account these days. HSBC Singapore is to be most recommended, as you can open an account by mail and their service is great and fees are reasonable (except for outgoing telegraphic transfers, but they'll issue you with an ATM card for your USD account so you can withdraw funds at your local HSBC ATM for very low fees). HSBC Offshore in the Isle of Man and Channel Islands also have good service and fees and account opening by mail if you invest a larger amount.
If you want something more stealthy you can set an offshore company as a personal investment company. If you want something really low profile you can set up a New Zealand trust either by setting up your own NZ company to act as trustee, or using a professional trustee company such as Guardian Trust (see http://www.nzgt.co.nz/dirgz/guardian/nzgt.nsf/Content/CorporateTrusts_InternationalTrusts). The trust files no tax returns and pays no tax so long as the person who establishes it is a non-resident of NZ, the beneficiaries are non-resident too and the trust earns no New Zealand source income. This means the IRS in the USA won't know anything about it, and best of all it looks like any other family trust or personal trust established by a NZ resident. The trust can even invest in New Zealand bank deposits with a 2% tax rate on your interest and no disclosure to the IRD (and therefore no disclosure to the IRS).
If you want to invest in gold, most Hong Kong banks such as HSBC and Standard Chartered provide gold accounts, but you may have to visit Hong Kong to open the account, or use a professional introducer. However I don't think they pay interest on your gold. You can also use Pecunix to hold gold in a safe and accessible form without any exposure to the USA.
You can also set up a Hong Kong company with nominee directors and shareholders as a personal investment vehicle that is tax free and has no onward disclosure that can get to the IRS. You can get the same result with a Singapore company, too, or a NZ company if you use NZ resident nominee directors and shareholders and use the company as a trustee for your trust.
So, there are lots of ways to avoid the exposure you're concerned about, and you can make it look like something quite innocuous. Just avoid high profile locations such as the Cayman Islands if you don't want to attract the attention of the IRS.
Published: November 30, 2007 3:37 PM
Chief Justice John Marshall may have said deciding what the "legal tender" of the country is, and the legal "unit of account" and "medium of exchange" is the "inherent power" of government. In fact he was re-iterating a "claim" not a valid power.
The invalidity is evident in both modern international currency markets and "government" dishonouring of earlier undertakings of their issuing fiat money to exchange "legal tender" for gold [or silver] on demand.
Published: December 2, 2007 7:21 AM
An excellent article on the government raid against the NORFED operations. I read some of the documents, prepared and submitted by the FBI, used to "justify" the search warrant used during the conducting of this raid. In one of them the FBI agent, making a sworn statement to obtain the search warrant, actually makes the statement that NORFED's so-called "Liberty Dollars" are being produced and sold as a competing monetary unit; that is to say, NORFED is issuing a competing currency. What was actually being produced were warehouse receipts, using NORFED's own wording, that represented legal claims on actual gold coins. It's interesting that NORFED's explanation so closely resembled the relationship between the older U.S. Gold Certificates and actual U.S. gold coins, during the early part of the 20th century.
Published: December 2, 2007 1:03 PM
Just ran across this rather funny piece on thestreet.com regarding Ron Paul dollars. Several people are interviewed on the street to test the assertion that people are being "confused" into thinking the Ron Paul dollars are somehow official money.
Published: December 31, 2007 5:04 PM
There is GREAT MISUNDERSTANDING ABOUT WHAT A "DOLLAR" REALLY IS. WELL HERE IT IS....371.25 GRAINS OF SILVER = ONE DOLLAR. NOTHING ELSE, PERIOD. THAT MEANS THE PRIVATELY OWNED CORPORATION CALLED THE FEDERAL RESERVE AND THE US MINT ARE PRODUCING BOGUS COUNTERFIT BILLS AND COINS. RESEARCH IT! THEY ARE COUNTERFEIT BY DEFINITION. YOU ARE USING BOGUS MONEY BACKED BY MASS MURDERING THUGS.
IT IS TIME TO BRING CHARGES AGAINST THESE CRIMINALS AND PUT THEM OUT OF BUSINESS ONCE AND FOR ALL.
Published: January 7, 2008 12:33 PM