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Friday, April 4, 2008

The Liberty Dollar Scam Continues!

My previous post on the Liberty Dollar Scam is #38 on my "Best of FSK" list. The Liberty Dollar's offices were raided by the FBI.

The Liberty Dollar is back in business!

The price of silver moved above $16/ounce. In accordance with their rules, the Liberty Dollar is debasing its money. Instead of charging $20 for an ounce of silver, they now are charging $50 for an ounce of silver.

Automatically debasing your money when the price of silver rises defeats the point of an alternate monetary system.

I don't like the way the Liberty Dollar is organized, because it still is linked to the US Dollar. It's much better to quote prices in ounces of silver, rather than Federal Reserve Points.

The Liberty Dollar's multi-level marketing structure wouldn't work if it sold Liberty Dollars at spot silver plus a minting fee.

The debasing means that all outstanding Liberty Dollar rounds must be reminted. The Liberty Dollar corporation is asking people to turn over their Liberty Dollars and pay a reminting fee. You would have to be nuts to turn your metal over to the Liberty Dollar corporation for reminting! There's no guarantee that they won't be raided by the FBI again, and you'll lose your metal!

The Liberty Dollar corporation also issued paper and electronic Liberty Dollars. The FBI seized all the metal that was backing this money. If you had a paper or electronic Liberty Dollar, you lost everything.

The Liberty Dollar corporation is issuing electronic Liberty Dollars again! That's insane! Why would you buy an electronic Liberty Dollar from them, after previous buyers lost everything!

There are some Liberty Dollars still circulating. Without a search warrant, some FBI agents are questioning merchants who accept Liberty Dollars. If the merchant admits to possessing a Liberty Dollar, the FBI agent will confiscate it, without a warrant or even a receipt. That's an unreasonable search and seizure.

The Liberty Dollar's attempt to set up an alternate monetary system is simultaneously offensive and amusing. I am deeply offended by the Liberty Dollar, because charging $50 for an ounce of silver is a ripoff. However, the Federal Reserve's policy of charging $50 in labor for a piece of paper that costs a few cents is an even a bigger ripoff.

Printing "$50" on a piece of metal that only costs $17 is a ripoff. That trick only works for the government, which uses violence to back the value of its money.

The FBI is cracking down on the Liberty Dollar because it sort of looks like official government money. A stupid person could confuse the Liberty Dollar for government-issued money. The designer of the Liberty Dollar coin could have behaved more honestly. For example, he could have minted "NOT LEGAL TENDER" on the coin. In that case, the Liberty Dollar would have a much stronger legal claim.

The person who owns the Liberty Dollar corporation has not been arrested or charged with a crime. The "standard of evidence" for convicting someone of a crime is much higher than the standard for seizing their property. The prosecutor appears to be taking the path of least resistance. Nowadays, the police seize property without a warrant or even a trial.

Judging morality on a relative scale, the Federal Reserve is run by criminals and the Liberty Dollar is run by saints. On an absolute scale, they're both criminals. The Federal Reserve charges a 100% markup for its money. The Liberty Dollar only charges a 60% markup for its money.

The Liberty Dollar gives alternate monetary systems a bad name. If you want to use Liberty Dollars, you should use generic 1 ounce silver rounds and pretend they're Liberty Dollars. Even better, you should use generic silver rounds and value them based on the spot price of silver. If someone offered to buy something from me with Liberty Dollars, I would give them credit based on the spot price of silver, and not the "$50" or "$20" stamped on the coin.

The FBI objects to Liberty Dollars because they sort of look like official government money. A stupid person could confuse Liberty Dollars for government money. I object to Liberty Dollars because charging $50 for an ounce of silver is a ripoff. People using alternate monetary systems should always quote prices in real money, gold or silver.

9 comments:

Thompson said...

The Liberty Dollar serves as a good transition, though. Once FRNs are more or less obsolete because of the success of agorism, then it'll make sense to bargain in terms of weights and measures; until then, I think it makes sense enough to keep upping the FRN "face value" as FRNs depreciate.

Anonymous said...

I bought a ron paul coin before they were raided. I mistakenly gave it away as a birthday present before I knew it was worth hundreds :)

I have bought a few coins from AOCS silver. Quite a bit over spot, but Im buying because of the design, etc.

Walt said...

There was more to it than stupid people thinking it was US tender. The natonal banking ACT forbade banks from printing their own currency- with what it called "regional currency distribution centers" norfed pushed this line. Also several of the 1 ounce rounds raided didn't "make weight" and were assayed as having less than marked- making the coins counterfeit bullion which is a crime. I'm all for going back to a gold & silver standard but it looks pretty strongly that this company was out to make money in a corrupt fashion by taken advantage of a broken US monetary system... I do know that the raid drastically raised the street value of the coins

Bruce said...

The liberty dollar is a leagal,Constitutional and moral effort to restore our country to real money. It's whole purpose is to awaken the sleeping masses to the legalized theft and plundering of their private property through the illegal,unconstitutional and imoral use of paper currency.
In the end, Liberty Dollar will be vindicated when the American people have lost everything to the banks, who control our nations money supply. An ounce of silver will always be worth more than a pound of paper.

kingtigerfish said...

You said "If someone offered to buy something from me with Liberty Dollars, I would give them credit based on the spot price of silver, and not the "$50" or "$20" stamped on the coin."

So if someone offered you a piece of paper stamped with "20" that means you would give them credit for the value based on the spot price of paper.

You also said ." I am deeply offended by the Liberty Dollar, because charging $50 for an ounce of silver is a ripoff. However, the Federal Reserve's policy of charging $50 in labor for a piece of paper that costs a few cents is an even a bigger ripoff.
Printing "$50" on a piece of metal that only costs $17 is a ripoff. That trick only works for the government, which uses violence to back the value of its money."

So I guess you must be even more offended by the government because they use violence to back the value of a piece of paper that only costs them a few cents. My question to you is this, which is better using government money backed by violence or private money backed by silver and not violence?

Andrew said...

Actually, the Federal Reserve Notes are not that big of a rip-off. There is one thing that the Federal Reserve Note has, that is worth more then all of the metals backing the Liberty Dollar; and that is universal acceptance. Basically, when you use a Federal Reserve note, you are participating in a worldwide club where everybody believes that the notes are worth something. So instead of being backed by precious metals, these notes are backed by the trust and acceptance the general public.

Anonymous said...

I, like some readers have pointed out, think the writer misinterpreted the point of the Liberty Dollar: The point is that the current FIAT system is broken and here is an aternative being offered. At least this currency has a partial metal backing and the only reason the FBI confiscated them, is that the Liberty Dollar is a representation of average people being raped by the big bankers! Clearly the bankers feel threatened.

I agree that it would make more sense to price things as "1 troy ounce of .999 fine silver" OR "1 gram of .999 fine gold", the reality is most people think in dollars, so for now, widespread acceptance will only be seen if there is an identical dollar comparison. I imagine an old $20 Liberty Bill would eventually be worth $40, then $60 and so on because of the silver backing. I don't know what Liberty's rules are, but I imagine this would be a currency that wouldn't wither away by the ravages of inflation.

Anonymous said...

Andrew,

"...So instead of being backed by precious metals, these notes are backed by the trust and acceptance the general public."

Um, "trust and acceptance of the general public". Yes, for now. But for how long. History is very harsh on fiat currencies. Look it up: None survive. All end in disaster. I don't think the US dollar is immune, unless there's a concerted effort to go back to the roots of the constitution. Unfortunately, it'll probably take another disaster to catalyze change.

Wild Bill said...

The liberty dollar is still a better deal as it's at least worth whatever the daily spot price of gold/silver is which is far better than the value of a $20 Fed note which is worth less than 80 cents anymore ... Besides, a $20 Fed note passes for face value same as a liberty dollar regardless what the daily spot price is too ya-know ... What part of that don't people understand ? ... The liberty dollar is a much better system !!!

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