Saturday, June 6, 2009

Why crack down on the Liberty Dollar now?

I find this disturbing because, although I didn't like the Liberty Dollar (I think the income tax of 1912 was a good thing), there is a heavy quality of ex post facto here-- tolerating something for years and then coming down heavy just as the former chief economist of the IMF implicitly ponders whether US might go the way of Argentina and have a currency collapse.

June 5, 2009

Asheville man charged in alleged Liberty Dollar fraud scheme
By Clarke Morrison

authorities arrested an Asheville man in what they said was a scheme to
undermine the U.S. currency system and defraud consumers with so-called
Liberty Dollars.

Kevin Innes marketed the “barter” currency in Western North Carolina
and recruited merchants willing to accept it and give it as change for
products bought with real money, according to an indictment unsealed
this week.

53, faces up to 45 years in prison if convicted. He was indicted along
with Bernard von NotHaus, president of the National Organization for
the Repeal of the Federal Reserve and Internal Revenue Codes, and two
other defendants from Indiana associated with the corporation.

made an initial appearance before a federal magistrate judge in
Asheville Wednesday and was ordered detained pending a detention
hearing set for Monday before a judge in Charlotte, according to the
U.S. Department of Justice.

Liberty Dollars are coins made of silver or gold and are touted as inflation-proof and a way to encourage buying local goods.

groups seek to undermine the U.S. currency system, the government is
compelled to act,” said acting U.S. Attorney Edward Ryan of the Western
District of North Carolina.

coins are not government-produced coinage, yet purchasers were led to
believe by those who made and sold them that they should be spent like
U.S. Federal Reserve Notes,” Ryan said. “Such claims are in violation
of federal law.”

and von NotHaus are charged with uttering and passing coins resembling
genuine U.S. coins and intended for use as money, mail fraud and
selling and possessing Liberty Dollar coins with intent to defraud.

Past statements

Despite warnings from the
federal government to the contrary, Innes told the Citizen-Times in
2006 that Liberty Dollars were legal.

of the first things I did when I started this in Asheville was go to
the police and tell them what I was doing,” he said then.

NotHaus created his organization in Evansville, Ind., in 1998, and
developed the Liberty Dollar. He touted the silver medallions as an
inflation-proof alternative to official currency.

The indictment alleges the corporation's purpose was to limit reliance on and compete with U.S. currency.

held the title of North Carolina regional currency officer and was one
of three members of the group's executive committee, the indictment

A 2007 affidavit said more than 70 businesses in the Asheville area agreed to accept the Liberty Dollar.

understand that there is only one legal currency in the United States,”
said Owen Harris, special agent in charge of the Charlotte office of
the FBI. “When groups try to replace the U.S. dollar with coins and
bills that don't hold the same value, it affects the economy.

“Consumers were using their hard-earned money to buy goods and services, then getting fake change in return.”

arrests are the latest development in an investigation under way since
at least 2004. Federal agents raided the company's headquarters in 2007
and seized documents and precious metals. A private mint in Coeur
d'Alene, Idaho, that produced the coins was raided the same day.

NotHaus' organization said in 2006 that more than $20 million worth of
Liberty Dollar coins and notes were in circulation. Congress has
exclusive power to coin money in the U.S. and to regulate its value,
according to the Treasury Department.

--end --


TCB said...

I think Unistat has a legit fear of alternate currencies right now, precisely for the reasons you mention. THe economists screwed up the dollar, but the governent needs to be able to tax you. A barter-bux gray market could avoid taxation, seems to me. Not a problem if the alt-currency's autonomous zone tiny, but if it grows, look out.

Anonymous said...

Unfortunately, I have to blame the Liberty Dollar. I question their legal preparation. Going to the "police station" before launching your currency program is not the right idea. You need to go to a qualified tax and securities lawyer.

Barter currency is legal in the United States and the IRS won't cause you a problem as long as you fill out your 1099 B form. People need to report their taxes.

The IRS is foolish not to accept alternate currencies for taxation, but they're glued to the Fed. That's their loss. But, I believe U.S. policies will change. The Fed operates a currency that is inherently unstable.

The United States government only has the power To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; and, To provide for the punishment of counterfeiting the securities and current coin of the United States...

These powers are granted to the U.S. government. This does not explicitly state that local currencies are illegal - a common misconception. Additionally, many new currency programs are virtual, which might mean they have to abide by Electronic Funds Transfer Act, but otherwise they are in their own legal classification.

The point is PAY YOUR TAXES. Don't tell businesses to give change in the alternative currency unless the consumer paid in the alternative currency. In the meantime, this limits local currency to being complementary to the U.S. Dollar. However, once the Federal Government realizes that these new currency models are for their own good, just watch them become early adopters.

I'll need to look into the Liberty Dollar more to understand why they were shut down, but I would say poor judgement, bad preparation, wrong purpose.