Ludwig von Mises Institute
Israel at the UN
Cascade Policy Institute
Voluntary Trade Council
Dr. George Reisman
Mises Economics Blog
The Distributed Republic
The Angry Economist
Civilian Gun Self-Defense
In The Pipeline
Free Money Finance
Liberty Dollar Seizure
On the morning of Nov. 14th, the head office of the Liberty Dollar was raided by the FBI. You can view the search and seizure warrants at the Liberty Dollar's raid page. The seizure is being made in alleged connection to money laundering and/or fraud:
By seizing all of Liberty Dollar's assets, the government is preventing redemption of Liberty Dollar paper certificates, which are akin to warehouse receipts for precious metals. The electronic Liberty Dollar was also backed by assets now seized.
I have never been a Liberty Dollar booster because I've always thought their attempt to index the Liberty Dollar to the U.S. Dollar was unnecessary and confusing. (I am happy to endorse the Phoenix Dollar, which is denominated simply by weight.) Despite my policy disagreement, I own a few Liberty Dollar pieces that I've acquired as a collector. I have silver pieces, not certificates, so this seizure doesn't directly affect me.
But it almost did. The folks at Liberty Dollar are strong supporters of Ron Paul's presidential campaign and were in the process of making and distributing Liberty Dollar pieces bearing his likeness as a way to support him. I had the opportunity to be one of the buyers for a very limited minting of platinum Ron Paul Dollars. My current understanding is that distribution of Ron Paul Dollars — mostly in copper — had not yet begun and that a large quantity of them were seized. I ended up missing the deadline to order my platinum because they (bizarrely) wanted next-day payment, which was quite impossible because I was paying by mailed personal check.
I expect that if I had made the payment deadline, the FBI would now be in possession of my platinum. (Assuming that they had already been minted.) I would have had standing and motivation to join the class action lawsuit the Liberty Dollar is planning to file in response to this seizure.
The U.S. government is hostile to alternative payment systems, especially those backed by precious metals. They have been harassing e-gold and the Liberty Dollar for years, causing serious hardship for both the operators and the customers of these systems.
By the way, of course I believe the criminal allegations are false. I have personally ordered Liberty Dollar products from the office that was raided and thought it was a totally straightforward transaction in every way. The U.S. Mint has been waging a disinformation campaign alleging that the Liberty Dollar is illegal. But it isn't. The Liberty Dollar isn't legal tender (and no one involved with it claims otherwise), but there's a huge distinction between "legal tender" and "legal". The Liberty Dollar is legal because barter is legal. Period.
A quick primer on legal tender in the United States: The concept only applies in situations where credit is involved. No one is ever compelled to offer or to accept legal tender as payment. However, if a debt is dollar-denominated and the debtor offers legal tender as payment, the creditor may not take them to court for non-payment.
"That sounds dumb and useless," you're thinking. You're right — unless you understand its historical origin. The federal government ran out of precious metals during the Civil War and paid its bills by printing paper money and making it legal tender. The government's creditors were faced with the alternative of accepting the paper money or nothing at all, so they accepted the paper.
Legal tender is a vehicle for confiscation. Legal tender serves no purpose in voluntary trade. (Nevermind that Congress doesn't have the power to make anything legal tender in the first place — the Supreme Court has been ignoring the Constitution for much longer than I've been alive.)