Liberty Dollar
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| ISO 4217 Code | None |
| User(s) | Various private businesses in the USA |
| Inflation | No reliable statistics, due to limited acceptance. Intrinsic metal round value subject to the price of silver and gold. |
| Symbol | $ |
| Central bank | NORFED (National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code) issues the currency but is not a bank. It is not necessary that a currency be associated with a central bank. |
| Website | www.libertydollar.org |
| Mint | Sunshine Mint |
| Website | www.sunshinemint.com |
The Liberty Dollar is a private currency embodied in minted metal rounds, paper notes, and electronic credits. It is issued by NORFED, which is a partial acronym for "National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code." NORFED describes itself as a non-profit company based in Evansville, Indiana, founded to promote the Liberty Dollar. However, the company that mints and warehouses Liberty Dollars (SMI in Coeur d'Alene, Idaho) is a for-profit business.
NORFED currently sells Liberty Dollar rounds and paper notes of specified denominations at retail for a corresponding number of US dollars at close to double the value of the silver they are backed by. NORFED also sells Liberty Dollars at a discount from retail to "Liberty Associates" who pay a fee to gain this status, and who receive referral commissions for signing up other Liberty Associates, though unlike a Ponzi scheme or a multilevel marketing organization, the Associate does not make a commission on referral activity carried on by the new Associate. NORFED does not buy back their currency with US dollars, claiming that such exchanges are "contrary to its goal of increasing the silver and gold in monetary circulation".
Liberty Dollars are specially-minted .999 pure silver rounds and .9999 pure gold rounds, as well as silver certificates and gold certificates sold as "warehouse receipts," which can be redeemed for gold and silver Liberty rounds within specified time periods. NORFED offers another product for sale, eLibertyDollars, which are redeemable with some restrictions for the rounds. The currency is not legal tender, and NORFED does not guarantee that they can be converted back into standard U.S. or world currency at par. NORFED currently sets the value of twenty Liberty Dollars at one troy ounce of silver, which as of October 3, 2006 has a spot value of $11.05 USD <ref>money.cnn.com (2006-10-03). Silver Price. Retrieved on 2006-10-03.</ref>.
NORFED is headed by Bernard von NotHaus, the retired "mintmaster" for a private business that calls itself the Royal Hawaiian Mint, but has no connection to the Hawaiian government. NotHaus cites a 96% loss in the value of the U.S. Dollar, based on the Consumer Price Index, as a selling point for the Liberty Dollar. Critics of the Liberty Dollar cite the fluctuation in price of silver in U.S. Dollars over the years since it began trading on the free market in the early 1970s. Since silver became a tradable commodity (i.e., listed on the COMEX along with tin, copper, gold and other metals), its price has been manipulated by such investors as the Hunt Brothers and Warren Buffet, cementing its reputation as a volatile commodity. Moreover, if the value of the currency was ever to actually exceed the purchase price of Liberty Dollars, then people would not want to spend it, so it would be a poor medium of exchange. As it is, with a value about half of purchase price, the inventor is enjoying a good profit while owners are anxious to spend it, but that isn't very easy.
The interest in Liberty Dollars may reflect a desire to return to metal-based or metal-backed currency. Of course, precious metals are valued in US Federal Reserve notes, so Liberty Dollars are valued in Federal Reserve Notes. The United States dollar was once defined as specific amounts of silver or gold (see gold standard, silver standard) and currency with a face value in dollars was redeemable for the corresponding quantity of metal. The exact amounts were specified in the 1792 Coinage Act. Today, US dollars are neither redeemable for nor defined by metal, and the metal value of most US coins in everyday circulation is relatively small and unrelated to the face value. In fact, the metal content of the cent has in recent years been close to or even above the face value, making the US penny a much better value than the Liberty Dollar.
From its debut on October 1, 1998 to November 23 2005, NORFED exchanged one troy ounce silver Liberties valued at ten Liberty Dollars for US$10, but on November 24, 2005, raised the silver base to US$20. However, this actually cost holders more money, rather than increased the value of their holdings because the old silver notes and $10 Silver Liberty are obsolete and there is a reminting fee to melt down old one-ounce $10 Silver Liberties and remint them into $20 Silver Liberties (but the paper certificates can be exchanged at no charge other than your time and mailing costs.)
NORFED specifically does not guarantee the exchange of Liberty Dollars back to U.S. dollars. Liberty Dollars are officially accepted by participating merchants around the world. Tens of thousands of merchants have accepted them unofficially. [citation needed]
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[edit] Anti-counterfeiting features
The paper Liberty Dollars include security features such as holograms, microprinting, UV fluorescent ink trim, hot gold and silver foil stamping, and an invisible synthetic DNA security thread. NORFED claims that paper Liberty Dollars are more difficult to counterfeit than United States currency. Since they are worth about half of face value and counterfeiting is a felony, they may be unattractiive to counterfeiters anyway.
The outer edges of the certificates contain the following:
Top-Preamble
Bottom-Declaration of Independence
Left side-Pledge of Allegiance
Right side-1st Amendment
They appear as dots to the naked eye, but are visible with a magnifying glass.
[edit] Denominations
Certificates:
- $1 silver certificate (brown)
- $5 silver certificate (magenta)
- $10 silver certificate (blue)
- $20 silver certificate (red)
- $1000 gold certificate (gold and blue)
- $5 Silver Quarter Liberty (quarter troy oz. round, .999 pure silver)
- $10 Silver Half Liberty (half troy oz. round, .999 pure silver)
- $20 Silver Liberty (one troy oz. round, .999 pure silver)
- $1000 Gold Liberty (one troy oz. round, .9999 pure gold)
Since the revaluation of the Liberty Dollar on Thanksgiving Day, 2005, the old silver notes and $10 Silver Liberty are obsolete. There is a reminting fee to melt down old one-ounce $10 Silver Liberties and remint them into $20 Silver Liberties, but the paper certificates can be exchanged at no charge.
Like the euro but not the U.S. dollar, the certificates' size and color varies with the value. However, unlike the euro, only the long dimension varies, similar to Japanese Yen bills. The higher the value, the longer the certificate.
The gold and silver Liberty rounds have a similar design except for particulars such as mint date and value. Because gold is denser than silver, the Gold Liberty is smaller, with about 5/6 the diameter of the silver round. Both rounds have milled edges, like on the U.S. quarter and dime, intended to discourage coin clipping.
Each piece of currency (whether paper or specie) bears, in addition to its specific weight and its denomination in Liberty Dollars, a toll-free US phone number (800-NEW-DOLLAR) and a web URL (www.libertydollar.org) intended to allow bearers to make contact with NORFED or a local Liberty Dollar representative, but the bearer is not guaranteed to be able to trade the currency for U.S. dollars with NORFED or its representatives. Most Liberty Dollar Regional Currency Officers and Liberty Dollar Associates, however, do pledge to exchange back Liberty Dollars that have been spent at a merchant or paid to a consumer in individual instances if they are not satisfied with the exchange, although they are not required to do so under their contract with NORFED after the customer or merchant originally agreed voluntarily to accept them. [To avoid confusion with official U.S. "legal tender" and coins, which only the U.S. Government can produce, Liberty Dollar members are clearly instructed never to refer to Liberty Dollars as "legal tender" or "coins", and if questioned are to explain that Liberty Dollar silver are silver pieces and "real money" backed by silver and gold, and a private, non-government currency (not to be confused with "current money", a specific legal term. Liberty Dollars are not "current money" as defined by law).]
NORFED has also issued limited-edition rounds in $10-base denominations of $1, $2, $5, $20, and $50, but they are not intended to circulate and cost even more per ounce of specie than the regular denominations above.
[edit] eLiberty Dollars
eLibertyDollars (or digital Liberty Dollar) are electronic money which are intended to be used for online transactions such as eBay auctions. These are identical to Liberty Dollars except the currency exists as online trading credits rather than as paper currency. They are purchased with US dollars but can only be redeemed for Liberty Dollar silver certificates or rounds.
[edit] Differences from other alternative currencies in the United States
A number of alternative currencies are in limited use in the United States, including the NORFED Liberty Dollar, Phoenix Dollars, Ithaca Hours, and online currencies. In particular, two primary differences exist between Liberty Dollars and Phoenix Dollars and most of the other alternative currencies. Liberty Dollars are partially backed by the intrinsic value of the silver (or in the case of digital and paper form, by NORFED's promise to exchange them for silver.) while Phoenix Dollars are denominated by weight and backed ounce for ounce by silver. Phoenix Dollars are also able to be used worldwide while Liberty Dollar has its focus on the United States.
Most alternative currencies in the United States are based on the Time Dollar theory: the value of the local currency is tied to a specific unit of time; the most common being currency denominated in "Hours", 1 hour = $10 USD, so it depends on people in the future willing to swap their labor time, regardless of the amount of currency issued. In other words, most alternative currencies obtain their value by trust between community members, while the Liberty Dollar obtains it's value because community members don't know that is not fully backed.
The other main difference is the other currencies are intended as local currencies to be used in a specific city or region, while Liberty Dollars are supposedly intended as an alternative national currency.
Liberty Dollars and the some other alternative currencies share the fact that very few businesses accept them presently, some who do accept them only accept them for partial payment. Ithaca Hours, on the other hand, a local currency in Ithaca, New York, have been relatively successful because one of the local banks accepts them as deposits, and many other trust-based local currencies are helping grow local marketplaces in thousands of communities around the world
There are also a number of alternative online currencies such as digital gold currency, as well as other online payment services such as PayPal, which eLiberty Dollars hopes to compete with. Primary differences are that PayPal's currency credits are convertible with actual U.S. Dollars which can be charged to a credit card or deposited in a bank account. e-gold exchanges gold, silver, and other precious metals, and can be redeemed through various online services at the actual spot price of the metal. eLiberty Dollars can be redeemed for silver Liberty rounds or for paper Liberty Dollars at par--currently one troy ounce silver Liberty round for twenty eLiberty Dollars.
[edit] See also
- Scrip
- Digital gold currency
- List of community currencies in the United States
- Silver standard
- Silver as an investment
[edit] References
<references/>
[edit] External links
U.S. Mint warns of jail time for users of Evansville-based company's coins http://www.courierpress.com/news/2006/oct/11/liberty-dollars-can-buy-users/
- Liberty Dollar website
- Image of the Silver Liberty (obverse)
- Image of the Silver Liberty (reverse)
- eLibertyDollar
- Retail prices of silver rounds
- "A Competitor for the Fed?" by Lawrence H. White, July 2000
- "Fed Up With the Federal Reserve" by Carl Watner
- A criticism of the Liberty Dollar system
- Video: CBS investigates The Liberty Dollar KEYE News (Austin, TX) February 2003 (Real Player)
- Video: The Learning Channel Special on the Liberty Dollar (Windows Media Player)
- "Liberty Dollar celebrates 6th anniversary, gaining in popularity across U.S." by Jayne Andrews, September 30, 2004, East Tennessee Business Journal
- The Indomitus Report
- Two men arrested in Buffalo for using Liberty Dollar
- US MINT Claims NORFED Are Federal Criminals - by Mike Lorrey, The International Libertarian
- US Mint v NORFED: The legal case - by Mike Lorrey, The International Libertarian
- NORFED Fires Back At US MINT - by Mike Lorrey, The International Libertarian
- Liberty Dollar Says NO To US Mint Allegations - by Mike Lorrey, The International Libertarian
