Mar 222011

The story reads like one of The Colbert Report’s “Nailed ‘Em” segments. Sixty seven year old Bernard von NotHaus — founder of Liberty Services and the creator of the Liberty Dollar, a collectable coin minted from and backed by precious metals such as gold, silver, platinum and copper — was convicted last Friday on charges of counterfeiting and “domestic terrorism.” The sentence he faces? Up to 15 years in prison, and the forfeiture of 16,000 pounds of Liberty Dollar coins and precious metals, valued at nearly $7 million, to the U.S. government.

The Curious Case of the Silver in the Currency

That’s a pretty heavy price to pay for selling collectible coins. (Watch out, Home Shopping Network, your Obama Coins could be next, if the Republicans win in 2012!) But according to U.S. Attorney Anne Tompkins, the punishment more than fits the crime:

“While these forms of anti-government activities do not involve violence, [she said,] they are every bit as insidious and represent a clear and present danger to the economic stability of this country. We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.”

Did you catch that? The subtle equation of economic stability to democratic legitimacy has become such a familiar assumption in American culture that the comment might almost pass unnoticed. But it suggests there’s more to the story than might be obvious at first glance.

The Liberty Dollar, first designed in 1998, is manufactured from precious metals that have been rising in price as the U.S. dollar has fallen in value over the past decades. A one troy ounce Liberty Dollar, originally sold for $1US, was worth almost $30US as of October 2010. Backed by an objective measure — the weight of the metal from which it is made — the Liberty Dollar differs from other alternative currencies such as Phoenix Dollars and digital gold currency.

The Liberty Dollar also differs from counterfeit money in a few essential ways. Most importantly, although it utilizes patriotic images such as the Statue of Liberty in its design, it makes no attempt to replicate the look of actual United States coins, nor was it ever marketed or sold as legitimate U.S. currency. Unlike counterfeit money, which seeks to utilize cheaper materials to imitate a more valuable currency, Liberty Dollars are minted of precious metals that accumulate in value, so that Liberty Dollars are actually worth more than their U.S. dollar counterparts.

It seems as though producing and selling Liberty Dollars should be no more “insidious” than creating heirloom jewelry or other collectible item out of precious metals with the intention of providing “inflation-proof” investment alternatives. So what explains the U.S. Attorney’s accusations not simply of counterfeiting, but of subversive and dangerous domestic terrorism?

Executive member of Liberty Services William Kevin Innes is also under indictment for counterfeiting and fraud, and faces up to 45 years in prison. A resident of Asheville, North Carolina, he approached local businesses in the Asheville area to encourage them to accept Liberty Dollars in addition to U.S. currency in their business transactions. Before doing so, however, he consulted with the police to make sure the organization’s activities were lawful. “If we’re criminals, why were we going to the police and being out in the open?”

Certainly, such behavior contradicts the very definition of counterfeiting, which involves the intent to deceive or defraud. The federal indictment itself seems contradictory in its charges: it alleges that Liberty Services was “engaged in a conspiracy to pass off their product as legal tender” while at the same time alleging that “the intent of Liberty Services is to put the Liberty Dollar into circulation and have it compete with U.S. currency.” How an organization could both be in open competition with U.S. currency and attempt to pass its products off as U.S. currency is not clarified. This is not surprising, considering that the year before the indictment, the U.S. federal government seemed confused about its position on the matter:

[I]n 2006, the U.S. Mint issued a statement saying that using the coins in place of standard currency was criminal. But in the same year, a Treasury Department official told media that if merchants wished to accept the coins, they were free to do so.

Freedom of Trade, Freedom of Association

As minor as this story may seem in comparison to the workers’ protests going on around the country as Republicans (and Democrats, too) use shock doctrine tactics to push through anti-democractic legislation, it sets some startling and disconcerting legal precedents about individuals’ freedom to barter or trade goods and services as they see fit. In this way, it reflects the on-going hypocrisy of a government which obsessively invokes the god of “free trade” while actively undermining certain conditions — such as workers’ unions and alternative economic models — that naturally arise when actual free trade and open exchange take place.

Equating the free and knowing consensual exchange of one product for another — a collectible coin for a soup and sandwich at the local café, for instance — with “domestic terrorism” suggests that the U.S. government possesses complete and exclusive control over the medium of exchange and the valuation of labor, and that trades and barters which take place outside the purview of the United States government are by their very nature illegitimate and, at worst, illegal and subversive. Such a claim would seem to undermine the very idea of a “free market,” and this is especially ironic when we remember, as Tompkins reminds us in her quote above, that invoking free market capitalism has become so essential to the government’s rhetoric of “healthy democracy.”

What’s especially interesting about this case is that alternative currencies, far from being illegal in the U.S., are available and in circulation in a number of towns and resorts. Ithaca Hours are one such example. The oldest and largest local currency system in the country, Ithaca Hours were invented by Paul Glover in 1991, modeled after earlier forms of alternative currency that proliferated in the U.S. during the Great Depression.

One of the primary functions of the Ithaca Hours system is to promote local economic development. Businesses who receive Hours must spend them on local goods and services, thus building a network of inter-supporting local businesses. While non-local businesses are welcome to accept Hours, those businesses need to spend them on local goods and services to be economically sustainable.

It is no coincidence that alternative forms of currency tend to increase in popularity as the value of government-backed currency falters and falls. The recent bank bail-outs in the United States — and the creation of billions of dollars out of thin air by the Federal Reserve through a process known as “Quantitative Easing” — have done little to bolster confidence in the stability of the U.S. dollar.

So what’s the difference between Liberty Dollars and Ithaca Hours? Why is one allowed to flourish, while another lands the creators and executives in prison? One reporter points out that, “What differentiates the Liberty Dollar, however, is its nationwide reach and the precious metals in the product.” Unlike Ithaca Hours, which are a local novelty with limited application backed only by an amorphous definition of labor value tied directly to the U.S. dollar itself, the Liberty Dollar has measurable independent value and national (potentially international) application. In other words, Ithaca Hours aren’t a real threat, because they do not offer a real alternative. Liberty Dollars are, because they do.

But simply providing a legitimate alternative to government-backed currency does not by itself render the Liberty Dollar illegal under U.S. law, and charges of counterfeiting are difficult to prove in a case where the value of the Liberty Dollar rests explicitly on its distinction from, not its similarity to, U.S. currency. That’s where U.S. Code Title 18 Section 486 becomes relevant:

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

Some argue that this law may not be constitutional, but what interests me more is the function of such a law in the shaping of American cultural identity. Accusations that Liberty Dollars should be considered counterfeit, and acts of domestic terrorism, merely for including images, words and other features “associated with legitimate U.S. coinage” (such as the words ‘trust in God’ and images of the Statue of Liberty) require closer scrutiny of the role that cultural symbolism plays in American society.

To understand how charges of counterfeiting and forgery could possibly make sense in a case where there is clearly no intent to deceive or defraud, it helps to look at an example from ecology. The viceroy butterfly is practically indistinguishable from its more popularly known and far more poisonous relative, the monarch butterfly. The same bright orange etched through with delicate stained-glass patterns of black cover the viceroy’s wings, and for this reason, it benefits from the monarch’s deadly reputation among their common predators. The monarch butterfly, however, loses ground every time a predator eats a non-poisonous viceroy. The existence of a non-poisonous butterfly that looks almost indistinguishable from the poisonous variety means that the association of that bright orange with the threat of danger is weakened. And so these two species of butterfly have evolved in a dance of adaptation and mimicry over hundreds of years, the patterns of their wings changing as the monarch seeks differentiation in the face of the viceroy’s imitation.

The cultural symbols of American national identity play the same role in modern Western society. It may at first seem utterly ridiculous to say that the United States government has exclusive rights to the use of symbols and images of liberty, freedom and divine blessing, but such claims often rest at the heart of American creedal identity and the legitimacy invested in the federal government when it claims this identity for its own. The legitimacy of a democratic government rests heavily upon the perceived correlation between the self-conceived identity of its citizens, and the government and its institutions as the primary source and expression of that identity.

In the case of the Liberty Dollar, a non-government organization has succeeded in utilizing classically “American” symbolism to offer a potentially effective and legitimate alternative to government-backed currency. As in the case of the viceroy and monarch butterflies, Liberty Services benefits from this association, appealing to core aspects of the self-identity of American citizens (which, ironically enough, includes a distrust in government) in order to lend legitimacy and weight to its products. But the United States government, like the poisonous monarch, suffers from the resulting dilution. It is no longer associated as strongly with, nor seen as the primary source of things such as liberty, freedom, blessings or — what money itself symbolizes most powerfully — wealth and prosperity.

To be continued tomorrow…

  3 Responses to “Making Money: Currency, Cultural Symbols and Civil Religion”

  1. I agree that the law under which this conviction was secured may be unconstitutional, but I don’t see what this case remotely has to do with Paganism.

    • Well, the article is “to be continued,” so I’m hoping that a summing-up is coming, including a discussion of what this has to do with Paganism.

      Off the top of my head, I can see a few possible points of contact. For one,there is the question of who has exclusive rights to certain symbols, and the power of symbols on the creation of group identity, something that I can see resonating with the history of Theodism, for example. For another, I’ve seen small-scale systems of barter within Heathen and Pagan communities, and one might wonder how large-scale this sort of thing would get before attracting federal attention.

      Either way, I found this article very interesting Ali, thank you, and I look forward to the continuation.

      • Nick,

        I wanted to spend more time talking about the small-scale bartering within Pagan and Heathen communities – as you mentioned in your comment – but I’ve been on a business retreat this week with very shoddy internet connection and had no time to respond to you or tweak the second part of the article, which was already scheduled to post.

        I do think, when it comes to bartering and trade within the Pagan community, that it becomes increasingly important that we know the extent to which those choices are bound by U.S. law as it stands right now. It’s very useful to know that Ithaca Hours are legal while the Liberty Dollar is not, even when they might seem so similar. It gives us, as Pagans, some indication of what kinds of social models already exist that we can look to for successful alternatives.