Monday, March 21, 2011

You cannot accept gold as payment. You must accept Ben Bernanke's worthless paper.

From Sovereign Man:
The United States Department of Justice delivered a very clear and unfortunate message on Friday:

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism. While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country.”

These remarks were released by the US Attorney’s office in the western district of North Carolina following the conviction of one Bernard von NotHaus, the creator of the ill-fated Liberty Dollar.

As you likely recall from a few years ago, Liberty Dollars were privately minted gold and silver rounds. Paper certificates, akin to warehouse receipts were also issued, effectively giving the bearer a right to claim a certain amount of gold or silver at the group’s warehouse in Coeur d’Alene, Idaho.

This is traditionally how the system of money used to function– precious metals would be stored in private, secure storage facilities, and paper certificates were issued as a medium of exchange that entitled the bearer to redeem metal from the vault. Liberty Dollars represented a return to that system.

Clearly, the Justice Department feels otherwise… instead viewing these silver rounds as an attempt by terrorists to undermine the US dollar.
Hit the link to read the rest of Sovereign Man's post.  It's worth the trip. 

Anyway, back during the previous Great Depression, FDR decided that he didn't want gold to compete with his valueless paper money.  Here's Wikipedia on the infamous Executive Order 6102:
Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both. Most citizens who owned large amounts of gold had it transferred to countries such as Switzerland. 
Order 6102 specifically exempted "customary use in industry, profession or art"—a provision that covered artists, jewelers, dentists, and sign makers among others. The order further permitted any person to own up to $100 in gold coins ($1,677 if adjusted for inflation as of 2010; a face value equivalent to 5 troy ounces (160 g) of Gold valued at about $6200 as of 2010). The same paragraph also exempted "gold coins having recognized special value to collectors of rare and unusual coins." This protected gold coin collections from legal seizure and likely melting.

The price of gold from the Treasury for international transactions was thereafter raised to $35 an ounce ($587 in 2010 dollars). The resulting profit that the government realized funded the Exchange Stabilization Fund established by the Gold Reserve Act in 1934.
So what? 

Well, if people are ever allowed to swap real honest-to-god silver and gold coins in exchange for goods and services, it won't be long before people refuse to do business with Bernanke Bucks.  There is a relatively limited supply of gold and silver.  Bernanke's capacity to print $20.00 bills is unlimited.  If you ever wrap your mind around why counterfeiting is illegal, and why debtor governments love inflation, then you'll understand why our government doesn't want a currency competitor. 

If I agree to accept a gold nugget as payment for goods and services, it's nobody's business but mine.  If I agree to accept Mickey Mantle baseball cards, ditto.  I'm making the choice.  As long as nobody mis-represents the nuggets or the cards, government has no business getting involved. 

But if people continue to accept worthless paper from Bernanke's printing press?  Well, somebody ought to be a good neighbor and suggest some alternatives.  I'm just sayin'.....

The picture of Bernanke's Printing Press came from here. 


Anonymous said...

So if this bill passes in North Carolina, will the Feds have to pardon VonNothaus, or will they just invade North Carolina instead?

ΛΕΟΝΙΔΑΣ said...

"or will they just invade North Carolina instead?"

To ask the question is to answer it. If Congress would pass a repeal of Gresham's law, the "One" would sign it before it arrived at his desk.