I posted yesterday about Bernard von Nothaus of the Liberty Dollar being convicted. I definitely think the fact support a guilty verdict on the charge of “issuing and passing Liberty Dollar coins intended for use as current money”, but some of the others seem quite a bit ridiculous, such as “conspiracy against the United States”. I think this was more fraudulent than conspiratorial…
…but it appears that the US Attorney doesn’t agree. She seems to think this is a lot more important than the rest of us… And what she says here [on the FBI press release, no less] is chilling:
“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict. “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,” she added. “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.”
Really, Anne? Really? You’re going to throw around terms like “domestic terrorism” over this? For as much as I disagree with what von Nothaus was doing — profiting off of those who feel your fiat currency, backed by nothing more than a promise, is on the verge of a potential collapse — he wouldn’t have such a big market to sell to if the Fed wasn’t doing everything in its power to undermine the legitimacy of the US Dollar every day.
Every day the government’s inflationary policies erode the value of the US Dollar, stealing the wealth of people who have worked their butts off to earn those Dollars. While I think what von Nothaus was doing was fraudulent, I think I’m beginning to agree with those who have used the old adage to explain why you chose to go after him: “Don’t steal. The government hates competition.”
Hard to believe it was over three years ago, but may of us in the libertarian movement will remember the seizure of the Liberty Dollar holdings/equipment/etc. For those new to the movement, the Liberty Dollar was a metal-backed currency presented as an alternative to traditional fiat currencies, but unlike Gold/Silver Eagles, or Krugerrands, or gold/silver bullion, was actually intended to be used and spent and traded as money in exchange for goods. It attracted the attention of libertarians and goldbugs, and earned a bit of national visibility when it set to release Ron Paul versions of one of the popular gold coins.
Let me state, first and foremost, that I am not a fan of the Federal Reserve, or of fiat money. I fully support the right of the people of the US to use and circulate alternative currencies. I enjoy the fact that some of those currencies would be backed by precious metals. But I incurred quite a firestorm of comments here after the raid, when I explained that I thought the government was right. While I support alternative currencies, and would love the Liberty Dollar to have been one, I claimed it was NOT an alternative currency:
A competing currency must not be interchangeable with FRN’s, which is the fiction that the Liberty Dollar creators try to uphold. Thus, the ALD becomes a method for them to sell silver at a profit while their associates or merchants work to defraud businesses by offering silver worth less (in FRN terms) for goods that are priced in FRN terms. At each level, it appears to have a cut of profit, as all multi-level marketing schemes do, and at the bottom of the scale, those who receive ALD’s as a “face value” equivalent to FRN’s are being shafted.
The Liberty Dollar does not seem to live up to what is bills itself as. If it were a true competing currency, merchants would price goods in ALD terms higher than in FRN terms, in order to receive identical value for their wares. If it were a true competing currency, the “exchange rate” between ALD’s and FRN’s would float, rather than be defined by the Liberty Dollar creators. I previously have written favorably about the Liberty Dollar, but given new information, I have changed my mind. It does not fit the bill of an alternative currency; it is a scam.
After three years of legal wrangling, it was announced today that the founder of the Liberty Dollar, Bernard von Nothaus, has been convicted on all four counts.
The crux of the government’s case rests pretty much on this, care of Coin World magazine [emphasis added]:
The federal government alleges that Von NotHaus, with three other defendants, worked together to violate the law by making Liberty Dollars the government characterizes as “coins” of silver “intended for use as current money” and “in resemblance of genuine coins of the United States …”
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U.S. Assistant Prosecutor Craig Morenao, in opening statements, said the government would set out to prove that von NotHaus deliberately told people to give Liberty Dollars as change for Federal Reserve notes, in direct violation of laws that specifically prohibit the use of passing originally designed coins as current money.
It seems pretty clear that this is not counterfeiting in the *traditional* sense, where you try to copy the direct design. But given that everything I had seen from the website, marketing materials, etc suggested that the ALD should be spent at parity with federal reserve notes, and given to vendors in place of or given to consumers as change in place of federal reserve notes is problematic. Creating a currency to be spent alongside in competition with the US Dollar is one thing — creating a currency to be spent as a US Dollar equivalent is another.
I feel moderately bad for those who got sucked in to the Liberty Dollar system. But overall, I feel worse for anyone who would have the goal to create a *true* alternative currency, because the actions of Bernard von Nothaus have given the very concept a bad name, and imbued the idea of alternative currencies with fear of government prosecution. All this for what was just a scam to get rich fleecing people who distrust government fiat money.
Want to inject liquidity into the market, support American jobs, and do so without raiding the US Treasury or overheating the printing press? The answer is simple: get out of the way.
Now, some may say that’s a libertarian’s answer for everything. And they’d usually be right. But I’m not signing you up for a precipitous decline in federal revenue. I’m not resorting in protectionist and mercantilist policies destined to impoverish American consumers in favor of American exporters. All I’m asking — or relaying the request of Cisco CEO John Chambers and Oracle President Safra Catz, more accurately — is that the US Government make it easier to bring foreign profits back to our shores:
One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.
The U.S. government’s treatment of repatriated foreign earnings stands in marked contrast to the tax practices of almost every major developed economy, including Germany, Japan, the United Kingdom, France, Spain, Italy, Russia, Australia and Canada, to name a few. Companies headquartered in any of these countries can repatriate foreign earnings to their home countries at a tax rate of 0%-2%. That’s because those countries realize that choking off foreign capital from their economies is decidedly against their national interests.
…
By permitting companies to repatriate foreign earnings at a low tax rate—say, 5%—Congress and the president could create a privately funded stimulus of up to a trillion dollars. They could also raise up to $50 billion in federal tax revenue. That’s money the economy would not otherwise receive.
The tax picture described is very simple, and it makes American companies make some difficult decisions. A company with overseas profits and a need to reinvest can choose to invest them abroad or here in the US. Those overseas profits can be invested overseas with little or no tax penalty, or they can be invested here with significant tax penalty. The decision becomes simple. It is only smart to invest foreign profits in the US if it is investment that simply cannot be effectively done overseas, because the cost of repatriation is enormous. It’s a trade war, but it’s aiming the artillery inward, not outward.
Anyone who has read my work knows that I am not a fan of government subsidies. I personally think that American corporations and American workers can compete quite handsomely on the world market. We don’t need our government to actively help industry here; we have an educated workforce, developed infrastructure, stable institutions and a strong rule of law. We have everything we need to make it profitable for companies to invest here. We could have a country where overseas profits are re-invested in American workers and the US economy. What we have instead are government policies actively hostile to that end. All I ask is that those policies be rescinded.
America is seen worldwide as pro-business. In many cases, that is true, but certainly not in our corporate income tax system, as described by the Cato Institute here. Rather than being a low-tax laissez-faire bastion of capitalism, we have the highest corporate income tax rate in the developed world:
Reducing the taxes on repatriated profits can be done in a revenue-neutral way. All that is necessary is to choose a tax rate that will balance the tax revenue earned on repatriated earnings at the current rate with the expected revenue earned on the much larger base of repatriated earnings at a lower rate. Some foreign cash is undoubtedly repatriated; as I said there is incentive not to do so, but that incentive in not insurmountable. However, at a lower tax rate it makes sense for more companies to repatriate much larger sums, and I think a baseline rate of 5% as suggested by Chambers and Catz is a good starting point for discussion if remaining revenue-neutral is a goal.
There is up to a trillion dollars out there that could be injected into the US economy without raising the deficit, without spinning up the printing press, and which would go immediately to the entities who have the best ability to invest it in stimulative ways — companies who are already profitable. While many in Congress may not like the idea, as they have little control over how the money is spent, I think that’s a feature — not a bug.
While I’m not a protectionist, I think we should stop government policy designed to hurt American employment and help employment overseas. Of all the policies in which our government engages, one that actively stops capital from flowing into America from overseas seems rather idiotic. » Read more
I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.
Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra
Brad Warbiany and Doug Mataconis have been very welcoming, and my new realm into libertarian thought should be fulfilling and rich.
I’ve been at United Liberty for two years, starting with the 2008 election and running all the way up to coverage of Arizona’s discriminatory immigration law. My work goes back even further, back to the San Francisco Examiner and the neighborhood newspapers North Seattle Herald Outlook and Madison Park Times in Seattle, Washington.
In the times we live in, there seems to be a political shift going on. The United States is becoming more ethnically diverse, the economy continues to stagnate, and government is making short term maneuvers without foreseeing long-term effects. On the other side of the coin, the Right, who talk a lot of jive about freedom, are parading their own twisted form of nationalism. In these times, it’s important to try to solidify and distinguish the libertarian movement as a separate alternative to the forms of authoritarianism so far proposed to us. I hope my work at The Liberty Papers will help to do that.
I am also currently working on a book on the future of race in politics. It should be finished within the year and published subsequently.
