Friday, October 20, 2006

Regulation Overload - Part Two

Via a link on the Mises Blog it has come to my attention that the Federal Mint is cracking down on Liberty Dollars. There is a general article about it here, and a link to a particular Liberty Dollar-related arrest here.

I find this intolerable on many levels. First - there actually is a law against minting alternative coins. This was passed in 1864 during the Civil War when the Union government outlawed the use of specie money. The current system of fiat money has its roots here (though it could be argued that the Confederacy actually started it by issuing fiat money from the outset of the war). Clearly, this law should have been repealed a long time ago - but in fact it was renewed and updated as recently as 1948. I can't think of a good argument why the national government should be able to maintain a monopoly on the issuance of money, nor why they should be able to dictate to the rest of us what kind of money we use. Second, people are actually being arrested for trying to use Liberty Dollars? Now, the company that makes Liberty Dollars is very careful to say that they are not money. They are simply a silver (or gold) product that you are free to purchase. The paper versions are money (because the feds haven't gotten around to outlawing paper and electronic alternative currencies), and they stand in for an amount of silver stored in a warehouse. Now - on what basis could someone be arrested for trying to spend a Liberty Dollar? I can't really see one. As far as I know, it is perfectly legal to barter goods in exchange for other goods. If I am a merchant and I provide a good or service to the public, then surely I am able to set my own terms for disposing of that service? I mean honestly, what next? Will the parents of children who trade comic books be carted off to jail? Will Mexican shops no longer be allowed to accept pesos next to US dollars? Will people be arrested for accidentally slipping a Canadian dime in with their change?

The whole system is absurd. People need to learn that money isn't real. Greenbacks only have value by fiat. That is, the only thing keeping them valuable is people's faith in them. You accept dollars because you know that other people will too. I don't see what right the government has to dictate the terms on which people exchange goods and services. If the US Mint's case is solid, if people really can't change goods and services on their own terms and for things that they individually find valuable, then this system is in principle no different from the Soviet system.

Don't believe me? Let's try a little thought experiment. Let's say that there was a run on the dollar, that hyperinflation set in. It's really not so hard to imagine (and anyway, it has happened before). Well, naturally prices would rise sharply. People might not have enough money in dollars to buy things they needed. Let's say someone needs a truck under these conditions to start a business, but he simply doesn't have enough dollars to his name to afford it. Would it be OK for him to take the sterling silverware his grandmother gave him and trade it against the truck? I guess we would all say "yes." After all, the silver is worth something to to the owner of the truck, and the truck is worth something to him. The seller owns the truck, the man owns his silver, no? Well, probably "no" according to BigGuv, becauase we can well imagine that the jackboots, under the excuse of averting an (already ongoing) economic "crisis," would make it illegal NOT to accept dollars for commercial purchases of any kind. And so this transaction becomes illegal. It's a form of price fixing, really - forcing someone to sell their truck either at far below market value - or else not sell it at all.

So there's only one solution: buy Liberty Dollars. Not that I'm much of a believer in their efficacy - but if the government sees them as enough of a challenge to its authority to go arresting people for using them in what should be completely legal and harmless transactions (buying beer in the case linked above), then the people who make them must be on to something. In any case, I consider it something of a patriotic duty (patriotic to the United States as it was originally intended to be - not the neo-socialist state we currently live in) to oppose arbitrary abuses of power by the federal government.

The page on becomming a Liberty Dollar Associate is here. It is a complicated process and costs $150 net ($250 gross - you get $100 in Liberty Dollars). You are then able to buy the currency at the actual silver rate, which will tend to be a discount (they claim it is always at a discount, but I can't find any evidence for this on the site) as fiat currencies (i.e. US Dollars) inflate. Or, you can buy the money directly from this page. Not that I'm keen on using my credit card for this - but fortunately the company that makes them is right here in Indiana, as are a lot of businesses that accept them. So I should be able to go pick them up somewhere. In fact, it should be possible to get them as change from one of the businesses that deals in them. I will simply go to one place that accepts them, buy something, get some as change, and then spend them somewhere else. My contribution to the currency black market.

I don't really have time or money to deal with this right now - but I will make a tentative commitment to buy and spend some over the Christmas Holidays. I missed a similar opportunity here in Indiana a couple of years ago when a diner in Martinsville defied the local smoking ban and had a contributions jar for legal fees. I meant to make a trip up there, drop $20 in their jar and have a smoke with a hamburger, but I never got around to it. The city sued, and the case was concluded in the government's favor. I couldn't find details on the penalty, but I imagine it must be reasonably stiff. They were originally fined $100, which they refused to pay. (I suppose it is still worth a trip up to Martinsville to support their business, however.)

The point is that stories like this crop up all the time. Our liberties are quietly regulated away. The diner in Martinsville had a sign on the door that said something like "This restaurant allows smoking. If you do not smoke, you may want to consider eating somewhere else." And that, to me, should be the end of the argument. No one is forced to choose a particular restaurant. If you don't like smoking, go somewhere else - right.

Likewise, people should be able to do business in whatever medium is valuable to them. I do not recognize the government's right to enforce popular use of its fiat money - nor should anyone else. That the fiat money is successful is definitely of benefit to us all - no denying that. My point is simply that the government cannot (and so should not try to) legislate in defiance of reality. Dollars have a real value. Either they spend in the world or they don't; either they buy you the things you need or they don't. At the very least, a basic freedom of people in civilization should be to engage in commerce on their own terms. If US dollars don't buy them the things they need, they should be allowed to switch to a medium that works.


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