I’m sitting in Asheville’s Grove Arcade, talking to Kevin Innes and planning to do something that at least some government officials have said is a Federal crime. I’m trading Mr. Innes 50 dollars in U.S. legal tender for $50 worth of “Liberty Dollars” and I intend to use them to purchase goods and/or services.
The currency that I’m about to pocket is made of actual fine silver. The $20 piece, in fact, is a full troy ounce of the precious metal. Just to be on the safe side, I verified the composition of the coin at Scotties Jewelry, a Hendersonville shop that deals in art, gold, silver and other major valuables. I could have opted for money-like certificates that are actually negotiable warehouse receipts backed up by precious metal stored in a facility in Evansville, Indiana. But I like the feel of the coins. Innes indicates that the weight of the metal is often what wins people over. “Just feel that,” he says dropping the $20 piece into my hand. “Doesn’t that feel right?”
The company that produces these liberty dollars — formerly known as The National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED) and now called simply Liberty Dollar services — makes no claim that their coin-like medallions and certificates are legal tender.
The impetus behind the Liberty Dollar is the notion that American money – the Federal Reserve notes you probably have in your wallet right now – are no longer backed up by actual precious metal. This, Innes and his colleagues say, is why we have runaway inflation and a weakening dollar on the international scene. Producing currency that is either backed by silver and gold or actually made of precious metal is their way, they say, of trying to set things right…or at least take a step in the right direction. When the government can print as much paper money as it wishes, Innes explains, it weakens the value of the dollars we carry around and spend. “You want to know why there’s inflation?” he asks. “It’s because government is pumping air into the system.”
The coin-like Liberty Dollars are minted at a northern Idaho facility and circulated through company associates like Innes. Nowhere, as far as I was able to determine, do the advertisements and promotions for the Liberty Dollars claim status as “legal tender.” Nevertheless, the U.S. Department of Justice in 2006 declared that “the use of these gold and silver NORFED ‘Liberty Dollars’ medallions as circulating money is a Federal crime.” The penalty for use could be as high as five years, according to an October 10, 2006 Washington Post article.
The Feds apparently base their objection to the “dollars” on the fact that they feature some language (“Liberty,” “Dollars,” “Trust in God,” and “USA” for example) similar to that of legal tender coins issued by the U.S. Mint. According to Innes and a company website (libertydollarasheville.com), those charges have been answered and any reasonable person can understand that the Liberty Dollars are not legal tender, but are really nothing more than either silver coins or certificates backed up by metal. As of this writing, the company’s attorneys were preparing a lawsuit that named as defendant, among others, U.S. Attorney General Alberto Gonzalez. A spokesperson for the U.S. Mint declined to comment on the Liberty Dollar situation, citing the impending litigation.
It’s worth noting that Liberty Dollars are far from the first attempt at promoting what is called “alternative currency.”
A quick Internet check revealed more than 75 other alternatives, including “Brooklyn Greenbacks” from New York, “Burlington Bread” from Vermont, “Carbondale Spuds” from Colorado, “Mo’ Money” from New Orleans, “Wash Bucks” from Iowa and, of course, Disney Dollars from the Magic Kingdom. The list includes several other alternatives called “hours.” These are time-based currencies. In this system, one person volunteers to work for an hour for another person. The volunteer is then credited with one “hour,” which may be redeemed for an hour of service from another volunteer. The “money” issued in these systems is merely a way of keeping track of who owe whom.
The legitimacy of the Liberty Dollar and the legal battle between the company and the Federal government may not be decided in the courts for years. The real test of the dollars, however, will be whether merchants and consumers get behind the idea of private money.
With that thought in mind, I pocketed the shiny currency and hit the streets looking for a place to spend them. The company website offers a list of merchants and trades people who accept the alternative dollars in their businesses…so I started with the list.
One of the more enthusiastic Liberty Dollar supporters was Judy LeRoux. She and her husband Ken own Always Herbs, Inc., located East of Asheville. The business posts signage describing the Liberty Dollar concept and inviting customers to use them to buy herbal products and supplements.
“We don’t have that many people who use them,” she explains, “but sure, I’ll take them,” she says. “It’s currency that has value. The paper money printed by the government is kind of a joke…just like the president.”
The dollars are difficult to use as currency, she explains, but she still likes the coins for their beauty and the political statement they make. “They have artistic value…and, of course, I’m vehemently opposed to most of the things the government does anyway. Don’t get me started.”
Jerry Brown, owner of Asheville’s Floating World Wood Designs, a company that designs and builds high-end wooden doors, echoes Ms. LeRoux’s sentiments. He’s happy to take the Liberty Dollars when they are offered. However, because his doors regularly top the $1,000 mark and the coins most commonly come in denominations of $5, $10, and $20, not many customers bring them to Floating World. “It’s more of a symbolic thing than anything else, he says. “I’ve never had anybody actually pay with Liberty Dollars. But I just like the idea. They have intrinsic value and they’re more likely to retain their value. And, of course, a snub of the nose at the government…that appeals to me.”
Not everybody on the list is as enthusiastic as LeRoux and Brown, however. The first person I called wished to remain anonymous, but said briefly that she no longer took the coins and that she found them difficult to use in her business.
Christine Ray, of Guitar Trader in Asheville, told me, “We do accept them, but we haven’ had anybody bring them in for a long, long time. Steve Parker, of Karat Patch Jewelers, said, “I’ve had a few, but I haven’t pushed it…so I haven’t gotten nearly as many as some other merchants have.”
The level of acceptance and sympathy for Liberty Dollars seemed relatively high in the Asheville area, but I wondered how merchants further from the city would react. One Hendersonville goldsmith said he’d probably take them in for scrap silver prices, which would be considerably less than the amount stamped on the individual coins.
Beau Rodriquez, owner of Hendersonville’s Black Bear Coffee Company, unhesitatingly accepted a five-dollar Liberty coin as payment for coffee and quiche. “I’m not going to put it in the cash register,” he said. “Somebody would probably give it away as a quarter.”
As an expression of one’s distaste for the current U.S. monetary system, the Liberty Dollars seem to be quite useful. They are considerably less handy as a way of doing business. The country, after all, is set up to run on Federal Reserve greenbacks. Even the Liberty Dollar company itself accepts greenbacks as payment for the silver medallions and paper certificates. This, says Kevin Innes, is because the company has “to use money in the world-trade market.”
Perhaps the phenomenon was best stated by an Asheville market manager (who also wished to remain anonymous). “I love to take them,” she said. “I really would. But they’re cash money that I can’t deposit…and I need every penny I take in just to run my business.”