According to the FBI warrant, the justice department told the Liberty dollar folk that they’re doing something illegal, citing the clause that David quoted above. However, this was the opinion of government prosecutors and not of a court.
The Liberty Dollar guys filed a civil lawsuit in the Federal Court in the District of Indiana. They sought an injunction against the U.S. government making statements that Liberty dollars violated Federal law. They argue that they never represented their dollars as being U.S or foreign “current money” in the sense that is meant by the law. They read the law as saying that one cannot counterfeit, nor can one make a coin of “original design” – e.g. similar but not same as U.S. currency – to pass if off as valid U.S. or foreign currency.
I’m not sure how a judge would decide, but from what I have seen, Liberty Dollar’s marketing was very above board on this aspect. Far from trying to confuse their dollar with current money, their customers probably bought these for exactly the opposite reason – because they explicitly thought these were different from current money. I sometimes see advertisements on TV that sell “collectors edition” dollars to people, and only the fine print indicates that the $5 coin is actually a Liberian $5! I assume these ads have been vetted by lawyers; but, Liberty’s advertising was never that subtle – it was purposely blatant about their currency being better than US dollars.
The liberty dollar was never a good purchase on a purely economic basis, the only “reasonable” reason to have bought it was to make a political statement. As for the Ron Paul link – no surprise. To me, it appears that the FBI is going after these guys for political reasons. The government does not like this particular form of political protest.
Even though the liberty dollar was never a good deal, I had previously suspected that it might be far worse than that. I had suspected that some actual fraud might be involved – like keeping even less reserves than they say. (The “counter-party risk” is huge.) In the FBI warrant, I was expecting to see some such facts; but, there were none.
At least from the lay-reporting, I think the initial comparison with smoking pot is flawed. A better analogy would be where someone challenges a law that is not so clear-cut: e.g. where someone opens a pot shop under state law even though the Feds opine that it violates their law, but no test-case has yet been decided.
In summary, while these guys are not ideological fellow-travelers – and might even be the opposite (in my mind, I classify them with various other “loonie” elements) – I wish them well on this particular court-case.
As a side-light, reading the FBI’s warrant, it was interesting to see how they stressed that the Liberty dollar folk were using their cars and house as part of their business. They seemed to stress that the cars and house were used in commission of the alleged “crime”. I wonder if there is some law – probably originally intended for drug-dealers, and then extended – that could let them threaten to grab these people’s house/car.
