I hit a jackpot of sorts as I prepared this blog post for the article in Issue 23 titled “Hard Money” in the Voluntaryist Tradition because my related research led me to a couple of future issues of The Voluntaryist.This article discusses the history of coined money as a medium of exchange in the United States. Carl explains how entrepreneurs came in to supply the market for coinage just as they do for any other product or service that is in demand.
Of course gold was the main metal used to create the coins and I learned that private gold coinage began during a gold rush in Georgia and North Carolina in 1828. (I didn’t even know there was a gold rush in those states, did you?)
Then the story moves to California after gold was discovered there in 1849. The use of coins there is quite a story. Since California wasn’t a state yet, there was no settled government which meant it was even more of an opportunity for someone to fill the market demand for a medium of exchange so people could conduct business.
California seemed to be doing just fine with this until the Civil War. The U. S. government issued paper money and California had to now figure out how to deal with this new situation. These new “greenbacks” had no gold backing so it makes sense that Californians would have little use for them. A lot of people had no interest in “greenbacks,” they liked their gold.
As a matter of fact, the tax collector of San Francisco even refused to accept them as payment!
In addition, many people did not want to be in a situation where they had contractual relationships built on payment in gold and end up receiving paper money, so the state passed the Specific Contract Law which basically said payment had to be made in the form stated in the contract.
I know I always recommend reading the articles for yourself but this one is of particular importance to Carl as he concludes the piece:
“Given the demise of both private and government gold coinage, it is difficult to imagine how commodity money will once again assert its dominance in market exchanges. Yet there is a natural law at work which assures us that paper is not gold, despite all the statist protestations to the contrary. Both voluntaryists and "hard money” advocates need to be aware of the monetary history related in this article, not only is the moral case for private coinage laid out, but its very existence just over a century ago proves that such a system was functional and practical.”
Now, to get back to what I said at the beginning about hitting the jackpot, as soon as I started reading this article, I immediately thought of the Liberty Dollar. I knew practically nothing about it specifically, only that people in libertarian circles were upset at how the government came in and shut them down and I also was aware that their offices were in Evansville Indiana, a mere two hours from where I currently live.
So as I was reading a bit on the Liberty Dollar, I discovered that Carl was never very enthused about it. He wrote about his concerns in Issue 110, one being that they used the term dollar, which Carl says is a statist term, “a government unit of accounting.”
This then led me to Issue 65 where Carl wrote about a bad experience with another private coinage firm, Gold Standard Corporation, which was accepted as payment for The Voluntaryist subscriptions up to that point.
Carl’s remarks on both the Liberty Dollar and Gold Standard Corporation reference the questionable character and actions of people inside those businesses. Carl warns us that “free market rogues can defraud you just as bad as government ones” so you should always be careful and skeptical.
This is true of course but if they were indeed fraudulent in some way, at least both of those businesses do not exist anymore. The Federal Reserve, government minting and printing however, still remains.
One last point I need to bring up on this topic is bitcoin. I have looked into bitcoin. I have watched videos on bitcoin. I have read articles on bitcoin. But I don’t get it.
Since my husband is in computers, when I saw people working with bitcoin at Porcfest, I had someone explain it to him in the hopes I can understand it better. He seemed to understand it better, but I still don’t. I am completely confused about it.
I have noticed a lot of excitement in libertarian/anarchist circles around bitcoin and I have seen several skeptical views about it as well. I don’t know what you think but I guess the smartest thing for me to do, since I don’t get it is to just stand back and see what happens.
7 comments:
I have had quite a bit if experience dealing with Liberty Dollar and Bernard von Nothaus (the "monetary architect" who started Liberty Dollar). I never had anything but good experiences with them. But I know of a LOT of people who just didn't "get" Liberty Dollar.
First of all I heard people complain (early on) that "silver is only worth $4 per ounce, but the LD has a face value of $10. We are getting screwed!" My reaction was always "And exactly how much is the paper worth in that dollar bill - or $100 dollar bill- you are holding?"
For currency the face value has to be greater than the "melt value" or people will hoard it rather than use it. If you want to see how badly you are really being screwed by the US coins in your pocket now, check out this site: current melt value of coins.
Bernard isn't to blame for the raid that resulted in all his metals being stolen by the feds. Sure, he might ought to have avoided the name "dollar", but I will never support the idea that The State owns a word. He studiously avoided the term "coin" for his Liberty Dollars, even though I think that was unnecessary. Government doesn't own that word either.
Ultimately it comes down to the fact that no one was ever forced to accept a Liberty Dollar as payment, and if anyone has any they don't want I will happily give them a loving home.
Kent, I don't think it's just the liberty dollar people don't get, I think it's the concept of money in general. Although I have learned a lot in the past few years, I might still be one of them.
Also, you may want to read the articles I referenced to get more clarity on Carl's thoughts on the liberty dollar.
Early in my dealings with Liberty Dollar I had written Bernard and suggested that he issue both "dollars" and coins without a designated value on them. He explained his reasons and I accepted them for what they were. I also suggested that they put out a 1/10th oz coin for smaller sales, and he said they would be too expensive to do (but later they minted 1/20th oz coins anyway, which I bought a bunch of).
But I had nothing but positive experiences with LD. I even still have some of the paper certificates and have sold some at a much higher price than I bought them for due to demand.
Reading about Carl's desire to make his own coin made me think about the one I designed but could never afford to have minted: The Silver Dubloon.
Debbie, if it is any comfort, I don't understand the "bitcoin" thing either. Several people I admire and trust have tried to explain it to me, but I remain confused. For one thing... what happens to them if the lights go out more or less permanently? I can light a candle and find the gold. :)
Like so many other things, one man's coin is another man's screwdriver...
Would I trade for bitcoins? Someone can always make an offer. :) Right now I have no real basis for comparison, so I'll probably stand back with you and wait to see what happens.
Bitcoin is definitely technology-dependent. If the aliens come and EMP us back to the Stone Age, it won't be viable, at least for awhile.
On the other hand, it's a highly secure, easily hideable digital currency. To the extent that it retains value (i.e. that people remain willing to give you a loaf of bread for .x bitcoin, etc.), it's a nice way of moving wealth out of government's purview, I think. I've got a little, and am working on getting more. Not as a high priority, but because it's worth tinkering with anyway.
I received an email from a fellow who directed me to a blog post he wrote called Precious Metal Math For Fun and Profit. It's a nice article helping to explain how to work with precious metals and even has word problems for those of us who need to learn how to calculate value. I did two of them and got them both right so I guess I'm on my way to being a precious metal expert. :) I recommend reading this nice instructional post.
The Achilles heel of the Liberty Dollar (besides the govt thugs hating it) was its denomination in a unit equivalent to a rubber ruler. Measuring the price of things in terms of the paper Federal Reserve Note, a.k.a. "dollar," is deceiving because of its constantly shifting (decreasing!) purchasing power.
The paper "dollar" is to a constitutional (silver) dollar as a picture of a cow is to an actual cow. To be viable a silver or gold coin needs simply to be stamped with its weight. Any other measurement is irrelevant and a deception. The value of money is in its weight--it's precious metal content--not what you call it.
But remember, the only purpose of a legal tender law is to force people to accept as payment something that they don't want. The single most effective thing that could be done to increase and secure liberty would be to repeal all legal tender laws and let the market decide what should be used as money.
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