Monopolies are bad. Is a money monopoly good?
Most mainstream economists will tell you that a central bank that has control over the currency is necessary, good, and just. But an important question that seems to go unanswered is: why do we have to be forced to use it?
Most Americans probably don’t feel as though they are being coerced into using the dollar. They go into a store and it has prices in dollars and nothing else. They get paid in dollars, make all of their purchases in dollars, and have their savings denominated in dollars. But even so, the US government not only frowns upon, but also prosecutes, those who challenge its monopoly on money.
Monopolies are maintained by force (even money monopolies)
According to Simon Black, the Department of the Treasury recently shut down Liberty Reserve, a digital currency provider that allowed customers to trade virtual currency that could be tied to fiat currency or precious metals. They did this ostensibly in the name of “money laundering.” Since it allows anonymous banking, Liberty Reserve was accused of being primarily “designed to allow money laundering and illicit finance.”
This is reminiscent of the prosecution of Bernard von NotHaus, the creator of the Liberty Dollar. He provided customers with monetary notes that were fully backed by precious metals. His vaults were raided by the US government, who stole all of his customers’ gold, silver, and platinum that was stored there. The warrant accused him of mail fraud, wire fraud, counterfeiting, money laundering, and conspiracy. A North Carolina jury found him guilty of “making, possessing, and selling his own coins.” He faces up to 15 years in prison, a $250,000 fine, and the forfeiture of $7 million worth of precious metal. His sentence is still being decided. (I actually wrote a letter to the judge presiding over his case. I’m not sure that it will do von NotHaus any good, but I felt compelled to to make any effort that might help alleviate such an injustice.)
Especially appalling was the gross hypocrisy and obvious falsities spoken by the Attorney for the Western District of North Carolina, Anne M. Tompkins, who said the Liberty Dollar was “a unique form of domestic terrorism” trying “to undermine the legitimate currency of this country”. She also said, “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.”
I did mention these statements in my letter to the judge, pointing out the fact that the US Constitution states that states may only consider gold and silver legal tender. Thus, von NotHaus’ currency is far more legitimate than Federal Reserve Notes! Not only that, but it is laughable to think that the Liberty Dollar undermines economic stability, especially in comparison to the problems caused by the creation of “legitimate currency” by the Fed.
I’m surprised and disappointed that a jury could be convinced that the Liberty Dollar was intended as counterfeit. Indeed, I’m not even sure that’s what they were convinced of. Maybe they heard the term “terrorism” and soiled their pants and decided to convict. Even a small child could easily tell that the Liberty Dollar is distinct from the USD.
What can we do?
In addition to the cases of Liberty Reserve and the Liberty Dollar, the government went after Mt. Gox, the largest Bitcoin exchange site. It seems to be quite clear that the government is desperate to maintain its money monopoly. They will accuse those who don’t go along of being terrorists, money launderers, and counterfeiters…whatever is necessary.
But there are solutions, as long as people are willing to use them. Unlike the Liberty Reserve and Liberty Dollar, Bitcoin has no central vault or exchange, making it nearly impossible for the government to stop. As well, I find the solutions mentioned and used by GSF in this No Time 4 Bull article to be quite interesting. I highly recommend checking it out.
It appears that the Internet and encryption have given us new opportunities to undermine the money monopoly and create our own sound money since the government is unable or unwilling to do so itself.
This is part of the beauty of voluntary interaction.