Is the Liberty Dollar Legal?

A couple of days ago I posted on  NORFED's fascinating attempt to create an alternative currency in the United States. According to the U.S. Mint, this is illegal. According to NORFED supporters, it is not.  Who is correct? The law that the U.S. Mint cites to as making NORFED's activity illegal is 18 U.S.C. § 486.

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

According the the U.S. Mint,

Under 18 U.S.C. § 486, it is a Federal crime to pass, or attempt to pass, any coins of gold or silver intended for use as current money except as authorized by law. According to the NORFED website, "Liberty merchants" are encouraged to accept NORFED "Liberty Dollar" medallions and offer them as change in sales transactions of merchandise or services.

In all fairness, the law is very clear, it is illegal to "pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money."   Setting aside the fact that the NORFED coins look an awful lot like United States currency, 18 U.S.C. § 486 outlaws minting coins for use as current money whether you are counterfeiting or whether you are minting coins of "original design."   NORFED denies that the coins are intended for use as current money, however, their website states,

The Liberty Dollar is private, inflation proof REAL money that is devoid of inflation and debt. It's a currency of the people, for the people, and by the people.

NORFED supporters claim that 18 U.S.C. § 486 only applies to coins and that NORFED only intended the paper notes it created to be used as currency and not the coins. This is a nuance that is likely lost on the casual observer and seems to be refuted by NORFED's rather self-incriminating web site, which states,

The Liberty Dollar is available in three forms: metal Gold & Silver Libertys (which are by far the most popular), paper Silver Certificates, and in digital form for use on-line and via email.

Unless those "Gold & Slivery LIbertys" are something other than coins, NORFED will have a very difficult time establishing their innocence.  

Competing Currency in the USA

Presidential candidate and Libertarian leader Ron Paul claims that Americans are held hostage to the unsound currency manipulations of the United States Federal Reserve. Essentially, Ron Paul is about as big an inflation hawk as you will find. He doesn't care for fiat money and believes that in the very least Americans should be able to choose the currency that they use. To this end he has proposed that Americans be allowed to use competing currencies. An American corporation, NORFED, has taken up the charge and is issuing notes backed by gold and silver and coins. This "currency" is more popularly known as the "LIberty Dollar." The problem is, this is apparently illegal. In November of 2007, federal agents raided NORFED and confiscated 2 tons of copper coins and 500 pounds of silver coins. According to the United States Mint:

Under 18 U.S.C. § 486, it is a Federal crime to pass, or attempt to pass, any coins of gold or silver intended for use as current money except as authorized by law. According to the NORFED website, "Liberty merchants" are encouraged to accept NORFED "Liberty Dollar" medallions and offer them as change in sales transactions of merchandise or services.

NORFED tells "Liberty associates" that they can earn money by obtaining NORFED "Liberty Dollar" medallions at a discount and then can "spend [them] into circulation."

NORFED’s "Liberty Dollar" medallions are specifically marketed to be used as current money in order to limit reliance on, and to compete with the circulating coinage of the United States. Consequently, prosecutors with the United States Department of Justice have concluded that the use of NORFED’s "Liberty Dollar" medallions violates 18 U.S.C. § 486, and is a crime.