Maverick Republican Congressman, Ron Paul, who recently generated a respectable following, particularly among the young, with his libertarian ideals in the Republican Presidential nomination race, is following up his ‘Audit the Fed’ initiative, recently passed by Congress, with a campaign to legalise alternate domestic currencies.

Followers of the U.S. scene may be aware that last year, Bernard von Nothaus, who created perhaps the best known alternative currency in the U.S. – the Liberty Dollar – was found guilty on various counts, including the making of “counterfeit coins” (resembling legal tender coins).  During the proceedings the Liberty dollar was described by the prosecution as “a unique form of domestic terrorism” that is trying “to undermine the legitimate currency of this country. The Justice Department press release quotes the prosecutor as saying: “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”.

The Fed clearly is prepared to bring out the big guns to maintain its money printing monopoly.   The Liberty dollar by all accounts was not created in the image of the U.S. dollar – so counterfeiting in the normal sense of the word seems a pretty absurd charge. It was, though, backed by precious metals which, of course, the U.S. dollar is not – and these precious metals have all been seized by the authorities.

Despite being convicted back in March 2011, von Nothaus has still not been sentenced.  Apparently he could face up to 22 years in jail for these ‘offences’, although this is probably unlikely.  No-one had lost money through the Liberty Dollar exercise until the U.S. authorities confiscated the gold, silver and platinum backing it.  The von Nothaus defence was that the Liberty Dollars were in fact warehouse certificates (which could be bartered for goods among those who accepted them) and the precious metals did not belong to von Nothaus, or his organisation, but directly to those who had subscribed to the Liberty Dollars.

Ron Paul, in his statement on his website on his latest campaign says:

I recently held a hearing in my congressional subcommittee on the subject of competing currencies. This is an issue of enormous importance, but unfortunately few Americans understand how the Federal Reserve and Treasury Department impose a strict monopoly on money in America.

This monopoly is maintained using federal counterfeiting laws, which is a bit of a stretch. If any organization is guilty of counterfeiting dollars, it is the Federal Reserve. But those who dare to challenge federal legal tender laws by circulating competing currencies — at least physical currencies — risk going to prison.

Like all government-created monopolies, the federal monopoly on money results in substandard product in the form of our ever-depreciating dollars.

Yet governments have always sought to monopolize the issuance of money, either directly or through the creation of central banks. The expanding role of the Federal Reserve in the 20th century enabled our federal government to grow wildly larger than would have been possible otherwise.

Our Fed, like all central banks, encourages deficits by effectively monetizing Treasury debt. But the price we pay is the terrible and ongoing debasement of our money.

Allowing individuals and business to use alternate currencies, especially currencies backed by gold and silver, would expose the whole rotten system because the marketplace would prefer such alternate currencies unless and until the Fed suddenly imposed radical discipline on its dollar inflation.

Sadly, Americans are far less free than many others around the world when it comes to protecting themselves against the rapidly depreciating US dollar.

Mexican workers can set up accounts denominated in ounces of silver and take tax-free delivery of that silver whenever they want.

In Singapore and other Asian countries, individuals can set up bank accounts denominated in gold and silver.

Debit cards can be linked to gold and silver accounts so that customers can use gold and silver to make point of sale transactions, a service available only to non-Americans.

The obvious solution is to legalize monetary freedom and allow the circulation of parallel and competing currencies. There is no reason why Americans should not be able to transact, save, and invest using the currency of their choosing. They should be free to use gold, silver, or other currencies with no legal restrictions or punitive taxation standing in the way. Restoring the monetary system envisioned by the Constitution is the only way to ensure the economic security of the American people.

After all, if our monetary system is fundamentally sound — and if the Federal Reserve indeed stabilizes the dollar as its apologists claim — then why fear competition? Why do we accept that centralized, monopoly control over our money is compatible with a supposedly free-market economy?

In a free market, the government’s fiat dollar should compete with alternate currencies for the benefit of American consumers, savers, and investors.

As the Austrian economist Ludwig von Mises explained, sound money is an instrument that protects our civil liberties against despotic government. Our current monetary system is indeed despotic, and the surest way to correct things simply is to legalize competing currencies.”

While the Liberty Dollar is not mentioned by Paul there is little doubt that he is at the very least sympathetic to the fate of von Nothaus and those who invested in Liberty Dollars and the huge injustice, as he and many others see it, meted on them by the Fed and Treasury Department’s interpretation of the law, the confiscation of the precious metals being held to back the ‘currency’ and the ensuing conviction.