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Comment by mseebach | Hacker News Reader

This bit confuses me:

At his federal trial, witnesses testified to the Liberty Dollar’s criminal similitude to standard American coins. They said his coins included images of Lady Liberty and cheekily reversed “In God We Trust” to “Trust in God.” Then again, his coins were made of real gold and silver, as American coins are not, and came in different sizes and unusual denominations of $10 and $20.

They may be similar to US coin, which is, if nothing else, dumb. But if they're made from gold and silver, wouldn't they be more valuable than the coins they were confused with? Is that not solid proof against mens rea? Gold is $55/g, silver is $32/g. A US dollar coin is 8.1g, a quarter 5.6g.

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He did not use pure gold or silver. The coins had less gold or silver than their respective face value.

By the way, there are gold and silver american coins that are still legal tender. There are many different legal tender gold and silver us coins that have a woman on them and the word liberty and they are often referred to as liberty dollars.

One side of his coin is especially similar to a silver coin called the peace dollar (but also often referred to as the liberty dollar).

> He did not use pure gold or silver. The coins had less gold or silver than their respective face value.

Putting in an amount of gold equal to its supposed monetary value would have been a losing business proposition. He'd have been losing money every single time he traded a Liberty dollar for US dollars. If the Liberty dollar is worth exactly the amount of gold that's in it, then the only way he could even break even is if the cost of minting coins were zero. He'd essentially be turning himself into an easy way for currency speculators to avoid brokerage fees, and losing his shirt in the process. (This is assuming he weren't using gold that he had previously stockpiled when it was at a lower price.)

Putting only a little precious metal in the coins is a much better business decision. Having some precious metal in there would be reassuring to members of his target demographic. Having less than the coin's stated value in there means that he had some shot at maintaining control over the market and having a viable business plan.

That, and I suspect that keeping the actual value of gold at arm's length would be an absolute necessity. Just look at what the price of gold was doing over the time that Liberty dollars were being issued. A currency that's constantly strengthening against all others at a double-digit rate is not a currency on which one could base a stable economy. cf.) Dutch disease.

> But if they're made from gold and silver, wouldn't they be more valuable than the coins they were confused with?

Sort of, but not really. The issue here is mixing the ideas of "a dollar" with "a piece of gold worth a dollar" or "a piece of silver worth a dollar". They are not the same thing.

There's an abstract notion of 'Value: $1.00' that both a piece of paper and a piece of gold links up to.

Hopefully that is a clear explanation.

No, I get they're not the same thing, that's why I stated that it's dumb they've been issuing coins that resemble dollars. But it would appear that the counterfeit coins are actually worth more than the real coins - that's usually not the point of counterfeiting, and that makes it unclear who the victim of this crime really is.

[original comment redacted]

> that makes it unclear who the victim of this crime really is.

Ah, okay - sorry, I missed this. There isn't really "a victim" here per se; it'd be hard to point at a person and say that they were hurt by what this guy was doing. Rather, it's a crime because it has the potential to destabilize the rules of how our financial system works. And, by implication, how our political system works. Money and politics go together, everyone accepts this.

Government rhetoric (I guess) requires them to label it terrorism, but that's really stupid. They could have used it as an opportunity to explain how our economic system actually works. Of course, if you explain how the system works, people may ask deeper questions, etc.

[response to redacted comment]

OK:

You make an 8 gram silver coin and call it a "One Liberty Dollar". It will cost you $256 in silver alone.

You then trick a bank into accepting it, so they deposit it into your account with a value of $1.

The coin isn't a real US dollar, so you're guilty of counterfeiting currency. In reality, however, you've lost significantly more than you've gained, and the bank should be able to recover most of the lost dollar by selling the silver.

It's clearly criminal to pass off something that isn't a real coin as a real coin, and the you should be punished for that. But it seems logical to me that charges of conspiracy and terrorism should be weighed against the fact that any conspiracy certainly wasn't to your financial benefit - as counterfeiting conspiracies very much tend to be.

Other comments have suggested that the coins were indeed worth less than they were accepted for, so that makes it more clear cut. I still think the quoted paragraph is poorly phrased - it would have made sense to include that very simple fact.

> It's clearly criminal to pass off something that isn't a real coin as a real coin, and the you should be punished for that. But it seems logical to me that charges of conspiracy and terrorism should be weighed against the fact that any conspiracy certainly wasn't to your financial benefit - as counterfeiting conspiracies very much tend to be.

I agree that the government's choice of language was extremely poor and wrong-headed. They certainly didn't do anyone any favors by just labeling the guy a terrorist and saying that's it.

I don't think it matters whether or not you lost money on going through with the act. If you want to throw your hard-earned money away to make a point, I suppose that's a privilege.

NO. It's a RIGHT.

After doing a tiny bit of research (google and wikipedia), it seems mens rea does not apply if said crime is considered a strict liability crime. Examples are selling alcohol to underage, or statutory rape. Counterfeiting is another strict liability crime.

His real crime is, of course, competing with the government. You will lose, unless you take up arms. The government has no problems using excessive force to stop you.

This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache. It would definitely have political and social implications.

[EDIT: I welcome downvotes on comments that are not constructive. If you think this is totally off the wall, please give a good explanation why.]

The logistics aren't different from accepting payment with any one of a dozen different credit cards (each of which might be settled in literally hundreds of currencies) or cheques. Or bartering.

Yes, it would have political implications because politicians can't devalue the loans they've made abroad by devaluing the currency, effectively (but opaquely) taxing savings. I'm not sure what social implications it would have?

America already has multiple currencies[1] without it being a problem. This guys has been convicted of counterfeiting legal tender.

Why would anyone take a gold coin worth $10 say, and try to pass it off as a normal dollar? They are losing money.

[1]: http://en.wikipedia.org/wiki/List_of_community_currencies_in...

This is a bit of a straw man - these are either all financial products or local currencies.

The point is that they all convert into dollars and I will certainly never use BerkShares for as long as I live. I only take US dollars.

Also, the banking structure around these things is really inconvenient. I worked a short stint as a teller at Bank of America and never once have I seen anything but greenbacks. This was in Santa Cruz county as well, where people would definitely be willing to try such crazy ideas.

A very weak argument.

In many places around the world, several currencies exist and are used simultaneously.

It's only a problem for the weak currency, which according to Greshams Law, everyone tries to get rid of, while hoarding the stronger currency.

The reason the government doesn't want competition in the currency business is because they like to weaken their currency. The government currency would be discarded quickly, while the competing currency would be hoarded.

> In many places around the world, several currencies exist and are used simultaneously.

You need to back this argument up with a good reference.

[EDIT: multiple currencies in the same country. Argentina is a beautiful country but it has had some severe issues over the years. You need to have one currency before you can do things like local currencies. URVs in Brazil were a genius way of pulling this off.]

30 seconds on google would have turned up this for you

https://en.wikipedia.org/wiki/List_of_circulating_currencies...

Okay, yes - technically speaking, there are countries out there who have more than one official currency.

But with every single listing of a country that has more than one currency, there is a political reason why (see Ecuador) and it has real implications for the society to use a currency that you don't control.

You use the phrase "technically speaking" pejoratively as though there is some special set of rules that make these countries multi-currency. There isn't. It's very plainly correct that many countries in the world use multiple currencies.

I assume one of the implications you refer to is that the people have a choice of currencies and hence protection against government sponsored inflation.

Second hand, but friends who have recently returned from Argentina described it in precisely these terms. Your mileage may vary (haven't been myself).

So there's cause and effect: Are countries unstable because they have multiple currencies, or are people using multiple currencies because the country is unstable.

You seem (correct me if I'm wrong) to be arguing for the former, "gold bugs" will generally argue the latter.

No, you're right, I am saying it is destabilizing for a country to have more than one currency. It does weird things to culture.

Look at why Europe is so messed up right now - they adopted a single currency without a real government to match. Much as I might not like her, Margaret Thatcher was right when she said that "single currency is a federal Europe through the back door". It's either that or big trouble down the line.

I see you're from Denmark, so think of Legoland (in Billund, I assume you've been - it's silly!). Yes, they take all kinds of currency there, but it's very isolated and localized. At a broader national level, there is just the (sic) kroner. I've never once paid with US dollars at a pølsevogn in Copenhagen. :)

The full argument is quite long, but at heart, yes - I believe that the gold standard was a bad idea and remains a bad idea. Going back to it will not solve any of our current economic problems, it's a waste of time.

Thanks for sticking with the conversation btw! It was fun. :)

You can actually usually pay with euros in most establishments catering to tourists, including pølsevogne. Like most casual cash transactions in Denmark, it's unlikely to go on the books, though.

Also, I'm not arguing for (or against, for that matter) the gold standard, just that if people feel they're better off transacting in a different currency than the single, nationally sanctioned one, they should be able to do so without incurring a forceful response by the government. For the record, I don't think that freedom extends to producing coins that are easily mistaken for those belonging to a different currency.

> Thanks for sticking with the conversation btw! It was fun. :)

Likewise, although I would still appreciate a response to http://news.ycombinator.com/item?id=4697030

We adopted a single currency, which is the new government-enforced legal tender. You're right that it caused plenty of problems, but it's hardly relevant as an example of destabilization caused by many currencies.

Many places have more than one official currency. Many more have more than one unofficial currency. The USD is unofficially used as a currency in many, many countries around the world, as an adjunct to the local currency.

In the days before the Euro, it was quite common for places to accept multiple currencies in the one location, especially in border areas or smaller countries with lower floats.

It's not such a big deal. Just about every international traveller works in two currencies by converting the 'away' currency into their 'home' currency in their head with each purchase. I have actually been offered the opportunity to pay with my home currency on visa POS machines while travelling.

There are undoubtedly efficiencies to having a central currency, but when the central government is systematically destroying the unit of value, inefficiency of multiple currencies is a very small price to pay for being able to escape that. That's why Zimbabwe has the highest number of currencies on the list that was linked above [Edit: position is relative, the list that ianb linked]

If that was the case, than the last thing this person would want to do is make his currency similar to a dollar. Because the US dollar is the weaker currency you see. Why would he then call his currency the liberty dollar, use dollar signs on it, use designs similar to US coinage, etc. Why would he want to be so similar to the weak currency?

The truth is that the US dollar is the strong currency and his one the weak; and he basically made money by having his coins confused for US dollars.

By the way, there are alternative money (such as bitcoin) that are actually honest about being an alternative. The government has not gone after bitcoin yet.

I agree that this guys competing currency is odd. It seems to be more of a political statement to me, than a genuine currency. If he had called it something else and convinced people to use it, then I wouldn't see the problem.

If he had just minted gold and silver coins with a stamped weight on them, then they would stand a chance of being actively traded. But then maybe he knew they would be hoarded. To be honest, I don't know the ambitions of an aging hippie with links to the 'bunker' movement.

From what I have read on this case (and I haven't read much) the coins do actually contain precious metals as a backstop to their value. Not so the US currency - although I hear the nickel now has a higher metal content than the face value.

This is a misunderstanding of Gresham's law which only applies for multiple currencies that are nominally of the same value. Meaning, if there is a $1 silver coin and $1 gold coin, everybody would be hoarding the gold coin and "getting rid of" the silver coin.

Also, a currency is not something you hoard, it's something you "get rid of" by giving it to someone else in return for goods and services. In your example, the "weak" currency would become the standard medium of exchange, while the "strong" currency would for all practical purposes disappear from circulation.

No, Greshams law says nothing about things nominally of the same value. It just states that bad money drives out the good money - meaning that for anything that is falling in value, it will be discarded. For anything that is falling slower, or not falling, it will be hoarded.

Currency is definitely something you hoard. It's called savings, and plenty of people still do it.

https://en.wikipedia.org/wiki/Gresham%27s_law

"When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."

Or in other words (from the same article): "Bad money drives out good if their exchange rate is set by law."

I think the logistics argument is better than it sounds. It's not just the logistics of payment. It's also about contracts, contract law, clearing processes, the cost of managing risk, hedging, fighting fraud, and ultimately the transparency of the entire system.

Even where there is complete freedom of choice like in commodities markets, one currency is usually chosen and then used by everyone. Otherwise things would simply get too complicated, too costly and too risky.

The argument that governments force a single legal currency onto everyone so they can more easily expropriate us through devaluation doesn't hold water at all. After all, everyone is free to use whatever they like as a store of value and trade it.

Here's why I downvoted you:

>This is one of the few times I'd ever say that government crackdown is a good thing. One country having multiple currencies at the same time could become a big logistical headache.

You think governments should crackdown on and seek to imprison people because they engage in activities that cause logistical problems for the government? And you think this is one of the few times that a government should intervene? Seriously?

> It would definitely have political and social implications. This sentence is empty of information. Every action has an implication. I would have upvoted you if you'd described what kind of implications rather than implying that having "implications" is something that governments should intervene in.

> You think governments should crackdown on and seek to imprison people because they engage in activities that cause logistical problems for the government? And you think this is one of the few times that a government should intervene? Seriously?

Yes, 100%.

> Every action has an implication. I would have upvoted you if you'd described what kind of implications rather than implying that having "implications" is something that governments should intervene in.

Fair point, I upvoted you for it.

>Yes, 100%.

Such absolute certainty is nice to have.

So if I organize a nationwide fun-run where people in every city are encouraged to run a mile for charity you believe the government should seek to imprison me for causing a logistical problem?

Since you've deleted your other comment stating roughly the same thing, I'll repeat my question here:

Why should you lock people up for being "a big deal politically"? Rosa Parks and the movement she was a part of was a big deal politically who had huge social and political consequences.

It's all well that you know economic theory, but you might find it useful to share the bits of it that's relevant here.

I think we can safely say that bitops is a product of 'all government is good, more government is better' thinking.

I agree with your statement - logistical headaches? Wow, just wow.

Anyone who has even a passing familiarity with John Law and the Mississippi bubble would never say such things like centrally controlled currencies are important for political and social reasons.

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