Alternative money has redeeming value: proponents of the repeal of the Federal Reserve Act accuse the Fed of enslaving Americans with debt and are promoting a new currency to replace the greenback

Insight on the News, April 15, 2003 by Kelly Patricia O'Meara

More than $3 million worth of them are in circulation throughout the United States, with an estimated 30,000 people using them in place of the dollar at an unknown, yet apparently increasing, number of business establishments.

No, they aren't Disney Dollars, but the principles are similar to those of mouse money and, surprisingly, to Federal Reserve notes. Those who use them claim that they are the "real" money, backed by something of value. They mean to make a statement about their lack of faith in the greenback, the world's premier currency.

Five years ago economist and retired mint master of the Royal Hawaiian Mint Bernard von NotHaus began the National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED) and started providing an alternative to the Federal Reserve notes commonly called dollars. "We have an obligation--a moral obligation--to tell people about the history and consequences of past fiat currencies and to draw an analogy of what is going on today in this country," von NotHaus tells INSIGHT.

Von NotHaus contends that the Federal Reserve is not a "federal" agency at all but a cabal of private and international banks that does not answer to the U.S. government. He says it is "shadowed in deceptive origins and fraudulent policies."

According to NORFED literature: "Hundreds of authors and commentators have gathered an impressive body of facts and documentation to show how the Constitution of the United States was circumvented to allow the central bankers control over our money.... These students of the nation's monetary system aren't kooks--they're professors, political scientists, judges, senators and even presidents. It is only a matter of time before the truth is revealed that the Federal Reserve is nothing more than a national scam that has ripped off the American people and enslaved them with perpetual debt."

That is, of course, one view going back to the scrap between Alexander Hamilton and Andrew Jackson, and it is a minority opinion. But it is one around which hard-money advocates have been circling their wagons for nearly two centuries. Now and then someone such as von NotHaus will come along and go so far as to produce his own private money.

Von NotHaus isn't alone in his contempt for the Federal Reserve, nor is his currency the first of its kind. Currently there are approximately 60 different forms of private currency in circulation throughout the United States, most notably the "Ithaca HOURS."

Ithaca HOURS are issued by a local community organization and are as valid as Fed notes for payment or settling debts among consenting parties. Five denominations of Ithaca HOURS have been issued, one Ithaca HOUR being regarded as equal to one hour of basic labor, or $10. The lowest denomination is one-eighth of an Ithaca HOUR, which is equal to one-eighth of an hour of basic labor, or $1.25. Nearly $85,000 worth of Ithaca HOURS have been issued, with an estimated transaction value of several million dollars added and kept within the local community.

Unlike the Ithaca HOURS, which are used within a specific community, or the Disney Dollar, which must be used exclusively within Disney facilities, the von NotHaus currency is accepted by businesses nationally and internationally and is exchanged in denominations that are one-to-one with Federal Reserve notes. Von NotHaus' currency comes in units of $1, $5 and $10 silver, and a $500 gold note, all redeemable in precious metal.

Everything about NORFED's American Liberty Currency (ALC) is perfectly legal and is explained on the organization's Website www.libertydollar.org. Claudia Dickens, a spokeswoman for the U.S. Bureau of Engraving and Printing, tells INSIGHT: "Any merchant who wants to accept [the ALC] can do so as long as the people circulating it do not indicate that it is backed by the federal government. Where private currency is made for use, and businesses accept it knowing this, it is perfectly legal."

What sets the ALC apart from other alternative currencies, says von NotHaus, is that "it is 100 percent backed and redeemable in gold and silver," which is what this nation's founders constitutionally mandated for the official currency. "We don't sell currency," explains yon NotHaus, "we exchange it. We have the $10 silver base, which means that while silver is under $10 an ounce, every liberty dollar is backed up by one-tenth of an ounce of silver. That ounce of silver is in the warehouse before the certificate is issued. NORFED doesn't issue the certificate; we distribute the currency. The warehouse receipt, which is a legal binding contract as defined by the Uniform Commercial Code, actually is issued by the warehouseman whose signature is on the back of every certificate.

"With the Liberty Dollars what people do is currency exchanges--they aren't purchasing money. There is no sales tax on currency exchanges, and this currency is designed specifically to function on a one-to-one basis with Federal Reserve notes, regardless of where the price of silver may go. That's why we call this `America's inflation-proof currency.' It protects from the inflation of the Federal Reserve notes."