Fed up with the Federal Reserve

Fed up with the Federal Reserve

Watner, Carl

This short article is prompted by my desire to be sure that readers of THE VOLUNTARYIST have heard about the efforts of NORFED, The National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code. Their address and telephone are: 4900 Tippecanoe Drive, Suite 6, Evansville, IN 44715; Tel. 1-888-421-6181. Their currency is the first in the world to carry a web address, which is: http://www.norfed.org.

I was visited by their publicist and Senior Economist, Bernard von NotHaus in mid-April 2000. He was promoting the American Liberty Currency developed by NORFED as an alternative to the government’s Federal Reserve ‘funny’ money. NORFED’s purpose is to gain widespread acceptance of its privately-minted, one troy ounce, .999 silver coins and its negotiable warehouse receipts which are backed by silver held in a third-party depository. So long as the free market price of silver is below $10 an ounce, the one ounce silver Liberty coins and the warehouse receipt (for one ounce of silver) are offered for sale by NORFED for $10 in Federal Reserve notes. If the price of silver goes over $10 (but remains less than $20 per oz.) then the coins and warehouse receipts) will be sold by NORFED for $20 each.

Although I signed up as a NORFED Redemption Center in late September 1998, when NORFED began, I found this “dollar” feature of the Norfed program very confusing and very statist. The “dollar” is really a meaningless concept because it has no real backing. It is, of course, a government unit of accounting, and people will exchange Federal Reserve notes denominated in dollars so long as they have confidence that other people will accept them and surrender real things (products or services) for them. To the government, the dollar is a government-issued piece of paper with the word ‘dollar’ printed on it. Five one “dollar” bills are exchangeable by the U.S. Treasury for one five “dollar” bill, and vice versa. The ‘dollar’ is a fake, just like the non-existent clothes of the emperor in Hans Christian Anderson’s fairy tale. Take note that NORFED is not holding itself out to redeem its one ounce silver coin or warehouse receipt for ten Federal Reserve dollars, but simply says that after you have given it ten `dollars,’ it will furnish you with one ounce of silver (assuming the price of silver is less than $10 per oz.). In other words, NORFED is not obligating itself to give you $10 back in the event you want to divest yourself of its coin or warehouse receipt. By purchasing from NORFED you are overpaying for silver, but you are also making a statement that you support an organization that wants to remove the Federal Reserve and IRS cancers from our country.

Besides my distaste for the ‘dollar’ feature of the NORFED program, I have other reservations about it. They were all initially fed by my bad experiences with Conrad Braun and his Gold Standard Corporation, which went bust in 1993. As I said in my article “Caveat Emptor! (Even in the Free Market)” in Whole No. 65 about the failure of Braun’s firm: “A free market money or free market money firm may fail just as miserably as any government currency or government. … Caveat emptor. Buyer beware! Investigate. Be skeptical. … Remember free market rogues can defraud you just as badly as government ones. Theft at the hands of private thieves hurts just as much [if not more than] theft by government agents.”

When I investigated the NORFED program, I came away with a number of disconcerting reasons not to support it. First, I was told by Tom Powers, the Operations Manager of the warehouse, Sunshine Minting Inc. (7405 North Government Way, Coeur d’Alene, ID 83815), that his company would not redeem the warehouse receipts directly from the public. Ordinarily, a warehouseman is obligated to redeem his warehouse receipts which read “Redeemable by Bearer on Demand.” This should be the responsibility of Sunshine Minting, not Norfed, inasmuch as Tom Powers signed the certificates as “Warehouse Official.” Furthermore, NORFED refused to let me see a copy of their contract with Sunshine Minting, which might clarify their contractual obligations in this respect. Secondly, some of the later generation warehouse certificates indicated the metal was stored at Shelter System Warehouse rather than Sunshine Minting. Even if this later designation was simply an “also known as” appellation for Sunshine, there appears to be no contractual link between Shelter System and Sunshine on the face of these certificates. Thirdly, an article in the Honolulu ADVERTISER of September 16,1998, page 10 (Business Section) indicated that Bernard von NotHaus and his wife, Talena Presley, and their business, the Royal Hawaiian Mint, had gone into Chapter 7 bankruptcy some time during the latter half of the 1980s. While this has no bearing on the success of NORFED, it made me feel uncomfortable since von NotHaus repeatedly referred to his successful numismatic career in Hawaii, without ever mentioning his business failure to me.

Every long-time reader of THE VOLUNTARYIST knows that I applaud NORFED’s attempt to create an alternative, non-governmental currency, even though I may choose not to use it myself. Gustav Stolper captured my own view point, when he wrote in his book, THIS AGE OF FABLE (New York: Reynal & Hitchcock, 1942): “A ‘free’ capitalism with governmental responsibility for money and credit has lost its innocence. From that point on it is no longer a matter of principle but one of expediency how far one wishes or permits governmental interference to go. Money control is the supreme and most comprehensive of all governmental controls short of expropriation.” [p. 58]

However, I must challenge the NORFED approach in desiring to repeal the Federal Reserve Act and Internal Revenue Code. The voluntaryist approach is not repeal, but simply one of ignoring, abandoning, and not honoring government edicts which demand that we behave in certain ways. Instead of obeying and then calling for the repeal of laws, voluntaryist strategy focuses upon civil disobedience. To agitate for the repeal of laws gives the government an undeserved legitimacy. It implies that the government has some business meddling in our affairs. It may for the NORFED people, but it certainly has no business meddling in my affairs. So when von NotHaus wrote in his book Y2K MONEY (Los Angeles: American Financial Press, 1999) “The author simply wants the best government and the least taxes for our Country” [p. 91 he pointed out his differences with voluntaryism. Voluntaryists want no coercive government, no taxes, no politically-defined Country. Period. So long as NORFED endorses those goals, voluntaryists must automatically look askance at the NORFED program, even if there were no other reservations surrounding its operation.

[Editor’s Note: This article was written in July 2000, with the commodity price of silver around $5.00 per ounce.]

“What should make you suspicious about [public] School is its relentless compulsion. Why should this rich, brawling, utterly successful nation ever have needed to resort to compulsion to order people into school classes-unless advocates of forced-schooling were driven by peculiar philosophical beliefs not commonly shared?”


Copyright Voluntaryists 3rd Quarter 2001

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