In a world where Ron Paul acolytes preach death to the Federal Reserve and pray for a future in which every free man has the right to mint his own currency, Bernard von NotHaus, the co-founder of the Royal Hawaiian Mint Co. and creator of the Liberty Dollar (which, it must be emphasized, is not considered legal tender by the U.S. government) is practically a folk hero. Ron Paul himself referenced the Liberty Dollar when introducing his Free Competition in Currency Act in December 2007. Paul was upset that federal agents had busted the "private mint" in the fall of 2007.
(Or perhaps he was just pleased that von NotHaus had minted small denomination coins named "Ron Paul rounds.")
NotHaus is profiled by Barry Harbaugh in the current issue of the online art magazine Triple Canopy. It's a fun read, especially if you are curious about the intrinsic nature of money itself. But I'd like to know why Harbaugh left out a key detail. He notes that in July, von NotHaus "told me he was retiring, replacing himself as CEO, and moving back to Hawaii to work on a new project. 'It'll blow your mind,' he assured."
But he doesn't tell us what the new project is, an omission that a quick trip to Wikipedia rectifies instantly. Von NotHaus' new gig is high priest of the Honolulu Free Marijuana Church.
(UPDATE: I am abashed. The fancy-pants formatting of the article led me to believe that the article ended before it actually finished. There was one more paragraph, and sure enough, the Free Marijuana Church made an appearance. My apologies to Mr. Harbaugh.)
I encourage you to make your own jokes. Meanwhile I will strive to let the aroma of some vintage Maui Wowee distract me from pondering the mystery of what makes money, well, money.
Since the U.S. went off the gold standard in 1971, the strength of the U.S. dollar depends, fundamentally, in the faith that the rest of the world has that the U.S. government can make good on its debts. As we approach our first $1 trillion deficit, I suppose it's worth wondering whether we are approaching some kind of end game -- a dollar denouement. It's all about confidence, and confidence is in short supply right now.
Which is why I was tickled by one anecdote from Harbaugh's story about what happened to the value of the "coins" minted by von NotHaus after the Feds seized the bulk of his bullion. The remaining coins suddenly became much more valuable than the silver they were minted from!
"The problem with spending a twenty-dollar Liberty today," von NotHaus says, rolling a worn Ron Paul in his hands, "is that you can get thirty dollars for it on eBay." While Liberty currency is occasionally subjected to a "move up" to keep it in line with the price of silver, the FBI raid has inflated the value of the coins in such a way as to reinforce their position as numismatic pieces. Von NotHaus can now sell a T-1, a first-run Liberty from 1998, for seven hundred dollars.
The day of the raid, the Ron Paul coppers were transformed into rare collectibles, and a sympathizer sent von NotHaus one hundred of them, which he sold for around five thousand dollars. Von NotHaus lost three thousand ounces of silver at Sunshine, and his income at the moment comes solely from what he sells on eBay. Liberty Dollar did about four million dollars in sales in 2006, but when I ask him how much he's made from the company, he claims to have no idea, joking, "But am I in it for the money? You bet I am."
If anything proves the fundamental point that the value of money is a social construct, and not an inherent thing tied to a particular amount of gold and silver, it's the soaring value of NotHaus' coins, now that they're rare and precious.