[ChuckMcM]

I lived in Las Vegas in the 70's when the Secret Service stepped in and shut down the process of people paying for things with Casino Chips.

For those not familiar with them, a Casino Chip has a current denomination ($1, $5, $25, etc) and the name of the Casino on it. For a long time Casinos, as service to their customers, didn't care if you played with another Casino's chips so you could just carry them around from place to place and play them. At the end of the day the Casinos would settle accounts and exchange chips and cash to make it all come out even. It was a great convenience and while occasionally people would try to counterfeit chips, at that time if you were caught doing that you literally disappeared. Of course businesses near the Casinos, 7-11, restaurants, etc, started accepting chips in lieu of cash since they could just walk next door and exchange them for cash. It was a kind of fun and "just one of those things."

And then the secret service came and said "Under the constitution only the US Government can make a currency, stop accepting chips or go to jail." And they did a few stings and there were some high profile wrist slaps (I don't think anyone actually went to jail) and the whole thing stopped.

Had the Liberty Dollar folks read that bit of history they would have seen where their enterprise was headed.

Relinquishing the right to create a currency was one of the pre-requisites to ratifying the Constitution [1] which took that power for the Federal government and removed it from the states and the citizenry.

[1] http://www.jstor.org/pss/2124065

[colanderman]

This doesn't make any sense to me... is bartering illegal? Where does one draw the line between bartering with chips and paying with chips?

[ChuckMcM]

No bartering is not illegal. Neither is buying, selling, and trading collectible Barbies. What is considered to be illegal (and I'm not a lawyer so I can't say definitively if it is or isn't) is creating an instrument, which represents a value (possibly fixed), and engaging in commerce using the instruments in lieu of the actual thing.

So trading a Malibu Barbie for a Space Barbie, or perhaps a Barbie Dream Home would not be a 'currency' transaction, giving someone a Malibu Barbie to pay for a lunch that was nominally $25 and having the person who got that Barbie then take it and buy $25 worth of groceries, and having the grocer be able to deposit it in their bank account and get credited with $25. That would be treating it like a currency.

There is a wonderful discussion on currency and what it is in the course Economics [1] offered by "The Great Courses". There is a wonderful story about an island which trades ownership interest in large rocks on another island as their currency. If you commute to work I highly recommend these courses as a way to pass the time and learn something (or at least get something to think about) while doing it. Don't be afraid of the price they regularly put things on sale for lots off. And if you have a library nearby you can sometimes check them out.

[1] http://www.thegreatcourses.com/tgc/courses/course_detail.asp...

update: I remember that one of the key things about the test of whether something was a currency or not, is if it could be exchanged back into another currency. Its one of the things various "points", "miles", and other systems avoid is an explicit path to turn them back into cash. Sure you can buy a $50 VISA gift card and sell it to someone for $50 but its not like you can go to the bank and turn it back into $50.

[Splines]

Planet Money had a segment about the rocks-as-currency island:.

Segment: http://www.npr.org/blogs/money/2011/02/15/131934618/the-isla...

Entire podcast (also discusses the currency test, IIRC): http://www.npr.org/blogs/money/2011/02/15/131963928/the-frid...

Very interesting.

[colanderman]

The Barbie example doesn't really make much sense. I could just as easily say I'm trading Malibu Barbie which is nominally worth $25 for a Space Barbie which is nominally worth the same, and run afowl of currency laws. Or that I'm trading Space Barbie for lunch with no mention of nominal worth and call it barter.

The test you propose about conversion is at least logically consistent, but it's not what I see applied. For example, Berkshares (local currency in the Berkshires) can be traded for USD but they don't run afowl of currency laws.

[elliottcarlson]

Depends on the intentions... are you a farmer bartering your crops for another farmers meat; or are you knowingly circumventing laws.

This is similar to the way Pachinko parlors work in Japan and Taiwan - you collect a ball from the machine when you win, and with a certain amount of balls you can receive various token prizes. This prize can then be redeemed around the corner at a different location for cash. Cash was exchanged - there were just middlemen involved - but it still comes down to gambling.

If you are intending to replace currency with something else not produced by the government, then you are not bartering, you are introducing private currency and that is illegal.

[nika]

There is no law prohibiting private currency.

Disney Dollars: http://www.disneydollars.net/ BerkShares: http://www.businessweek.com/smallbiz/content/jul2007/sb20070.... Buy Local—With Town Currency Dollar alternatives, such as BerkShares in Massachusetts, are shoring up local economies by keeping money in the community Microsoft Points: http://www.xbox.com/en-US/Live/MicrosoftPoints Pittsboro Plenty: http://www.democracynow.org/2009/4/9/north_carolina_town_pri....

[ChuckMcM]

Nika, none of the issuers you mention will convert back into dollars. Its a one way street. Presumably they have set up agreements with people who will accept them an they have pre-negotiated a discount rate. Its like chucky cheese tokens, you can't turn them back into quarters so that you can play more video games.

[zach]

Actually, now that you mention it...

According to recent California law, "a gift certificate with a cash value of less than ten dollars ($10) is redeemable in cash (not a new certificate or merchandise) for its cash value."

Disney dollars are generally available only in denominations of $10 or less, so they may actually be an incredibly-inconvenient cash equivalent in California.

[ChuckMcM]

According to the 'reference site' [1]

"Disney Dollars DO NOT expire. The oldest bill from 1987 can still be used today. As they are worth real money. They also may be exchanged back for the U.S. Dollars or purchased using the same.

They may used to pay for anything that can be normally paid for with cash including the following locations: (only Disney locations)"

They are exactly like casino chips, which is to say that within the Disney properties they can be used equivalently to cash, and even converted back into cash.

Given the Las Vegas experience however, I suspect that people in and around Orlando or other Disney locations, who aren't associated with Disney, should not accept them in lieu of cash.

One of the parallels to remember, the Secret Service wasn't going after the casinos for their chips, they were going after people who accepted them as cash even though they had no business relationship with the casino.

[1] http://disneydollars.net/where_can_disney_dollars_be_used.ht...

[makmanalp]

What about bitcoins? I thought you could convert those back to dollars.

[ChuckMcM]

Good question. Early on when I was trying to create a milli-cent currency for subscription buying of content from a website we wondered if we offered a refund for our digital cash tokens if we'd get in trouble for it.

As it turned out the Digi-cash folks had all the patents and were being real dicks about licensing so we never got to test the question.

I can absolutely predict that if you can buy several hundred thousand dollars worth of bitcoins from person X, and then go to persons P, Q, R, ... Z and redeeem them back for cash, that the authorities will shut down that sort of thing quite quickly.

[colanderman]

Actually yes, you can convert BerkShares back to USD. http://www.berkshares.org/whatareberkshares.htm

[elliottcarlson]

You are right - as long as the nomination is exchangeable for U.S. currency and all transactions are taxed accordingly.

But on the note of the parent:

> Where does one draw the line between bartering with chips and paying with chips?

It's not bartering when you are trying to get around things intentionally.

[nika]

I like how you just assert-- sans any evidence or argument-- that they are trying to "get around things intentionally". You don't even say what things.

Don't bother, I don't care. I'm just amazed at the BS this topic has elicited from people, and I am done defending these guys.

All the BS is just proof of why the country is going to hell- why the FBI was able to steal $7M in gold, silver and platinum and get away with it.

It is because you, and the rest of the ignorant government "educated" americans can't be bothered to think critically.

[elliottcarlson]

Do you need a hug? Seems like you are a little stressed by this thread.

According to the documents posted, the poker sites in question are attempting to get around the legalities of U.S. citizens placing monetary wagers or bets on international gambling sites. This would be an intentional circumvention of the law.

The example I posted in regards to Pachinko parlors circumventing their local laws by allowing people to trade in fake token prizes for cash is an example of people circumventing their local law.

There is nothing wrong with bartering or the barter system - and it is perfectly legal in it's intended use, but it can be used to circumvent other laws and would be illegal based on the legal definition of intent. As for the government stealing assets illegally - yeah that's wrong. Confiscation of these .com's bothers me a great deal - but that wasn't the topic I was replying to.

I am not an "ignorant government "educated" american" - and while my self education in legal matters may very well be off at times, I am able to think critically and be reasonable in what I do and don't know.

The problem is, that you are unable to have a conversation with someone that may be right or wrong on a topic - and it might not always be right that you can convince someone of the true nature of matters even if you are right. That doesn't mean you can act like an asshole - which you are. You don't know me, and because of one statement you are more than willing to blame everything you conceive as wrong on someone like "me". Get off your pedestal and learn to have a civil conversation - it's an awesome trait to have.

[rhizome]

This isn't really the best site for the "Wake up, sheeple!" thing.

[lotusleaf1987]

You come off like a completely arrogant know it all, regardless of the validity of your claims, the responses you're getting are largely from your own comment's original tone, not the subject, in my opinion of course.

[nika]

I won't attempt to argue that the Liberty Dollar wasn't a misguided enterprise. Even when the law is on your side, the fact that the government controls the courts assures that you'll never get a fair trial.

You're misunderstanding the constitution and what the "right to create currency" means. There are many currencies in circulation, and there have been many state and even private currencies over the years. Even today there are localities that make their own currencies- such as the Ithica Hour http://www.ithacahours.com/

What the constitution reserves to the federal government is merely the power to determine how many grains of silver are contained in a given dollar.

Thus, actually, the current paper US dollar, which is not denominated in silver, is illegal, it is counterfeit!

Thus it is clear that tradition has long ago seperated from the law. But this is relatively recent. In 1930s it was that the government made ownership of gold illegal and switched from silver certificates to unbacked dollars, but even then the dollar was backed internationally with gold, until Nixon closed the Gold window in the 1970s and defaulted the US government.

An excellent book on the history of Money in the USA, is "The Creature from Jekyll Island" by G. Edward Griffin.

[ChuckMcM]

"You're misunderstanding the constitution and what the 'right to create currency' means."

You may be correct, I have noticed a strong correlation however between how the government behaves with respect to alternative currencies and my understanding of the legalities of same. And while I also recognize that correlation is not causation, I find this sort of correlation useful in predicting whether or not my future actions would be viewed as "sanctioned" or "not sanctioned" by law enforcement authorities.

[cookiecaper]

Right, but the point of this discussion is indicating the abuses the government perpetrates on the people, not the practicality of running an alternative enterprise if you don't want your life destroyed. Everyone knows that doing something like Liberty Dollar is greatly frowned upon, and that the feds will dispose of that as quickly as they can. Some people choose to do it anyway for the effect. You can think of it as a protest, I guess.

[shpxnvz]

And while I also recognize that correlation is not causation, I find this sort of correlation useful in predicting whether or not my future actions would be viewed as "sanctioned" or "not sanctioned" by law enforcement authorities.

It's certainly true that behaving as the government wants you to results in less hassle, but we should be clear that "not sanctioned by law enforcement authorities" is absolutely not the same as "illegal" in the U.S.

[dia80]

I listened to a lecture by the author of "The Creature from Jekyll Island" where he made some outrageous claims about the ownership of the Fed. I was trading US Govt. bond futures at the time and we went to some pains to understand the federal reserve system and to say he erred in fact is being generous. It was full of slavering nonsense, often with anti semetic overtones.

As a side point paper money is obviously extremely vulnerable if abused (see Zimbabwe) however the idea that your money supply should be dictated by mining is beyond primitive. Periods of rapid economic expansion will lead to deflation unless the state controls mining and has sufficient mineral reserves which then becomes the same thing as printing money.

[ynniv]

I haven't read "The Creature from Jekyll Island," but I have seen some good citations. It's probably better taken as an exposition of the motives of private central banking than an argument for a gold standard. The complication in US history comes from a private central banking cartel (the Federal Reserve) using the departure from a gold standard to their own profit. Through this (naive) lens, returning to a gold standard would help to keep monetary tricks in check.

Any modern currency reform should instead concentrate on public banking with a Fiat currency. This combination allows for controlled market expansion, with the everyday banking profits being distributed across the commonwealth. It should be noted that this would have no affect on the profits of investment banking, and would not require any substantial change to our current US Dollar economy.

[nomurrcy]

What kind of outrageous claims? (Just curious)

To me what is shocking is that most people thing the Federal Reserve (which is probably the most powerful institution in the country) is part of the government and not privately owned.

I work for a very large bank and most employees here think you're crazy if you tell them the Fed is a private bank.

[dpatru]

Can you cite some specific claims where the lecture was wrong?

[Locke1689]

What the Constitution allows and disallows is a matter of the Supreme Court's interpretation of the Constitution at the time. You have yet to make an argument that the federal government's seizure contradicts the established jurisprudence on this topic.