Anyone interested in creating coins for use as a medium of exchange would be well advised to become familiar with the foundations of our currency laws; namely, Article I, Section VIII of the U.S. Constitution. It states clearly that “The Congress shall have Power…To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States.”
The Coinage Act of 1792 is the foundation of American legal tender laws. Section 10 specified the configuration of U.S. legal tender coins, establishing the standard against which the authenticity of American currency was measured thereafter:
And be it further enacted, That, upon the said coins respectively, there shall be the following devices and legends, namely: Upon one side of each of the said coins there shall be an impression emblematic of liberty, with an inscription of the word Liberty, and the year of the coinage; and upon the reverse of each of the gold and silver coins there shall be the figure or representation of an eagle, with this inscription, “United states of America” and upon the reverse of each of the copper coins, there shall be an inscription which shall express the denomination for the piece, namely, cent or half cent, as the case may require.  [Emphasis in original.]
A currency only functions as a medium of exchange if a society believes that it truly represents value. The reason why gold and silver have been desirable as money throughout history is because they are highly portable, easily divisible substances which are universally recognized as scarce, which makes them a store of value. The United States utilized gold and silver in some manner or form as the basis for its economy until 1971, when U.S. President Richard Nixon terminated the Bretton Woods agreement of 1944. Under Bretton Woods, which fixed international exchange rates against a gold-pegged dollar, the world’s largest economies had a functional relationship within which to trade currencies, and for the purposes of international settlements. Some argued that the gold basis for this system did not allow for enough elasticity in the money supply, and that argument eventually prevailed. In August of 1971, the American currency lost what remained of its direct commodity backing, raising grave concerns about the advent of greater monetary abuse.
In response to what he perceived to be the forced, hidden confiscation of the purchasing power of the American currency by the United States government, self-described monetary architect Bernard Von Nothaus embarked upon a mission to establish a commodity-backed, voluntary barter currency composed of gold and silver. Von Nothaus claims to be the mint master of Royal Hawaiian Mint, (RHM). There is no indication that this is an official state entity. No information exists on RHM other than a few references associated with the Von Nothaus name. RHM is very likely a private entity run by Von Nothaus himself. Regardless of the opaque nature of his resume, Von Nothaus claims over 25 years experience in minting.
Von Nothaus recognized the grave economic threat that is an unrestrained government with the ability to monetize debt indiscriminately. His solution was to create a voluntary barter currency redeemable in silver, issued under the umbrella of a nonprofit entity called the National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code, or NORFED, where Von Nothaus has been mentioned in several articles as being its “Senior Economist.”  In 1998, NORFED introduced the Liberty Dollar, and marketed it as an alternative to Federal Reserve Notes. The project began with the circulation of warehouse receipts representing a specified quantity of silver held in storage at a private mint. Merchants or consumers who held similar concerns about the longevity of the Federal Reserve Note’s purchasing power could circulate these Liberty Dollar receipts amongst themselves as a medium of exchange for goods and services. So long as it was voluntary, and both parties understood what they were doing, the system was untouchable.
According to an article by John Christian Ryter, NORFED was investigated in 1999 by the Secret Service regarding their warehouse receipts but did not file charges, finding that the receipts did not constitute counterfeit currency because they did not contain the language “legal tender”, and that there was a sufficient amount of warehoused silver to represent the value indicated on the Liberty Dollar receipts.  It was not until the coins themselves began widely circulating that the U.S. Government decided to take legal action. In November of 2007, the U.S. Department of Justice conducted a raid, seizing the assets of NORFED held in a private office in Evansville, Indiana.  A concurrent raid was also conducted at the private mint in Idaho where the coins and warehouse receipts were manufactured and stored.  In the Justice Department’s own affidavit, it cites Von Nothaus’ statements to the effect that the Liberty Dollar was intended to be in direct competition with the Federal Reserve Note.  This seems to contradict and nullify the counterfeit claim. In spite of this, the Affidavit cited U.S.C. 18 § 492 as justification for claiming probable cause. This section of the U.S. code deals with forfeiture of counterfeit coins, material and apparatus. 
To directly compete for consumer market share with a distinctive good or service is one thing. To undermine the legitimate market share of a firm by emitting false or erroneous versions of that firm’s distinctive products constitutes the crime of counterfeiting. Von Nothaus made no attempt to overtly counterfeit Federal Reserve Notes or other official U.S. coinage. All of his marketing literature explicitly distinguishes the fundamental philosophical and economic differences between what the U.S. government forces the market to accept as official U.S. currency and what NORFED was offering with the Liberty Dollar. The problem was that Von Nothaus did not make his products physically distinctive enough to avoid confusion.
In fact, knowing full well that the ability for a currency to succeed is incumbent on its acceptability, Von Nothaus encouraged his associates to directly introduce the silver coins into general circulation, trusting that once vendors could physically inspect these coins, that their intrinsic value would be understood. Von Nothaus had faith that his product would indeed be seen as a legitimate medium of exchange and in no way different in function from Federal Reserve Notes. Regardless of their legitimacy, without an explicit understanding that a merchant was undertaking a voluntary barter transaction, any such transaction with Liberty Dollars was fraudulent. No contract between two parties is valid if the terms are not clearly and explicitly articulated.
Strangely absent at the time of the seizures was the issuance of a criminal complaint against Von Nothaus. The U.S. Justice Department did eventually file a criminal complaint against Von Nothaus and three of his colleagues in June of 2009.8 The indictment cited several violations, including U.S.C. 18 § 486, dealing with uttering coins. It states the following:
Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title  or imprisoned not more than five years, or both.  [Emphasis added.]
U.S.C. 18 § 486 does appear to create criminal liability for the simple reason that the Von Nothaus product was put directly into circulation without the clear understanding by merchants that they were entering into a voluntary transaction with a medium of exchange not officially recognized by the U.S. government. It was common practice for Von Nothaus and his associates to present Liberty Dollars to merchants unfamiliar with his product without offering the explanation that they were not U.S. legal tender currency, but rather, a voluntary barter currency, one which could not be redeemed at face value for Federal Reserve Notes in any U.S. commercial bank. A video exposé posted originally on the Liberty Dollar website – a short clip from The Learning Channel’s show Super Structures – features Von Nothaus personally buying sandwiches with a $10 Liberty Dollar coin, declaring it to be a “new ten dollar silver piece” as he handed it to the bewildered vendor. 
However compelling Von Nothaus’ philosophical and constitutional arguments may be, this unfortunate, deceptive practice does not lend credibility to the legitimate criticism of the U.S. government’s fiscal policy of inflation, nor to the legitimate practice of entering into private voluntary barter using gold and silver as a medium of exchange. Although it can be argued persuasively that the Liberty Dollars are not technically counterfeit, the engagement in the practice of infiltrating the currency market in such a way seems to be tantamount to a kind of economic insurrection, inviting the reprisal of government force. Furthermore, if Von Nothaus wanted his competitive product to be able to vie for market share of exchange media, the coins should not have been made to so closely resemble U.S. legal tender coins.
The Liberty Dollar coins which were seized by the F.B.I. and the Secret Service contain “impressions emblematic of liberty”, namely, the word “Liberty” in bold lettering, appearing in the same manner as on U.S. legal tender coins; the phrase “Trust In God” in a location similar to that of the inscription “In God We Trust”, as found on U.S. legal tender coins since the Coinage Act of 1873  ; a profile of a woman’s head wearing a crown, similar to that of the Statue of Liberty on the obverse; and what appears to be the torch of the Statue of Liberty on the reverse. The Von Nothaus coins also have the year of mintage featured prominently and similarly as on U.S. legal tender coins. The coins also utilize the “$” symbol to denominate their purchasing power, even though they represent purchasing power from a different philosophical perspective-value which is not in direct correlation with that suggested by the denominations on Federal Reserve Notes.
1. A Century of Lawmaking for a New Nation: U.S. Congressional Documents and Debates, 1774-1875, Library ofCongress Website. Accessed Feb 20th, 2010. http://memory.loc.gov/cgi-bin/ampage?collId=llsl&fileName=001/llsl001.db&recNum=371
2. “Y2K Buck Stops Here” by Will Hoover, December 7th 1998. The Honolulu Advertiser. http://www.libertydollar.org/news-stories/pdfs/1164902770.pdf
3. “FBI Raids Liberty Dollar” by Jon Christian Ryter. November 17th 2007, NewsWithViews.com. http://www.newswithviews.com/Ryter/jon201.htm
4. “Liberty Dollar Office Raided” by Gary Lesnick. November 15th 2007, Evansville Courier & Press. http://www.courierpress.com/news/2007/nov/15/liberty-dollar-office-raided/
5. Verified Complaint for Forfeiture In Rem, United States District Court Western District of North CarolinaAsheville Division, June 26th, 2008, pg. 3.
6. Verified Complaint for Forfeiture In Rem, United States District Court Western District of North Carolina Asheville Division, June 26th, 2008, pg. 6.
7. Cornell University Law School, Legal Information Institute. http://www.law.cornell.edu/uscode/18/492.html
8. United States of America v. Bernard Von Nothaus, others. Bill of Indictment, May 19th 2009. United States District Court for the Western District of North Carolina Statesville Division. http://www.libertydollar.org/legal/pdf/05192009_indictment.pdf
9. Cornell University Law School, Legal Information Institute. http://www.law.cornell.edu/uscode/18/486.html
10. “Fiat Currency versus The Liberty Dollar” exerpt from Super Structures, The Learning Channel, January 8th, 2004. YouTube video posted October 22nd 2007. http://www.youtube.com/watch?v=1VaBX7A9FqA
11. United States Department of the Treasury: Fact Sheets: Currency & Coins: History of ‘In God We Trust’. http://www.treas.gov/education/fact-sheets/currency/in-god-we-trust.shtml