In the aftermath of the U.S. government’s seizure of the Liberty Dollar assets in Evansville, Indiana, many supporters of voluntary barter who saw potential in the Liberty Dollar concept were left without a unified solution for their desire to break the government monopoly on exchange media. Even prior to the rise and fall of the Liberty Dollar, there were several attempts around the country by private organizations to establish regional currencies.  Much like what had occurred in the early 1930’s with the use of scrip, the results of such efforts created enclaves of local businesses who participated in the circulation of distinct monetary products. Unfortunately, for many, like the BerkShares corporation in Massachusetts  , their voluntary currencies were not backed by tangible commodities like silver. They were set to parity with the Federal Reserve Note, thus sealing their fate as being just as susceptible to inflation. Another interesting and early monetary experiment is the Ithaca HOUR, from New York.  This is purely temporal money, with the unit of purchasing power representing one hour of labor time.
Though the architects of these experimental local currencies saw significant participation in their respective regions, spawning their own business directories, there lacked a unifying monetary philosophy, as well as a fixed standard of valuation which could allow these disparate groups to function in tandem. There was no way to aggregate economic power on a national scale to balance the dominance of the Federal Reserve Note. The ability for merchants and consumers from one region to effectively engage in commerce with another region required that these problems be addressed.
In an attempt to solve these unique problems, as well as to avoid the inflation issue, Rob Gray, a former Liberty Dollar currency officer, established the American Open Currency Standard [AOCS], a voluntary barter system based upon the value of silver. (Gray is currently serving as the AOCS executive director, working out of the Dallas, Texas area.) For the first time, a national database of firms interested in participating in voluntary barter could be established, because there was now a universal standard for composition and valuation of an alternative currency. 
Cognizant of the legal issues which befell the Liberty Dollar, and aware of the moral responsibilities of promoting a voluntary barter currency, Gray established the standards by which any private group wanting to design their own currency would have to adhere to in order to have access to the AOCS merchant database, as well as the favorable manufacturing rates for their specie. For starters, partnerships with several private mints noted for their excellence were established. All coins were required to be designed to exact specifications with specific markings; most notably, that they be .999 troy ounces of fine silver, that a uniform “trade value” be indicated by a universal typeface, and that they indicate approval as an AOCS currency. For the first time, a standard for competitive silver barter currencies was established, which allowed for different private groups to promote their regional currencies independently, yet utilize a universal valuation which provided firms and households with interchangeability. The concept of a voluntary barter currency which could legally function along side the U.S. dollar was realized at a national level. As of February, 2010, there were over 26,000 business firms conducting commerce with AOCS currency, and 22 independent currencies being privately minted which conformed to AOCS standards. 
There is a fundamental philosophical distinction between the purchasing power of AOCS currencies and that of the Federal Reserve Note. AOCS specie are not denominated in “dollars”, though legal tender currency is presently required to manufacture and purchase them. Since it is too cumbersome and too confusing to use a term such as “unit of purchasing power” when discussing the value basis for a barter currency, it is necessary for AOCS participants to rely upon the common vernacular term “dollar” in regular discourse. So long as the barter currencies do not utilize the symbol “$”, the likelihood of a counterfeit charge from the U.S. government is remote. This is why strict specifications for markings are required for acceptance into the AOCS by monetary architects interested in participating.
The ideas of value which the two currencies represent are different- the Federal Reserve Note does not have any substantial commodity value, nor has it since silver was demonetized in the mid-to-late 1960’s. The value of the Federal Reserve Note is enforced by mere government fiat and the public accepts this notion of value on the faith that the United States government can continue to redeem its official currency. The problem with fiat currencies is, of course, their inevitable collapse due to inflation. This is the principal difficulty facing the American Open Currency Standard and its supporters: in order that the AOCS can fulfill its function as an inflation proof alternative to the Federal Reserve Note, the valuation of AOCS currency shall also require a measure of faith on the part of barter participants, principally because the numerical markings on the individual specie themselves are higher than the price-per-unit of silver.
A marking of “50” on an AOCS barter round does not indicate fifty dollars. This would mean that consumers were spending $50 to purchase an ounce of silver worth $18 on the precious metals market (assuming April, 2010, prices). This fact is the source of the greatest amount of confusion and skepticism from critics and observers, as it appears to represent a monetary loss. The “50” does not represent the dollar value of the silver contained within the coins- it represents the current purchasing power equivalent of $50 in Federal Reserve Notes, but exclusively within the AOCS economic system. AOCS is not some obscure silver purchasing scheme which consumers lose money on. Simply put, the buy-in cost for one AOCS coin is at relative parity with value in the marketplace priced in Federal Reserve Notes. Consumers are acquiring AOCS specie for $50 in Federal Reserve Notes, and using them to trade for fifty “dollars” of value from participating business firms.
“The biggest detractors of our model come from inside the revolution, so to speak,” says Gray.  For strict numismatists, and others who might consider participation in AOCS, it is difficult to look past the cost basis of the coinage. Since it requires an equivalent value in Federal Reserve Notes to purchase AOCS silver, being willing to spend $50 for an ounce of silver in April, 2010, does not appear rational unless you understand the underlying philosophy. It is important for people to realize that AOCS participants are not losing value in the buy-in. Merchants and consumers participating in voluntary barter choose to have faith that the AOCS coins represent fifty “dollars”, even though they are not Federal Reserve Notes. The difference between the currencies is that Federal Reserve Notes have no backing for their purchasing power there is no representation of tangible value in government monopoly money. So in terms of commerce, AOCS users are merely purging Federal Reserve Notes from the economy in favor of a voluntary barter currency whose purchasing power is at relative parity at any given time. No matter what, AOCS specie will be intrinsically valuable- an aspect which renders them invulnerable to the effects of hyperinflation. This fact makes their use more widely appealing to anyone concerned about the effects of inflation on legal tender currency. This also creates the incentive for merchants and consumers to “keep it local”: the advantage of intrinsic value keeps AOCS coinage in circulation, and out of coin shops.
How does the AOCS keep its currencies at parity with a fiat currency whose purchasing power is eroding? The system the AOCS uses is that which was developed originally by Bernard Von Nothaus, monetary architect and developer of the Liberty Dollar. The reality of a volatile price of silver as a commodity presented a challenge to Von Nothaus as he was required to monetize his alternative currency before it could function. The Liberty Dollar was designed to maintain its purchasing power as the underlying commodity price of silver increased with inflation. Von Nothaus developed a formula whereby the Liberty Dollar was pegged to a temporal range of the thirty day moving average of the price of silver, reported independently by a subsidiary of the Bank of Nova Scotia.  Once the thirty day moving average for silver remained above an established price ceiling for a period of thirty days, the price of silver was considered to have become constant enough to allow the Liberty Dollar to “move up” in value. A description of Von Nothaus’ valuation formula can be found on the remnants of the Liberty Dollar website. 
The AOCS utilizes the same econometric foundation for the valuation of all AOCS currencies: when the market price for silver stays consistently above an established threshold, the AOCS sends out a press release to all participants that their currency has officially reset to reflect inflation. This reset manifests as an issuance by the AOCS mints of new specie with a higher valuation (typically a 100% increase.) According to Gray, all AOCS participants are then able to redeem their specie with the old valuation and exchange them for specie at the new valuation, minus the costs of shipping. This system does serve to protect the purchasing power of AOCS currencies, though the valuation formula can only work so long as silver is priced in Federal Reserve Notes.
Excluding the fact that the U.S. government only accepts Federal Reserve Notes for settling tax liability, the greatest limitations of AOCS currencies at this stage in their existence are a result of the challenges of discovering coincident wants and needs between private parties, and the exponentially increasing complexity of relationships which occur as business firms grow. Just like any other business interested in expanding its customer base, an AOCS currency vendor must also advertise, promote and market his currency in order to establish a network of clients who share similar concerns about the continuing viability of Federal Reserve Notes.
A successful transition into AOCS silver is dependent upon a firm’s owners understanding the value that AOCS currency represents, and they must have the willingness and ability to turn around and recirculate the currency among their clientele and with the firms who supply their factors of production. An economic system utilizing the AOCS requires that all its participants grasp the philosophical basis for the alternative currency and how it represents value. An understanding of the system requires articulation by its marketers – this is the principal impedence to implementation of the AOCS system on a macroeconomic scale. Generally, the greater the number of executives in need of a tutorial, the lower the likelihood of initial acceptance and successful implementation within a firm. This is because any public company with shareholders and a board of directors has its executive function collectivized, making the decision to transition to an AOCS currency more time-consuming and problematic.
The participation between a firm, its customers, and its suppliers completes the circular flow of commerce between them, and provides for a functional microeconomy. This will help keep AOCS currency in circulation. But, the further away from home a firm must look to acquire its factors of production, the greater the number of firms they must rely on, and the more dispersed their customers base is, the less they will be able to initially utilize the AOCS: coincident needs and wants are less easily met with a voluntary currency facing barriers to acceptance due to a lack of understanding of its nature. Discovering how the AOCS economic system functions isn’t difficult- it merely requires a process of learning. But without the full endorsement of the philosophy by all parties, the circulation of AOCS specie will evaporate. So, for the purposes of implementing the AOCS, the system must be taught one person at a time.
As more and more households and firms transition into AOCS silver, and the greater the monetary value of their participation, the less exposure to fiat currency the U.S. economy will have. This is the desirable aim of the AOCS: to lawfully supplant the Federal Reserve Note. But due to the problem of increasing complexity of implementation, it seems most feasible to enter into voluntary barter on the smallest scale possible, allowing a business to expand its AOCS usage as the company grows. Attempting to retask a dynamic corporation circulating billions of U.S. dollars is not a reasonably attainable goal, at this point. For example, it is impossible to offer a fifty “dollar” AOCS silver round as payment for a dinner for four at a McDonald’s franchise and expect the management to accept it voluntarily, or to tender change to settle the transaction. McDonald’s is a multinational corporation with thousands of franchises around the world and an ornate web of commercial relationships. The logistical problems facing McDonald’s in convincing all parties to participate are monumental.
To reiterate, the implementation of an AOCS currency can only occur at the macro-economic level to the extent that all the market participants involved are willing to accept it. Business firms would run into problems of decreasing functionality in the face of increasing economic complexity. As more factors of production are required in creating a finished product, and as more participants become involved in a microeconomic system, the greater will be the task of the AOCS coordinators in establishing the willingness among all parties to participate. Everyday consumers and merchants can’t be expected to understand this right away, even if they are losing faith in the U.S. dollar at the same time.
So, there appears to be a natural limitation to growth attached to the utilization of a voluntary barter currency due to this transition difficulty. But facing the prospects of keeping up with price inflation as a result of the dependency on Federal Reserve Notes, it may be more profitable for the small firm in the long run to circulate ever larger quantities of silver as they expand, since a firm utilizing AOCS currency would not have to embed the costs of inflation into its prices. Consumers using AOCS currency would be able to trade for goods and services at prices discounted against those denominated in Federal Reserve Notes. This obviously increases demand for the AOCS currency, as well as the wares offered for trade.
Facing the prospects of hyperinflation, and the more people become aware of such an eventuality, the easier it will be to win over the American people on the idea of an alternative currency. As with the AOCS, the recirculation of demonetized U.S. silver coinage for use on a voluntary barter basis would run into the same microeconomic and macroeconomic issues. A long term observation of the AOCS system and a study of its expansion will serve as a valuable indicator for implementation, management, and growth of any similar system.
1. 2. 3. “Local Currencies in the United States”, E.F. Schumacher Society website. Accessed April 18th, 2010. http://www.schumachersociety.org/local_currencies/currency_groups.html
4. Introducing the American Open Currency Standard! AOCS website. http://www.opencurrency.com/introducing/
5. American Open Currency Standard homepage. www.opencurrency.com
6. Personal Interview with Rob Gray. Wednesday, February 3rd 2010.
7. Gold and Silver Market Watch: Daily Update. ScotiaMocatta Website.
8. Inflation Proof Currency: Liberty Dollar MovesUp to the $20 Silver Base, by Bernard Von Nothaus. November,