Liberty Dollars are an alternative currency offered by a company called NORFED. If you want to know what they have to say about themselves you can read their website1. For the short form, you can read C-Dawg's excellent writeup above. I've looked at various alternative monetary systems over the years, and the idea has always intrigued me. Pretty neat stuff. Stick it to the man. Fight the power. Return to sanity and the good old days.
However, as I looked through their site, something about this particular system bothered me. I couldn't quite put my finger on it, but they obviously get this reaction from a lot of their visitors - a signifiicant portion of their site is devoted to answering all sorts of questions and concerns.
For example, I wondered why should I pay US$10 for certificate redeemable for 1 ounce of silver ... which is, as of this writing, worth US$6.71. Did I miss a meeting? No, they have an answer for that one: That's a wholesale spot price for merchants, and NORFED pays more than that. So, let's say they pay $8 for each ounce of silver, where does the other $2 go? They've covered this too: As a non-profit corporation, they use that money to cover the costs of printing, distribution, staff salaries, marketing, and and so on. Thinking about it I realized, Credit cards and PayPal work the same way, only they charge a transaction fee to the seller instead of the purchaser, so most people don't think about it.
A 20% original exchange fee still seems a bit steep to me, but sticking it to the man has always been pricey. Besides, Liberty Dollars are backed currency that you can redeem at any time (at one warehouse in Coer d' Alene, Idaho2) for actual silver (or gold). In the case of the specie, they are the actual metal. Stable, safe currency. Now I just need to convince the people in my area to accept them in exchange for goods and services that I need. "Seriously, it's a real silver coin." I'm not sure what I'd buy that would require a gold coin. What if I've only got certificates on me? Maybe I have better things to do with my time.
The cold hard truth is NORFED is a business. They sell what might be termed a service called Liberty Dollars. They stay in business by convicing people to buy LD's. How do they do that? By telling people that LD's are the only currency available that is truly safe - backed by something real and tangible, not like those silly, weak, devalued, unsafe, US Dollars. And why is NORFED doing this? For the good of the country, of course! This is the only way to save us from the certain doom of fiat currency! ... Oh, you actually looked up the value of silver? Well, NORFED is a "non-profit corporation" which needs to cover it's costs, and we have a pie chart to explain how that works3. That pie chart includes a section for "NORFED Staff". I wonder if the founders are "Staff" - "executive staff", maybe? How much do you think they pay themselves? Do they use Liberty Dollars for that?
Why should I pay "some guy" to let me fight "the man"?
The way I see it, NORFED offers a service based around convincing you you're in danger and then selling you a solution that they say will make you safe. Another name for that is fearmongering. Assuming they're right, does their service solve the problem? Not really. Look at the events before and after Hurricane Katrina. When the chips are down, people fall into one of two camps: the "haves" and the "have-nots", neither of which will have have any use for LD's. If you are one of the "haves", you'll have other resources to help you escape or pull you through. And if you're one of the "have-nots", no one will care whether your money is backed or not: You can't make weapons, clothing, food, or shelter out of little slips of paper (or even coins for that matter).