Mad Money

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From an Evansville strip mall, Bernard von NotHaus ran the most successful alternative currency in the country. Then the FBI raided his headquarters, arrested him, and seized eight tons of gold and silver backing the notes. But even as he awaits sentencing, the $65 million question remains: Was it really counterfeiting?

Say what you will about Bernard von NotHaus, the man has led his federal probation officers to some beautiful places. First, there was the waterfront penthouse in Miami Beach. Then there was the penthouse at the Marco Polo condominium in Honolulu. Today, he occupies a multimillion-dollar, 40-acre estate in Malibu owned by a longtime friend. Make no mistake, though: NotHaus is broke.

Ever since the FBI raided the Evansville office of his alternative currency, the Liberty Dollar, in 2007 – seizing his assets and arresting him for counterfeiting – the 68-year-old has been living on Social Security and the kindness of wealthy acquaintances.

Which explains how someone who drives a beat-up, ’90s-era Pontiac Grand Am received his regular visit from the probation department yesterday at a spectacular house with a driveway so winding and steep that the officer refused to ascend it.

Wearing a Hawaiian shirt and his long gray hair in a ponytail, NotHaus greets me at the front gate and welcomes me inside. His companion of 40 years, Talena “Telle” Presley, disappears to a back room. If he wants to do another interview, that’s his business. A documentary filmmaker from Los Angeles has been shooting him here lately, and the BBC plans to sit down with him next week. NotHaus wastes no time spreading dozens of old coins and bills on a table for the beginning of a monetary history lesson.

“Listen, the U.S. government has been printing billions of dollars a year,” he says. “That’s like watering down good Chivas whiskey! And it always leads to hyperinflation eventually.”

He picks up a worn bill with German writing and considers it.

“Back in January of 1919, it took 12 German marks to buy one ounce of silver. Then in November 1923, just four years later, a little guy with a moustache jumped on a table at a beer hall in Munich and said the revolution had begun. Usually, people don’t keep records of inflation during chaotic times, but the Germans did. And at the end of that year, it took 543 billion marks to buy the same ounce of silver. Are you familiar with the French assignat?”

He picks up another wrinkled note.

“Here’s one from 1792. The French thought, ‘Other people have f – ed up with paper money, but it can’t happen here. We know how to manage it.’ Well, during the rise of the Republic, the assignat entered hyperinflation and became worthless.

“Here’s an American colonial dollar from 1796. Ever heard the expression ‘Not worth a colonial dollar’? And look at this recent $100 trillion note from Zimbabwe.”

NotHaus gets so excited explaining the difference between these “fiat” currencies – those not backed by a commodity like precious metal – and his own Liberty Dollar that he can no longer remain in his seat.

“Mark my words,” he says, standing. “One day, gold will hit $100,000 an ounce, and silver will hit $1,000.”

Even the most avid supporter of returning our money to the gold or silver standard would have to be startled by that prediction. While it’s true that silver has risen from $5 an ounce to more than $30 over the past few years as Federal Reserve dollars have slowly depreciated, no calamity seems imminent. Yet, in less than a decade, NotHaus’s Liberty Dollar surged to become the most pervasive alternative to the American buck. His makeshift Indiana bank printed or minted more than $65 million – bills and silver coins that spread to buyers in all 50 states. Hundreds of merchants nationwide came to accept the stuff. And the bizarre story of how the Liberty came about, how the government came to see it as counterfeiting, and how NotHaus believes it still might save us from an economic collapse is richer than any currency can measure.

Bernard von NotHaus was born near Kansas City, Missouri, where his father was a salesman, his mother taught swimming lessons, and absolutely no one was interested in economics. He studied architecture at Kansas State University for six years before dropping out to enjoy what remained of the ’60s in Europe. He claims to have traveled a little with John Lennon. Dated Lennon’s cook. Wandered around Pakistan and Afghanistan. Ultimately, NotHaus moved to Hawaii in 1971 for the same reasons everyone moves to Hawaii.

Living on Oahu in absolute poverty and happiness, he and his girlfriend, Telle, built a rustic little cabin together. They partied on the beach with the trust-fund crowd, smoked pot with the right people. Telle bore him two sons, Random and Extra. (When asked about the unusual names, NotHaus offers only that “they’re unusual boys.”) And then on Sept. 11, 1974 – he has no problem remembering the date – NotHaus had an experience that he says defined the rest of his life. A spiritual visitation. A voice invoking him to spread the word about gold. An “epiphany.”

“It ebbed and flowed over a period of about two weeks,” he remembers at the Malibu house, his eyes welling with tears. “And it was wonderful. I had no background in economics. Come to think of it, I still don’t – it’s dry, boring. Money is cool. Anyway, at the end of it, I knew I had to write this economic research paper.”

NotHaus knows how delirious that sounds. “You can make fun of it if you like,” he says. “But there are religions where God comes to you on a little wafer. They had some good people selling that one. Imagine marketing a crucifixion as a beautiful experience. Give me a naked woman and a joint.”

So the hippie apostle of no one in particular read up on the history of gold ownership and wrote his gospel on its potential to rescue us from a coming depression. The 21-page report, titled simply “To Know Value – An Economic Research Paper,” studied the devaluation of the dollar over the last century along with gold’s relative steadiness. Simplified charts were thrown in for good measure. And here’s the strangest part: It made a decent argument. NotHaus began selling copies of the paper for $3 to his friends in the neighborhood. “People thought, ‘Bernard has lost it!’” he says with a frenzy in his eyes that suggests he might have. “I didn’t even point out that private ownership of gold was illegal at the time!” That decades-old prohibition, intended to reserve the metal for federal purposes, would change shortly thereafter, in December 1974. And after reading NotHaus’s paper, several of his wealthy Hawaiian friends decided they wanted some gold of their own.

Now blessed with a market for precious metal, NotHaus had a problem. He didn’t know the first thing about minting. A more orthodox person might have taken a few classes. Instead, NotHaus called every private mintmaster he could find until one in California named Earl Butler grudgingly agreed to share a few secrets over the phone. Still, it was a complicated process – melting, rolling, tumbling, die-making, pressing. Perfecting it took time. And there was this added complication: NotHaus didn’t own his own press. But his friend Henry Stotsenberg, a young consultant living in Hawaii and eventual owner of the Malibu house, knew financiers and how to pitch them for the $100,000 loan the operation needed. NotHaus got his press.

By the early 1980s, the Royal Hawaiian Mint, as it came to be known, was churning out some of the most beautiful collectible coins in the country. The medallions commemorated everything from the anniversary of Pearl Harbor to the historic kings of the islands. Dignitaries such as the governor of Hawaii would even come out for their release on occasion. Advertising his gold and silver pieces in numismatic magazines such as Coin World, NotHaus slowly became a rich man. He moved his family to the exclusive Diamond Head area. His son Random attended the Punahou School, from which Barack Obama had graduated. NotHaus and his boys would travel the world for two months each year, “Captain Rough Seas and the Crew of Two,” visiting mints, collectors, and others related to the industry everywhere they went. All the while, he continued to study monetary theory. Though he would spend 25 years at the Royal Hawaiian Mint, his time there served as financing for a loftier goal – one that had nothing to do with collectibles. NotHaus abhorred the Federal Reserve’s relentless printing of fiat money and the accompanying depreciation of the dollar, which had lost almost half its value in his lifetime. If he could create his own system of money based on silver or gold, he thought, he might be able to protect the American people not only from inflation, but something far worse. “Every country that has hyperinflated its currency has ended up in a dictatorship,” he says. “Societies collapse in the absence of value.”

NotHaus began to design a new system of cash based on gold and silver. He sketched out the paper bills, experimented with molds that would make the coins, and used his savings to buy thousands of ounces of gold and silver bullion. By the summer of 1998, all he needed was a name for his newly minted operation and a more centralized U.S. location than Hawaii for its headquarters. The Liberty Dollar began its life under the clunky moniker “National Organization for the Repeal of the Federal Reserve” (NORFED). And as he began to publicize his plan among libertarian and anti-establishment groups, NotHaus received the break he needed: a call from a man named Jim Thomas of Evansville, Indiana.

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