CategoryEssay / Research

Real life DHARMA Initiative # 7: DARPA and HAARP

information awareness office

Unlike DHARMA, DARPA is actually a US agency, not a private endeavor. But, in addition to the name, there are some projects worth considering – especially the High Frequency Active Auroral Research Program (HAARP).

From Wikipedia’s DARPA entry:

The Defense Advanced Research Projects Agency (DARPA) is an agency of the United States Department of Defense responsible for the development of new technology for use by the military. DARPA has been responsible for funding the development of many technologies which have had a major impact on the world, including computer networking, as well as NLS, which was both the first hypertext system, and an important precursor to the contemporary ubiquitous graphical user interface.

Its original name was simply Advanced Research Projects Agency (ARPA), but it was renamed DARPA (for Defense) on March 23, 1972, then back to ARPA on February 22, 1993, and then back to DARPA again on March 11, 1996.

DARPA was established in 1958 (as ARPA) in response to the Soviet launching of Sputnik in 1957, with the mission of keeping U.S. military technology ahead of the nation’s enemies. […]

DARPA is independent from other more conventional military R&D and reports directly to senior Department of Defense management. DARPA has around 240 personnel (about 140 technical) directly managing a $3.2 billion budget. These figures are “on average” since DARPA focuses on short-term (two to four-year) projects run by small, purpose-built teams.

DARPA is known for creating the Internet and, more recently, for their paranoia inducing projects like Information Awareness Office and creating robotic insects.

But no DARPA project has attracted as much interest from conspiracy analysts as HAARP. From 60 Greatest Conspiracies’s HAARP entry:

In an Arctic compound 200 miles east of Anchorage, Alaska, the Pentagon has erected a powerful transmitter designed to beam more than a gigawatt of energy into the upper reaches of the atmosphere. Known as Project HAARP (High-frequency Active Auroral Research Program), the $30 million experiment involves the world’s largest “ionospheric heater,” a prototype device designed to zap the skies hundreds of miles above the earth with high-frequency radio waves.

Why irradiate the charged particles of the ionosphere (which when energized by natural processes make up the lovely and famous phenomenon known as the Northern Lights)? According to the U.S. Navy and Air Force, co-sponsors of the project, “to observe the complex natural variations of Alaska’s ionosphere.” That, says the Pentagon, and also to develop new forms of communications and surveillance technologies that will enable the military to send signals to nuclear submarines and to peer deep underground.

60 Greatest Conspiracies first reported on HAARP more than a year ago. Since then, inquiring Internauts have blamed the peculiar project for everything from UFO activity to major power outages in the Western United States, to, most recently, the downing of TWA Flight 800. (The Pentagon maintains that the HAARP array has been inactive since late last year.) Some have dubbed it the “Pentagon’s doomsday death ray.” Though many of these theories are, well, creatively amplified, an assortment of more grounded critics–environmentalists, Native Americans and Alaskan citizens among them–argue that the military does indeed have Strangelovian plans for this unusual hardware, applications ranging from “Star Wars” missile defense schemes to weather modification plots and perhaps even mind control experiments.

Sounds oddly familiar, doesn’t it?

Real life DHARMA Initiative # 6: Technocracy Incorporated

technocracy incorporated monadthe swan hatch dharma initiative

Technocracy Incorporated is one of the great vanishing acts of history. At the peak of its existence, Technocracy Inc. had half a million members in California alone and received extensive press. Today, they are virtually forgotten.

technocracy sign

(Above: a Technocracy sign in a Depression-era town)

To over simplify: the goal of Technocracy Inc. was to create a socio-economic system run entirely by engineers. It was founded by Howard Scott, an engineer with dubious credentials.

howard scott

Above: Technocracy founder Howard Scott

Scott’s basic idea was that all human endeavor could effectively be measured in terms of energy expended. Whatever it took to make anything could be translated into pure ergs and joules. Therefore, the first thing to do was to take a grand energy survey of all the nations industries, a project to which Rautenstrauch actually got Columbia’s venerable president Nicholas Murray Butler to lend his support. Once it was determined how much energy it took to make everything, the nation’s engineers could step in and eliminate the irrational “social motives” in business. That is, all the energy businessmen put into making luxury goodsor profits.

Scott was always vague about just what would happen next. When pressed, he and his associates finally theorized that some sort of scrip, equivalent to the energy the nation used in a year, could be distributed on a perfectly equal basis to all U.S. citizens. To keep everything balanced and that pesky capital from accumulating, people would have to use up their “energy certificates” during the year or see them become worthless. The result, Loeb asserted in a book he rushed into print by early 1933, would be such abundance that no one would have to work more than four hours or so, four days a week. (Source)

Sounds nice. But things got a little creepy.

technocracy grey fleet

Above: a fleet of official Technocracy gray cars, from this IWW profile of Scott.

Technocracy’s program gained in popularity over the 1930s and 1940s, with members from all over North America. The organization gave lecture tours, study courses, and held motorcades, where hundreds of official “Technocracy Grey Cars” travelled all over the United States and Canada as part of the organization’s “symbolization” campaign. The Grey Cars sparked fears that Technocracy was a secret society with resources to create a fleet of vehicles in the midst of a depression. In reality, the organization only supplied grey paint so that members could customize their own vehicles. A grey suit became the organization’s uniform, and a red and grey monad its official symbol. (Source)

technocracy fascist

Names, too, were suspect for some reason so members of the movement in California were designated only by numbers. A speaker at one California rally was introduced only as 1x1809x56! (Source)

Numbers instead of names. Gray cars and uniforms. A completely engineered vision of society. Oh my.

To tie it back to the Dharma Initiative a bit, check out these training videos on YouTube:

They are forgotten, but not gone. Technocracy Incorporated is alive and active today, but their numbers have diminished. Perhaps, as we enter a new depression and a crashing banking system they will be able to rise again. China actually accomplished part of what Technocracy Inc. sought: rule by engineers. As the United States and Europe’s economies melt down, we can no longer use practicality as a justification to avoid Chinese economic and political policies. Technocracy may well be in our future.

More Info:

Wikipedia entry

Official Technocracy Incorporated web site

Kevin Baker’s column on the Reform Party and Technocracy Inc.

Time Magazine article on Scott from 1932.

Tim Boucher’s article on technocracy

Real life DHARMA Initiative # 5: Global Business Network

Global Business Network (GBN) is a consulting firm that grew out of Shell‘s Planning Group, Stanford Research Institute, and Stewart Brand and the community based around his “Whole Earth” businesses. In other words, it’s an unlikely alliance of oil industry insiders, mad scientists, and hippie visionaries. They specialize in “scenario planning.”

Schwartz has also studied Tibetan Buddhism and worked closely with Willis Harman, a key figure in the transpersonal psychology movement in San Francisco. Before accepting a post at Shell’s Planning Group, he worked at SRI International, the famed Menlo Park, California, research outfit that came up with the widely used psychographic measuring system known as VALS (for “values and life styles”). SRI also developed the computer mouse. Schwartz’s is a tame résumé by the standards of GBN.

That quote’s from a long Wired article on GBN. It was written by GBN member Joel Garreau, who notes:

This article on GBN was commissioned by a magazine whose executive editor is a member of GBN. It is running in a magazine which mentions a GBN member in almost every issue. Four GBNers have already been on its cover. And, as I mentioned at the beginning, it was written by a journalist who is a member of GBN.

Douglas Rushkoff has described Wired as a newsletter for GBN:

It’s the promotional arm of the Global Business Network. They’re a group of advisors who are pretty much the same as the masthead of Wired. They hire themselves out at $10-$15,000 an hour and when someone gets to join the GBN, their face appears on the front of the magazine and they’re touted as the new great media theorist. When a company hires the GBN and follows their advice, their director magically appears on the front cover.

(This was in 1997, before Conde Nast acquired Wired in 1998, and The Monitor Group acquired GBN in 2000)

Real life DHARMA Initiative # 4: Project MKULTRA and other government experiments

Most of the real life DHARMA initiatives we cover here are, like the DHARMA Initiative, private organizations. But the high weirdness that the CIA’s Project MKULTRA got into is too important to ignore. From Wikipedia’s entry on MKULTRA:

Project MK-ULTRA, or MKULTRA, was the code name for a covert CIA mind-control and chemical interrogation research program, run by the Office of Scientific Intelligence. The program began in the early 1950s, continuing at least through the late 1960s, and it used United States citizens as its test subjects. The published evidence indicates that Project MK-ULTRA involved the surreptitious use of many types of drugs, as well as other methodology, to manipulate individual mental states and to alter brain function.

Considering John’s experience with hallucinogenic drugs on the Island, and persistent hallucinations on the part of many of the characters, there’s a strong possibility that DHARMA conducted psychedelic experiments on the Island.

It’s also worth noting that the Hostiles/Others are engaged in some form of mind control themselves, as witnessed in Room 23.

Project MKULTRA was not the US Government’s first foray into mad science. Another infamous example is the Tuskegee Study:

The Tuskegee Study of Untreated Syphilis in the Negro Male (also known as the Tuskegee Syphilis Study, Public Health Service Syphilis Study, or the Tuskegee Experiment) was a clinical study, conducted between 1932 and 1972 in Tuskegee, Alabama by the U.S. Public Health Service. 399 poor, and mostly illiterate, African American sharecroppers were studied to observe the natural progression of the disease if left untreated.

The study became controversial, and eventually led to major changes in how patients are protected in clinical studies. Individuals enrolled in the Tuskegee Syphilis Study were not required to give informed consent and were not informed of their diagnosis; instead they were told they had “bad blood” and could receive free medical treatment, rides to the clinic, meals and burial insurance in case of death in return for participating.

Not to mention government backed Human Radiation Experiments:

During and after the end of World War II, scientists working on the Manhattan Project and other nuclear weapons research projects conducted studies of the effects of plutonium on laboratory animals and human subjects. In the case of human subjects, this involved injecting solutions containing (typically) five micrograms of plutonium into hospital patients who were thought either to be terminally ill or to have a life expectancy of less than ten years due either to age or chronic disease condition. The injections were made without the informed consent of those patients.

In her book, The Plutonium Files: America’s Secret Medical Experiments in the Cold War, Eileen Welsome, Pulitzer Prize-winning journalist for The Albuquerque Tribune, revealed the extent of the experiments conducted on unwitting participants. At the Fernald school in Massachusetts, an institution for “feeble-minded” boys, 73 disabled children were fed oatmeal containing radioactive calcium and other radioisotopes. The only purpose of the experiment was to give Quaker Oats, the company behind the testing, a commercial advantage over Cream of Wheat in an advertising campaign. Immediately after World War II, 829 pregnant mothers in Tennessee received what they were told were “vitamin drinks” that would improve the health of their babies, but were, in fact, mixtures containing radioactive iron, to determine how fast the radioisotope crossed into the placenta. Other incidents included an eighteen-year-old woman at an upstate New York hospital, expecting to be treated for a pituitary gland disorder, who was injected with plutonium. Such experiments are now considered to be a serious breach of medical ethics.

Do these remind you of the weirdness surrounding “the sickness” on the Island?

It would be comforting to think that these sorts of things don’t happen anymore, or at least not at the order of the US government at tax payer expense. But the events at Abu Ghraib and Gitmo make it hard to believe that this particular American nightmare is over.

Barack Obama signed an executive order to close down Gitmo and end extraordinary rendition. But there’s always potential for abusive tactics by government organizations either in secret or through “satellite” organizations – private organizations comprised of former government agents engaged in various law enforcement and espionage.

LOST acknowledges government sponsored torture, and the role of private organizations through the role Kelvin takes in encouraging Sayid to torture prisoners, and the fact that Kelvin and Mikhail are former military personnel now employed by private groups.

We’ll take a look at government satellite organizations in a future installment.

Real life DHARMA Initiative # 3: Esalen Institute and Physics Consciousness Research Group

Jack Sarfatti, Saul Paul Sirag, Nick Herbert, and Fred Alan Wolf

From left to right, Jack Sarfatti, Saul Paul Sirag, Nick Herbert, and Fred Alan Wolf lower right in 1974

From the Wikipedia entry on the Esalen Institute:

Esalen Institute is a center in Big Sur, California, in the United States, for humanistic alternative education and a nonprofit organization devoted to multidisciplinary studies ordinarily neglected or unfavoured by traditional academia. Esalen offers more than 500 public workshops a year in addition to invitational conferences, residential work-study programs, research initiatives, and internships. Part think-tank for the emerging world culture, part college and lab for transformative practices, and part restorative retreat, Esalen is dedicated to exploring work in the humanities and sciences that furthers the full realization of what Aldous Huxley called the “human potential”.

Esalen Institute was founded by Michael Murphy and Dick Price in 1962, and soon became known for its blend of East/West philosophies, experiential/didactic workshops, and a steady influx of philosophers, psychologists, artists, and religious thinkers.

One of the various projects of the Esalen Institute was the Physics Consciousness Research Group, founded to study time travel, ESP, consciousness after death, and other fringe subjects. Various people have made the claim that Physics Consciousness Research Group was the inspiration for the movie Ghostbusters. Jack Sarfatti, one of the founders of the Physics Consciousness Research Group, is a physicist and archetypal “mad scientist” – in fact, he claims to be the inspiration for both from Back to the Future and Egon Spangler from Ghostbusters.

MP3 Interview with Sarfatti on the R.U. Sirius Show.

Something of a memoir by Sarfatti that covers Physics Consciousness Research Group and its influence on Hollywood.

Update: How could I have forgotten Alex Burns’s classic article on Sarfatti?

Ioan P. Culianu: Eros, Magic, Politics and Murder Remembered

I was recently going through my books when I found a signed copy of “Eros, Magic, and The Murder of Professor Culianu” by Ted Anton that was given to me by a friend. For those unfamiliar, Ioan P. Culianu (or Couliano) was a professor of divinity at The University of Chicago. He also taught Romanian history. His most famous work was “Eros and Magic in The Renaissance” which was a study on how magic in the Renaissance was “a scientifically plausible attempt to manipulate individuals and groups based on a knowledge of motivations, particularly erotic motivations. In addition, the magician relied on a profound knowledge of the art of memory to manipulate the imagination of his subjects. In these respects, Culiano suggests, magic is the precursor of the modern psychological and sociological sciences, and the magician is the distant ancestor of the of the psychoanalyst and the advertising and publicity agent.”

Besides being a scholar of ancient magic and the occult (he worked frequently with Mircea Eliade and many other notable minds), he was an outspoken activist against the government of Romania. Born and raised there, Culianu later defected to Italy and eventually put down roots in Chicago. After Ceausescu was ousted, Culianu was forthright in insisting the new government staged a coup, and that the Romanian people were duped into believing they were headed toward democracy when in reality they were not. Of the previous government he said ”Why did we accept so much suffering without saying anything? Why did we permit ourselves to be robbed more than other people in the world…? This stain is more difficult to remove than that of original sin.” In a piece he wrote for an Italian news magazine called Panorama, he noted Romania’s history with dictators and aptly titled the article “The King is Dead. Watch Out for an Heir.” In this article he states that “all events that happen in our poor country are the repetition of some archetypes embedded in our religious history”, and that “Umberto Eco says that everything depends on what use one makes of symbols. The case of Romania shows that he is right. No sooner had the people forced the bloody dictator to leave the presidential palace than the government that was formed took the name National Salvation Front. They couldn’t have chosen a less fortunate label: the name calls to mind the fascist National Renascence Front, which was the sole party created by King Carol II in 1938 after he dissolved parliament and proclaimed himself dictator”.

On May 21, 1991, Professor Culianu was found dead in the men’s bathroom on the 3rd floor of the UIC’s divinity school. Detectives concluded that he died from one bullet shot to the back of the head at close range. None of his personal belongings were taken and no fingerprints or weapons were found. The police never found the killer, and assumed that because of the sketchy neighborhood the school was located in, that the murderer could have been a thug or a disgruntled student or acquaintance. Looking at the way it was done (with no money or belongings taken), where it was done (to kill someone in a bathroom in Romania is the ultimate “f*ck you!”), noting that his apartment was broken into and he was receiving threats before he was killed leave many believing that it was a professional political hit.

Professor Culianu is remembered as a magnetic individual who’s extensive knowledge of history, magic, religion, and the occult kept scholars, historians, witches, magicians, and those who read his work glued to his every word. Those who knew him personally or had heard him speak say that they sometimes felt as though they were “hypnotized” after being in a room with him. Author Jennifer Stevenson, who knew him briefly, had this to say:

“Well, you know, Culianu and I were not close.  I only knew him for about 3 weeks, spread out over about two years. My impression of him was of someone who would take infinite pains to charm you.  I always wondered what his agenda was, so I held back a little, but I did find him extraordinarily charming.  If he had lived, I might have entered a PhD program at the UoC just to work with him, although I need another degree like I need a hole in my head. (My husband says I have enough degrees to start my own thermometer.)

Later I came to the conclusion that he was one of those people pleasers who had made almost a religion out of charm; if you read “Eros & Magic in the Renaissance” (his book from University of Chicago Press) you understand what that meant to him and why.  His way of life, his friendships and personal habits, his areas of scholarship, all made up a single edifice, and magic was way down at the foundation–scholarly magic, practical magic, emotional magic, even sexual magic. The magicians whose work he studied were engaged in the colossal work of fusing all known sciences of their era and of all past eras into a unified field theory, a system that would make sense of everything and give man control of it all.

This is my opinion, who knew him a total of three weeks, and who have read his published work, including his fiction. An author friend of mine, told of my odd acquaintance with this man, said, “He sounds like a spy.” My grandfather, a supremely cynical newspaperman bred up in the yellow journalism world of the 1930s and later, would have said, “He believed his own bullshit.” Whatever your interpretation, persons who had only glancing acquaintance with him, as I did, were powerfully affected by his death. In my opinion he was a boulder in the stream of time.”

His knowledge of renaissance magic, Giordano Bruno and the art of memory have left an indelible print in the many volumes on the study of magic and the occult. And all those who currently study magic, symbols, media and memes are carrying on his legacy. It’s just too bad that there were no high tech means of investigating a crime scene back then. Maybe if there were, we would’ve found out “who’d done it”.

“Eros, Magic, and the Murder of Professor Culianu” by Ted Anton, Northwestern University Press, 1996.
“Eros and Magic in the Renaissance” by Ioan P. Couliano, The University of Chicago Press, 1987.
“Scholar’s Death Remains a Mystery” – The New York Times, January 17, 1993.

(Related: “Forces of Darkness” by John Crowley via Netcool. “The Astonishing Story of the Dead Professor” part 1 and part 2, via History’s Sideshow)

Real life DHARMA Initiative # 2: Findhorn Foundation

findhorn ecovillage

From Wikipedia’s entry on the Findhorn Foundation:

The Findhorn Foundation is a Scottish charitable trust registered in 1972, formed by the spiritual community at the Findhorn Ecovillage, one of the largest of the communes in Britain, has been home to thousands of residents from more than 40 countries. The Foundation runs various educational programmes for the Findhorn community; it also houses about 40 community businesses like the Findhorn Press, and an alternative medicine centre.

But it’s a bit weirder than that:

The Findhorn garden grew from a rich compost and it is apt that Findhorn spirituality should also sprout from its own steamy mix, a fecund blend of positive thinking, psychism, esotericism, and — less often acknowledged — evangelical Christianity. The twentieth century may have given us the term “personal transformation,” but the same purpose was an item on the agenda for nineteenth-century Christians. Among them was John George Govan.

Read all about it at

(Thanks to Trevor Blake for the heads up on this one!)

Real life DHARMA Initiative # 1: SRI (Stanford Research Institute)

dharma initiative

This is the first of a series of posts examining the a number of potential real life influences on the conception of the Dharma Initiative.

SRI International (previously known as Stanford Research Institute) is the clearest influence on the DHARMA Initiative (though DARPA is closer in name. Incidentally, SRI has been known to work for DARPA). SRI is a non-profit research institute working in a broad range of fields including, according to Wikipedia: “communications and networks, computing, economic development and science and technology policy, education, energy and the environment, engineering systems, pharmaceuticals and health sciences, homeland security and national defense, materials and structures, and robotics.”

changing images of man

Things got weird for SRI during the 60s and 70s, when it was engaged in parapsychology and LSD research. They hired L. Ron Hubbard, tested Uri Geller’s claims, and experimented with remote viewing.

They also compiled a report called The Changing Images of Man, contracted and funded by The Charles F. Kettering Foundation (the real life equivalent of Alvar Hanso?). The states purpose of Changing Images of Man:

First, we attempted to identify and assess the plausibility of a truly vast number of future possibilities for society. We next followed a method of analysis that determined which sequences of possible futures (that is, which “alternate future histories”) appeared to be the most plausible in light of human history and to most usefully serve the needs of policy research and development. Lastly, we derived a variety of policy implications, some of which dealt with how best to continue this type of inquiry.

The document allegedly comes to some creepy, fascist conclusions (I’ve not read it), and has been fodder for conspiracy theorists for years.

More info:

SRI International on Wikipedia

Changing Images of Man PDF

Scientists on Acid: The Story Behind “Changing Images of Man”

Get Familiar with Willis Harman.

TAZ History: Kowloon Walled City

“There were only two rules for construction: electricity had to be provided to avoid fire, and the buildings could be no more than fourteen stories high, because of the nearby airport.”

Old photograph of the Kowloon Walled City in Hong Kong.

When I was 17, I started constantly re-reading Hakim Bey’s TAZ, or as I like to call it, “His Only Good Book.” I had no problem with Jonathan Kozol, but Peter Lamborn Wilson builds a sentence like Turkish Muslims build a shrine. Before I discovered the playground of “Academic Critical Theory,” from Marshall McLuhan to Manuel de Landa, TAZ was the most dense language artifact I’d ever seen.

Even then, though, I wondered why Hakim Bey didn’t discuss the only real “TAZ” I could think of – the Kowloon Walled City in Hong Kong. “Kowloon” means “Nine Dragons,” and you can only visit the ruins today.  After an eviction process that took years and cost billions of Hong Kong dollars, the city was destroyed in 1993 and only a park remains.  While it lasted, though, it was the closest thing to Pure Anarchy the world has seen outside of a war zone.

At it’s most overgrown peak in early 1987, Kowloon Walled City was home to 50,000 inhabitants.  From 1899, these tenacious squatters had repelled the British, the Japanese and every would-be landlord and “property owner” in the history of Hong Kong.  So why not make them the centerpiece of the book?

I’ve since come to realize it’s because he was writing a personal historical fantasy, not a tactical or practical guide. Although Kowloon truly was a Temporary Autonomous Zone, and it’s a cool idea to read and think about, it truly sucked to live there. This is best summed up by Coilhouse‘s conclusion:

Yes, the anarchistic types out there are correct when they say that the Walled City is evidence that humans can co-exist, and even thrive, without laws constantly piled on them. But it’s not that simple. After all, without massive police raids (government incarnate), the place would have probably become a mob-run tyranny. Its residents had a degree of freedom that anyone who comes home to piles of bills or endless forms can’t help but envy. They also had darkness, a lower life expectancy, filthy living conditions and huge numbers of drug addicts.

But if the Walled City is a reminder that lawlessness isn’t quite as cleanly romantic as some might think, it also reminds us that a staggering number of societies are possible “‘ and that every one of them has a price.

It’s also worth meditating on how Kowloon came to achieve their “hands-off” status: by kicking up such a profound shit-storm of noise and problems, every single time someone tried to exert their authority, that everyone in power simply gave up. As David Robinson puts it in his great Tofu Magazine piece, “British policy came to regard Walled City as something of a hornets nest “‘ best not to be kicked unless absolutely necessary.”

Perhaps the lesson here is that there are no little things when it comes to defending your freedom. If either of those words are supposed to mean something, there are no acceptable tradeoffs or reasonable comprimises.

FURTHER READING: The best narrative summary is from Coilhouse, and the Wiki is surprisingly dense.  My Father Lived in Kowloon City, and the hilariously mis-translated but quite interesting story of a Japanese expedition into the city the week before it was demolished in 1993. If you’re interesting in more photos, more information, and more pages to scroll through, then say hello the Skyscraper Forum, who have collected pretty much all there is to know in one thread.

Three images from an adventure 1 week before the city was demolished

The new currency war

I originally wrote this in October 2007 and it was first published in OVO: Money. It has become increasingly relevant.

Since the colonial period, the United States has been fighting to control currency. In fact, this battle was part of the foundation of the country. Prior to 1764, colonists issued “Bills of Credit” to deal with a shortage of hard currency. Some were issued by “land banks” and backed by the value of land. Others were merely promises of credit. [1] In 1764 the British Parliment passed the Currency Act, which prohibited the use of these Bills of Credit. This caused significant economic hardship for the colonies, and helped set the stage for the Revolution. [2]

In an 1883 paper called “Ideas for a Science of Good Government,” Peter Cooper wrote (emphasis mine):

After Franklin had explained this [the use of paper money] to the British Government as the real cause of prosperity, they immediately passed laws, forbidding the payment of taxes in that money. This produced such great inconvenience and misery to the people, that it was the principal cause of the Revolution. A far greater reason for a general uprising, than the Tea and Stamp Act, was the taking away of the paper money. [3]

Although Cooper was in favor of government issued currency, he saw the British outlawing of the Bills of Credit as a problem. He opposed the use of these local currencies, but saw them arising out of a failure of the government: “Jefferson, the author of the Declaration of Independence, raised his voice against the curse of the local banks, which were allowed to come into being by the neglect of the Government in the performance of its duty.” [3]

Today, a host of independent currencies are available: from small and local to big and global, and they are all issued to solve perceived problems with government issued currency. But it appears that the government is none too pleased with this competition.

Indie currency

Activists on both the far left and far right of the political spectrum work to create government independent currency solutions, but it seems that the left tend to prefer local currencies. “Community currency is a tool that can help revitalize local economies by encouraging wealth to stay within a community rather than flowing out,” Susan Meeker-Lowry wrote for Z Magazine. “In many communities around the country people are taking control by creating their own currency. This is completely legal and, as organizers are finding, often very empowering.” [4]

The Local Exchange Trading System (LETS), developed in British Columbia in the 80s, is one widely used system. LETS does away with the need for a printed money, acting instead as an interest free credit system. Michael Linton, a computer programmer, created LETS to solve a simple problem: community members “had valuable skills they could offer each other yet had no money. He also saw the limitations of a one-on-one barter system. If a plumber wanted the services of an electrician, but the electrician didn’t need plumbing help, the transaction couldn’t take place.” [4]

LETS solves the problem by issuing credit within the system. In the above example, the plumber would owe a debt to the LETS system, and electrician would be issued credit from the system. The electrician would be able to redeem the credit from another LETS member who is either in debt or wanted credit, and the plumber would be required to make his services available to other LETS members. [4] Many variations of Linton’s original system have been created, and several “how to” kits and manuals are available for purchase, or to download for free from the Internet. [5]

Shifting the focus away from the US for a moment: during the Argentine financial crisis, the national currency of Argentina became practically worthless. [6] To help meet their needs and keep the economy working, many people turned to barter or to local currencies such as the “credito.”  [7] The credito was based, amongst other things, on LETS materials translated into Spanish. Transactions were originally recorded in a notebook, as in LETS, but eventually paper certificates were needed. By 2000, circulation of this currency had reached the equivalent of about $5 million a year. [8]

Argentina illustrates the usefulness of independent currencies when central banks fail. Local currencies, which tend not to cross state lines, seem not to get much attention from the government. I don’t know of any cases of local currencies being shut down by the government.

Towards a more perfect capitalism

Right wing proponents of alternative currencies, however, tend to favor more global forms of exchange. Advocates of “free banking” propose the dissolution of central banks like the Federal Reserve in favor of private banks issuing competing currencies. [9]

The founder of the Internet payment solution PayPal, Peter Thiel, envisioned PayPal as a way to create a more free exchange of currency globally. Thiel hoped people in foreign countries with restrictive money export laws could use PayPal to hold their currency in dollars or other more stable foreign currencies, such as the US dollar [10]. But the proprietors of precious metal backed digital currencies like e-Gold and the Liberty Dollar are more even more ambitious.

Thinkers ranging from Ron Paul [11] to Alan Greenspan [12] advocate a return to the gold standard. But some entrepreneurs act directly by issuing digital currency backed by gold, silver, or other precious metals.

Dr. Douglas Jackson founded e-gold, the first Internet currency backed 100% by precious metals, in 1996. Jackson cites gold’s stability as a currency and the Internet’s natural openness as the reasons for creating an Internet based gold currency. He believes e-gold is currency perfected: stable and market driven. In an interview in Wired in 2002 he called e-gold “probably the greatest benefit to humanity that’s ever been thought of.” [13]

The Liberty Dollar, backed mostly by silver but by other precious metals, is sold by National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED). Founder, and former mint master of the Royal Hawaiian Mint Company, Bernard von NotHaus conceived of the currency to compete head-on with the Federal Reserve:

“For years America was saddled with a slow, poor postal service. Finally, Federal Express brought competition to this heavily subsidized government agency that no one though could change. And it responded and improved noticeably. NORFED emulates this model by bringing a superior product to America’s monetary system, its currency.” [14]

NORFED offers coins, certificates that look like something like dollar bills, and an Internet backed currency. Coins and certificates are available through “Regional Currency Offices,” and NORFED actively encourages Liberty Dollar enthusiasts to open their own RCOs and recruit others. [15]

Financial Jihad

Outside the western left/right political spectrum is the another global cultural force: Islam. While the founders of Pay Pal, e-gold, and NORFED believe themselves to be perfecting capitalism with their digital services, the Islamic founders of e-dinar, who formed a partnership with e-gold and at one point hosted 50% of e-gold’s reserve at their vaults in Dubai, believe they are destroying it. [13]

The founders of e-dinar are members of the Murabitun movement, a peculiur form of Sufism. Murabitun followers believe that paper money is haram, unlawful, according to Islamic faith. The founder of the Murabitun movement, Sheikh Abdalqadir, says: “A true study of the Qur’an and the Sunna shows us that capitalism will not be abolished on the battlefield but in the marketplace where it is practiced.” [13]

“Fatwa Concerning the Islamic Prohibition of Using Paper-Money as a Medium of Exchange,” a Murabitun text by Umar Vadillo, states: “After examining all the aspects of paper money, in the Light of the Qur’an and the Sunna, we declare that the use of paper money in any form of exchange is usury and therefore haram” because paper money (and, by extension, credit and debit cards) is “nothing but a pure symbol with no reality attached except the imposition of law.” [13]

Vidillo says: “You want to be radical? You don’t need to blow up the bank, just burn your bank account. For that you need an alternative. What is the alternative? E-dinar.” [13]

The current status of e-dinar is a bit mysterious. e-gold used be partners with e-dinar [[13], but according to e-dinar’s web site e-dinar officially split with e-gold in 2004 after being acquired by an unnamed “Large International Corporation” in 2003. [16]

The state responds

It would seem, though, that the larger reach of global alternatives lead to larger interventions by the government. Of all the major players in independent currency game, e-gold has probably had the worst legal trouble. “In December 2005, the Secret Service and FBI raided the company’s headquarters and seized roughly $800,000 in assets,” according to the Washington Post. [17] This lead e-gold to beef up their security measures, even creating new software designed to detect e-gold customers committing crimes. [18] The new security measures didn’t stop a federal indictment from being leveled against the company in April of 2007. The company was served with 4 indictments, including operating an illegal money transfer operation and money laundering. [17]

Then, on Wednesday May 9th, 2007 the United States government seized the holdings of 58 e-gold accounts, forcing 48 bars of gold to be redeemed for approximately $77 million dollars. As of this writing, all the funds are still in in the US government’s control pending the outcome of lawsuit filed against e-gold’s parent company. [19] However, e-gold and its subsidiary Omnipay maintain business as of this writing.

In 2006 The United States Mint issued a press release stating that circulating Liberty Dollars is a federal crime. The press release implies that Liberty Dollars are deceptively similar to US currency, and that NORFED intends them to be used as legal tender. [20] As of this writing, I am unaware of any case against any persons in the United States for using the Liberty Dollar.

NORFED responded with a civil lawsuit. On March 20, 2007 von NotHaus filed against the US Mint, asking “the court to declare that the use of the Liberty Dollar is not a ‘federal crime,’ as claimed by the U.S. Mint. And the organization further asked the court to enter a permanent injunction against the U.S. Mint requiring it to remove any reference that the use of Liberty Dollars is a federal crime from its website.” [21 As of this writing, the case remains unsettled. But on November 14th, 2007 the situation took another turn: the FBI raided Liberty Dollar on charges of circulating illegal currency, mail fraud, wire fraud, and money laundering. The affidavit also described Liberty Dollar as a “multi-level marketing scheme.”  [22]

Von NotHaus has described the raid as “a direct assault against the US Constitution and your right to own and use gold and silver in any way you chose”  and dismissed the mail fraud, wire fraud and money laundering charges as fantasy. [23]

Pay Pal, eventually burdened with legal problems, banned the use of PayPal for gambling, pornography, and several other uses in 2004. [24]


It is important to note that e-gold and NORFED may well be guilty of the crimes it has been charged with, it remains to be seen how they will come out in court. NORFED and e-gold have many competitors, so the international, gold back Internet currency business continues. However, the struggles of these companies, and the fact that they are being held liable for what their customers use their services for, is illustrative of the control the US government exerts over currency. If the Federal Reserve were held accountable every time legal tender were used in criminal transactions, surely the Fed would have been shut down by now. Why are companies like e-gold held to a different standard? Why are they asked to act as de facto law enforcement?

And all of this raises the question: why is there such a demand for alternative currencies? Shouldn’t the state be spending its time trying to correct the problems the Fed (or shutting it down), instead of trying to shut down those who are trying to solve problems the government is not?


1. “Currency Act,” Retrieved 10/30/07.

2. “Currency Act,” Retrieved 10/30/07.

3. Cooper, Peter. “Ideas for a Science of Good Government,” Retrieved 10/30/07.

4. Meeker-Lowry, Susan. “The Potential of Local Currency,”  Z Magazine, July 1995. Retrieved 10/30/07.

5. Wikipedia. “Local Exchange Trading System,” Retrieved 10/30/07.

6. Ballvé, Marcello. “Silent Revolution,”  Orion Magazine, July 2006. Retrieved 10/30/07.

7. Katel, Peter. “Argentina: the Post Money Economy,”  Time, February 2002.,8599,199474,00.html Retrieved 10/30/07.

8. DeMeulenaere, Stephen. “Reinventing the Market: Alternative Currencies and Community Development in Argentina,”  International Journal of Community Currency Research, 2000. Retrieved 10/30/07.

9. Greaves, Bettina Bien. “Market Money and Free Banking,”  The Freeman, October 1999. Retrieved 10/30/07.

10. Bodow, Steve. “The Money Shot,”  Wired, September 2001. Retrieved 10/30/07.

11. Ludwig von Mises Institute. “The Case for Gold.” Retrieved 10/30/07.

12. Greenspan, Alan. “Gold and Economic Freedom.”  The Objectivist, 1966. Retrieved 10/30/07.

13. Dibbell, Julien. Wired, January 2002. Retrieved 10/30/07.

14. Orzano, Michele. Coin World Magazine, October 1998. Retrieved 10/30/07.

15. Liberty Dollar web site. “Regional Currency Office.” Retrieved 10/30/07.

16. e-dinar web site. “History.” Retrieved 10/30/07.

17. Krebs, Brian., “U.S.: Online Payment Network Abetted Fraud, Child Pornography,”  May 2007. Retrieved 10/30/07.

18. Zetter, Kim. Wired News, “E-Gold Gets Tough on Crime,”  December 2006. Retrieved 10/30/07.

19. “US Government Forces E-gold Redemptions – Seizes Gold,”  Money Net News, May 2007. Retrieved 10/30/07.

20.US Mint web site. “Liberty Dollars Not Legal Tender, United States Mint Warns Consumers.” Retrieved 10/30/07.

21. Liberty Dollar web site. “Legal Updates.” Retrieved 10/30/07.

22. Taylor, Jeff. Reason Magazine web site,”Your Liberty Dollar Raid Update.”  November 2007. Retrieved 7/24/07.

23. Liberty Dollar web site. “FBI Raid on the Liberty Dollar.”  November 2007. Retrieved 7/24/07.

24.Balko, Radley. Reason Magazine,”Who Killed Pay Pal?”  August 2005. Retrieved 10/30/07.

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