George Leef’s latest Forbes column focuses on a clear case of an overly large federal government exceeding its constitutional bounds.

Our Constitution sets forth –- and limits — the government’s powers. Under Article I, Section 8, Congress is authorized to “coin money and regulate the value thereof” and also to “provide for the punishment of counterfeiting of the securities and current coin of the United States.”

Notice that no power is given for Congress to confer upon the government a monopoly in the creation of money. That matters because, prior to the drafting and ratification of the Constitution, private coinage was known and accepted. …

… If the Founders had thought there was something wrong in allowing money to circulate besides that produced by the federal government, they would have granted Congress power to forbid that. They did not. As with almost every aspect of life, the people were to be left free to manage their affairs, including the freedom to produce money and accept whatever medium of exchange they desired. Only counterfeiting – that is, producing fake money or securities intended to deceive recipients – was to be illegal.

This history is pertinent to another of those increasingly frequent instances where the government has gone after a peaceful citizen on legally dubious grounds. The case involves Bernard von NotHaus, a man who produced and sold pure silver coins he called “Liberty Dollars.” He was arrested in 2009 and charged with violating federal criminal law, specifically 18 U.S. Code Sec. 486, which prohibits making coins “intended for use as current money.” The prosecution’s argument was that this statute gives the federal government the exclusive power to produce currency.

One more thing – the government also seized around $7 million worth of gold, silver, and other property from Mr. von NotHaus.

At trial, the defense argued that “Liberty Dollars” could not be mistaken for any current U.S. coinage because they are not the same size as any coin the government is producing and have different imagery. Von NotHaus’ coins weren’t deceptive and although they could be used in exchange for goods or services, they aren’t a substitute for “current money” any more than are foreign coins or silver bars are.

But Judge Richard Voorhees adopted the prosecution’s view of Sec. 486, instructing the jury that the law makes it a felony to mint coins Americans could use, even if they weren’t meant to deceive, because the government has power to coin money to the exclusion of everyone else. The jury thus had virtually no choice but to find the defendant guilty.

In a press release after the verdict, the U.S. attorney’s office took a victory lap and pontificated, “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism.”

That notion is simply laughable. Coinage is an extremely small fraction of the nation’s money supply; whenever “real” money was exchanged for Liberty Dollars, that money did not disappear, but was spent in the business; and most significantly, the doubts that many Americans have about the stability of our monetary system, causing them to prefer money and other forms of wealth that don’t steadily erode in value long predated Mr. von NotHaus and will continue with or without his coins.