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It is still legal for someone to take a 1 oz. silver round and trade it to someone else for an item they have if they both agree to the trade. That is the whole idea here. Merchants who accepted Liberty Dollars were indicating that they would accept them in trade.
Then they should have been called Liberty Trade Units, or Liberty Barter Units. And how did the merchants value the Liberty Dollars--was it in pounds of butter or parts of sheep or how much they could sell the silver for in US Dollars?
I'm hoping to see all the confiscated ones melted down and the precious metals returned to Liberty after they agree to eliminate reference to 'dollars' and to do what everyone else who mints PM rounds does--state the amount of silver/gold/platinum in the round or token and it's fineness along with any other purely decorative design. The only reason to make the 'Liberty Dollar' look like they are US money is to market them as an alternative to US money--and to make a point which may or may not be subsumed by the profit motive of the 'Liberty Dollar' creators.
While their political speech is protected, the minting of Dollars to be marketed as an alternative to the US dollar presents a thorny problem. Even if they were explicit in explaining their understanding that it was legal to own 'Liberty Dollars' but illegal to use them, they were still advocating their use.
In my opinion, the Liberty people's biggest miscue (a supporter might call it their biggest provocation on behalf of Freedom) was in minting the pure copper L$1; had they stuck with precious metals, they might not have run into so many problems with the gummint.