Comments on: Guest Post: California’s IOUs Offer a Way Out of Its Fiscal Crisis http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html Sun, 22 Nov 2009 07:56:24 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Money, Taxation, and Ye Olde Colonial Finance; or why California has gone back to the 1700s « Patriot Politicos http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-54478 Money, Taxation, and Ye Olde Colonial Finance; or why California has gone back to the 1700s « Patriot Politicos Wed, 02 Sep 2009 22:07:30 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-54478 [...] process is explained briefly in this post by Marshall Auerback. Accepting the IOUs in lieu of cash turns them into a substitute currency, in effect—so long as [...] [...] process is explained briefly in this post by Marshall Auerback. Accepting the IOUs in lieu of cash turns them into a substitute currency, in effect—so long as [...]

]]> By: King of the Paupers http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-51003 King of the Paupers Wed, 22 Jul 2009 18:30:39 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-51003 Jct: There’s nothing wrong with small denomination municipal or California State IOUs if anyone can pay their taxes with them. When Argentina’s government workers were faced with cuts, their unions talked 6 state governments into paying them with small-denomination state bonds which could be used to pay for state services and taxes by everyone. <br />When the local currency is pegged to the Time Standard of Money (how many dollars per unskilled hour child labor) Hours earned locally can be intertraded with other timebanks globally! In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours. U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture. <br />See http://youtube.com/kingofthepaupers <br />Too bad California IOUs won’t be accepted in payment for state taxes and services like state bonds were in Argentina. Too bad California IOUs will be denominated too big to use as local currency. Too bad Argentina people were smart enough to avoid the tent-cities catastrophe and California people are too stupid to follow their example.<br />If they make IOUs legal tender, I'll take back every joke I ever made about Girlieman Governor Musclehead if he engineers the California state currency lifeboat.<br />But Philadelphia has an Equal Dollars system that could save them so they might be even stupider. Jct: There’s nothing wrong with small denomination municipal or California State IOUs if anyone can pay their taxes with them. When Argentina’s government workers were faced with cuts, their unions talked 6 state governments into paying them with small-denomination state bonds which could be used to pay for state services and taxes by everyone.
When the local currency is pegged to the Time Standard of Money (how many dollars per unskilled hour child labor) Hours earned locally can be intertraded with other timebanks globally! In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours. U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
See http://youtube.com/kingofthepaupers
Too bad California IOUs won’t be accepted in payment for state taxes and services like state bonds were in Argentina. Too bad California IOUs will be denominated too big to use as local currency. Too bad Argentina people were smart enough to avoid the tent-cities catastrophe and California people are too stupid to follow their example.
If they make IOUs legal tender, I'll take back every joke I ever made about Girlieman Governor Musclehead if he engineers the California state currency lifeboat.
But Philadelphia has an Equal Dollars system that could save them so they might be even stupider.

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50925 Anonymous Tue, 21 Jul 2009 22:04:32 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50925 <i>the US Constitution prohibits the States from issuing thier own currency - which the CA IOUs clearly are - as defined in the Constitution.</i><br /><br />This is precisely right. The California proposal described above is the functional definition of "legal tender". Less well known is the fact that citizens are not required to settle private debts in Federal Reserve notes, provided they agree to an alternate tender ahead of time.<br /><br />I cannot conceive Bernanke and the FRB will allow this to stand. But if they are that weak-minded or willed, then fasten your seatbelts. Momentous political events lie directly ahead.<br /><br />Let's assume this does come into effect. I see no reason these IOUs would remain confined inside California's borders. Example. Others outside CA could accept these "bills of credit" as payment at a 10% discount from face, knowing they could resell them at a 5% discount to anyone owing CA taxes. This kind of discounting is done every day with accounts receivable. the US Constitution prohibits the States from issuing thier own currency – which the CA IOUs clearly are – as defined in the Constitution.

This is precisely right. The California proposal described above is the functional definition of "legal tender". Less well known is the fact that citizens are not required to settle private debts in Federal Reserve notes, provided they agree to an alternate tender ahead of time.

I cannot conceive Bernanke and the FRB will allow this to stand. But if they are that weak-minded or willed, then fasten your seatbelts. Momentous political events lie directly ahead.

Let's assume this does come into effect. I see no reason these IOUs would remain confined inside California's borders. Example. Others outside CA could accept these "bills of credit" as payment at a 10% discount from face, knowing they could resell them at a 5% discount to anyone owing CA taxes. This kind of discounting is done every day with accounts receivable.

]]> By: carol765 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50924 carol765 Tue, 21 Jul 2009 21:56:24 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50924 Marshall writes: "Republicans and Democrats alike embraced legislation last week that would make California IOUs acceptable payment for all taxes, fees and other payments owed to the state - an action that effectively would mean that California is entering the currency business."<br /><br />Not so fast: look at the table presented by Felix Salmon in his blog, when the IOU's were issued: http://blogs.reuters.com/felix-salmon/2009/07/01/california-the-haves-and-have-nots/ <br /><br />A lot of people getting IOU's probably do not have to pay taxes to CA. Marshall writes: "Republicans and Democrats alike embraced legislation last week that would make California IOUs acceptable payment for all taxes, fees and other payments owed to the state – an action that effectively would mean that California is entering the currency business."

Not so fast: look at the table presented by Felix Salmon in his blog, when the IOU's were issued: http://blogs.reuters.com/felix-salmon/2009/07/01/california-the-haves-and-have-nots/

A lot of people getting IOU's probably do not have to pay taxes to CA.

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50921 Anonymous Tue, 21 Jul 2009 21:01:33 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50921 There is a good reason why Article 14 of the US Constitution prohibits the States from issuing thier own currency - which the CA IOUs clearly are - as defined in the Constitution. The power to print money, end effectively indebt the economy is something that only the Federal Government should be able to do. CA is impacting the other states, and since this currency is effectively local to CA, this will limit overall curency velocity, by carving a piece out of the overal total US economy and forcing it to trade within a single states border. This will discourage interstate commerce, and encourages intrastate commerce. Good for CA, bad for the rest of the country. This IS NOT A GOOD THING. There is a good reason why Article 14 of the US Constitution prohibits the States from issuing thier own currency – which the CA IOUs clearly are – as defined in the Constitution. The power to print money, end effectively indebt the economy is something that only the Federal Government should be able to do. CA is impacting the other states, and since this currency is effectively local to CA, this will limit overall curency velocity, by carving a piece out of the overal total US economy and forcing it to trade within a single states border. This will discourage interstate commerce, and encourages intrastate commerce. Good for CA, bad for the rest of the country. This IS NOT A GOOD THING.

]]> By: Fred http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50912 Fred Tue, 21 Jul 2009 20:21:06 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50912 What a ridiculous argument? The author probably plays Monopoly in his bedroom while playing with himself! CA IOUs are no better than Monopoly money: its the same BS thats been done to Social security except these are fungible. Next stop every state issues its own IOUs as currency. Then we can have Forex right inside the US.<br /><br />Author should should stick to fantasy Monopoly. What a ridiculous argument? The author probably plays Monopoly in his bedroom while playing with himself! CA IOUs are no better than Monopoly money: its the same BS thats been done to Social security except these are fungible. Next stop every state issues its own IOUs as currency. Then we can have Forex right inside the US.

Author should should stick to fantasy Monopoly.

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50890 Anonymous Tue, 21 Jul 2009 18:50:25 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50890 Very naive. The tax argument was well-understood in the eighteenth century and a staple of monetary writings of the 19th century.<br /><br />The problem is that we are now in the 21st century. Most money is no longer currency. There won't be much float on the warrants unless CA pays interest. And if they pay interest, what's the value to issuing a currency? Very naive. The tax argument was well-understood in the eighteenth century and a staple of monetary writings of the 19th century.

The problem is that we are now in the 21st century. Most money is no longer currency. There won't be much float on the warrants unless CA pays interest. And if they pay interest, what's the value to issuing a currency?

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50885 Anonymous Tue, 21 Jul 2009 18:41:16 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50885 Bill, they pay interest unlike greenbacks. Bad money flushes out good money so don't ever expect to see CAIO's. Bill, they pay interest unlike greenbacks. Bad money flushes out good money so don't ever expect to see CAIO's.

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50882 Anonymous Tue, 21 Jul 2009 18:07:24 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50882 these iou's are similar to the Civil War era greenbacks, which ultimately collapsed and threw the country into a depression. After a while, California will have issued more than can be used for tax obligations, and the value will plummet. these iou's are similar to the Civil War era greenbacks, which ultimately collapsed and threw the country into a depression. After a while, California will have issued more than can be used for tax obligations, and the value will plummet.

]]> By: Ricochet Smith http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-way.html#comment-50880 Ricochet Smith Tue, 21 Jul 2009 17:37:45 +0000 http://www.nakedcapitalism.com/2009/07/guest-post-californias-ious-offer-a-way-out-of-its-fiscal-crisis/#comment-50880 So now I can pay my DMV fees and the like with my CA income tax IOU? It must work both directions or it's not really money. So now I can pay my DMV fees and the like with my CA income tax IOU? It must work both directions or it's not really money.

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