Those IOUs the State of California is currently issuing join the Hall of Shame of auction-rate securities, CDOs, mortgage-backed securities and other such financial detritus on Second Market. Hey vultures, now’s the time to swoop in and buy and sell deeply dicey financial wreckage for pennies on the dollar.
Way to go, Governator and California legislature. Your incompetence and sluggishness has now resulted in California IOUs being traded as risky and illiquid. Given repeated chances over many months, you always choose to argue and do nothing until events forced you to do something. And even then, you fudged the facts and pushed debt into the future for someone else to deal with. It’s not often you get to see such mind-numbing irresponsibility and pigheadedness.
Boiled down to ones and zeros – these California “IOUs”, especially now that they’re in trade, are fiat currency. The state has printed its own “money”. This may have some interesting long-term implication as the wheels continue to come off.
Fiat currency maybe, but trading at a discount to par value…
So you’re saying they’re “not worth a Continental”?
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 on growth of the international time-trading network.
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.