Saturday, July 11, 2009

Proposed California bill would allow IOUs to be used to pay state taxes



If this bill passes it would, in the words of Warren Mosler, "be profound." (Read here.)

Indeed, it would allow California to deficit spend just like the Federal Gov't and with the IOU's acceptable as payment of state taxes, it instantly imparts value to them.

It will also end, almost immediately, California's budget problems.

Yes, profound! And the first step toward secession??

When other states see how wonderfully this works, they will do it too!

Interesting...Europe went to a single currency...America might now be going to 50 differetn currencies!! All because our policy makers in the Federal Government don't understand our monetary system!!

3 comments:

Pentagron said...

This is truly mind blowing. Banks are already accepting the IOUs. They truly are CURRENCY issued by the SOVERIGN State of California. Yippee!

Mike Norman said...

Yes, but the question is, will it stand? It could very well be challenged on the grounds that the Federal Government has a monopoly in regards to the creation of currency and that the use of the IOU in this manner is tantamount to "creating currency" and therefore unconstitutional. However, if it is challanged there will be a fierce confrontation and likely to ensure Obama forfeits California's 56 electoral votes in the next election.

googleheim said...

LOOKS LIKE IGOR THE RUSSIAN WAS RIGHT FROM LAST FALL !

THE USA IS BREAKING APART FOR THE HOPE OF KEEPING THE OTHER NATIONS OF THE WORLD TOGETHER !

IN OTHER WORDS, LAST FALL THE US DOLLAR COULD HAVE gotten so strong that the rest of the world would have collapsed and we could have easily paid off all our foreign debts really easily since the foreign currency markets would have been pounded.

However, the Fed swapped out the position and stalled the stampede to the U$D.

So even if the USA does not break apart, the local currencies ARE breaking out !

Next the World Trade Organization is going to complain ...
and Merkle of course will have a cow and have her finance minister proclaim "MORE KRASS KEYNESIAN ECONOMICS"

I would point out that this Californian type of deficit spending is the TRUE form of tax payer on the hook. Tax receipts are forgone for payments the state should be paying.

This is not a 1:1 deficit spending comparision as the US Fed&TSY does.

So look out for even more confusion and ignorance about how the monetary system works.