Posted on 07/03/2009 3:14:41 AM PDT by mylife
Move Over Fed, California's Now Printing Its Own Money
Watch out Ben Bernanke, the Federal Reserve now has competition in the currency game. California is planning to create its own money in the form of IOUs, just like the Fed. What is the California IOU – currency or an interest bearing note?
Officially the IUOs will be called “registered warrants”. State Controller John Chiang planned to issue $3.4 billion, maturing on Oct. 1 to replace state payments. The interest rate is set to be determined on Thursday, but cannot exceed the statutory limit of 5%.
The San Jose Business Journal “California banks ponder their stance on state IOUs” reports that banks are equally perplexed about whether to accept the IOUs and how to process them. But the banks are loath to upset the state with the largest economy in the nation; the state capable of generating the largest investment banking fees.
Bank of America (BAC) issued a statement saying they will honor the IOUs through July 10. Wells Fargo (WFC) and JP Morgan (JPM) have not decided. The smaller banks were mixed.
California’s ingenuity poses an interesting dilemma for the Fed. The IOUs would be structured as short-term tax-free bills, but trade like cash. Banks are being asked to accept the IOUs and advance customers interest. Should the Fed sanction alternate forms of money?
Disclosures: Author is long BAC and WFC.
No state can print money. It is a Federal Task. These “notes” are really worthless kinda like bad checks....
Biblicly speaking, it's the love of registered warrants that is the root of all evil.
Constitutionally speaking, governments figured out, long before there was a USA, that the power to make money out of thin air is an ingredient of financial disaster. States agreed not to have it, and the US Congress is directly on the hook to "coin money and regulate the value thereof."
Something about coastal waters that breeds democrats and stupidity. The bigger the coast, whether it be ocean or large lake, they will flock.
http://www-personal.umich.edu/~mejn/election/2008/
If they are traded like cash, this is clearly unconstitutional: it was declared such in 1830 Craig v. Missouri. The Fed notwithstanding, this was forbidden the states period. The "Consent of Congress" begins the next clause.
It sure has gotten to the point where they just consider the written law to just be a minor impediment to what they really want to do - they just go ahead and do it.
We’ll see how it all plays out.
This administration has demonstrated over and over that it has NO regard for the constitution.
Back in November there were two kinds of voters, those who remembered the Carter administration and those who were going to find out what it was like.
California, indeed the rest of the U.S., did not get this way from one administration. California is in its current mess because the voters themselves created or allowed it to be created.
Wasteful government spending, immoral government spending comes from one set of sources. Interest groups, groups that are able to twist the english/spanish language into whatever, ‘for the common good’ they want. They inject and infest true public morality with their version of public guilt.
I keep thinking about something I read from the 5,000 Year Leap. It was the question if the people had the moral character to deserve freedom. Our founder's felt they did at the time, for without moral character in the whole of the people, their efforts would have been for nothing. They would trade one master (the crown) for another master.
The moral character of Californian society has been bankrupt for some time now. It took nearly 100 years to get to this point and if we want to fight for the Republic, it will take another 200 years to get morality back.
Even if there is a second revolution, I believe we need to ask the same question the founder's had.
Principle 4 - Without religion the government of a free people cannot be maintained.
“Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports.... And let us with caution indulge the supposition that morality can be maintained without religion.” - George Washington
To start changing the culture we will need to find the Missionaries for America.
Arnold did indeed inherit the mess that is California, there is no mistake in that statement. Many of the laws and bureaucracies he did not create and could not eliminate behemoth institutions that crashed the system. Even in their death throws, they refuse to recognize their “common good” rhetoric is their own hell-fire.
I am afraid you are correct, though all is not lost yet.
What is just killing us is this idea of entitlements from the Gubmint.
FU very much FDR
BTW, it is exceedingly clear that Obama is playing the role of FDR II with some LBJ on the side
Yep. Like this guy who had invested in beer stocks which crashed, and found out he’d have had more on the return by drinking it and getting the 5cents per can recycling credit.
You can’t make business with paper. You got to have the beer sold too.
Californica is making paper and producing no drinks under its socialism. With no tax payers or slaves left, all diseased up from exploited prostitution, how will Californica pay?
What a disaster. Banks are screwing themselves in this deal or betraying their customers.
What is the California IOU – currency or an interest bearing note? That should help not.
United States Constitution Article 1 Section 10: Limits on the States.
The final section of Article One outlines the limits on the powers of the States:
Section 10, Clause 1 (Contracts Clause): No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Interest bearing note.
A so called Republican is backing this.
Do you shop at a military commissary? I haven’t seen tuna for 50-75¢ in 10 years.
I found this article helpful in explaining how these IOU’s are going to work.
http://www.freerepublic.com/focus/f-news/2283682/posts
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