Posted on 07/15/2009 5:13:18 AM PDT by arthurus
The first, which will have the most visible impact on John/Jane Doe, is in relation to California's financial woes and their issuance of IOUs. While certainly rare enough (fortunately), the issuance of IOUs by a state in lieu of payments isn't without prescedence. California did the same thing back in '94. What has changed between then and now, is the response of banks to the issuance. Back in 1994, the banks all accepted the IOUs as legal tender, so once the public got over the initial shock, they quickly found that they could deposit the scrip into their accounts and write checks for their rent/mortgage payments, utility bill, etc. So the only effect, actually, was possibly a step, or two, added to the mechanics of the transaction, from the banks' point of view.
No sympathy here.
California actually has defaulted by issuing IOUs.
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