[mylife]

But hey, the recession is easing...

[mylife]

“will you take a registered warrant?”

[spikeytx86]

Get out your wheel barrows! It’s time for Arnie Bucks!

[MediaMole]

These sound more like junk bonds than currency.

Once my severance runs out, I’m going to start paying in MoleMan money. That’s a currency you can bank on. (Well, you could burn it on a river bank to keep you warm.)

[Jimmy Valentine]

And yet, with all of this, does anyone think the damned DemocRATS will seriously consider cutting spending?

Not a chance!

[giotto]

So the IOUs are like Savings Bonds? Can individuals buy them, or just banks? (Not that I would want to invest in anything the California government has control of)

Maybe this isn't such a bad idea. In fact, why not raise taxes, with the provision that the additional tax would be repaid in full, plus a certain amount of interest, within a certain period of time? I have a feeling that most people would not mind paying the extra taxes quite so much, if they knew they would get it back with interest, in a few years. Of course, I would much rather see the state cut wasteful spending, but how likely is that to happen? Even if by some miracle we elected a Republican majority, they would never have the cajones for that.

[knarf]

La Raza and the ReConquista’s have won and no one sees it.

[lentulusgracchus]

Will these California things survive an Article I test? These notes may fall under the several things that States bound themselves under Article I not to do, including the prohibition against making anything but United States money (or "gold and silver") legal tender.

IOW, California can't do this?

[Aldebert]

I would like to know how federal banking law and regulations restrict federal and state chartered banks in their treatment of these IOUs. They are not “money” so if a bank accepts an IOU must it essentially buy it from the customer in exchange for real money. Will the bank discount it as was done in the old days? And is the bank restricted in doing this? Also, a California IOU cannot possibly be covered by FDIC insurance, I would think.

[djf]

No State shall... coin Money; emit Bills of Credit;...

[Mr Ramsbotham]

Registered warrants are the root of all evil.

[OpusatFR]

Morgan and BOA can take those warrants, buy others, bundle them into CDOs and then sell them on the exchanges maybe as Californicated CDO maturing 10/1/09.

Just think of all the MBSs that could be written off the Cali IOUs! It could ignite another round of home building.

Why, we could have infinite fiat between this and the ClownBuck. Whatta job! /s

*Yeah, it’s sarcasm.

[ALPAPilot]

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?

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.

[olrtex]

We are losing the last, best hope of mankind at a pretty fast clip here. So sorry, Mr. Madison, Mr. Jefferson, and Mr Lincoln. Nice try, but it appears a government conceived in Liberty and dedicated to the proposition that all men are created equal (a government of the people, by the people, and for the people) may be able to endure only until the evil heart of man (and the stupid heart of man) ushers in the age of Obama and his groupies.

[Vaduz]

What is the California IOU – currency or an interest bearing note? That should help not.

[broken_arrow1]

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.

[meyer]

I don’t know about y’all, but if California owed me money, I wouldn’t accept anything but US currency. Realistically, I should demand my payment in gold or silver or oil. Something of value.

[reefdiver]

Is that a green shoot I’m seeing?