Posted on 07/02/2009 4:51:15 PM PDT by SeekAndFind
Facing a budgetary crisis of its own making, California has begun to issue IOUs instead of cash payments to at least some of its creditors. For the first time since 1992, the state government has too little cash to meet its obligations. However, Governor Arnold Schwarzenegger insisted that the state was “responsible” enough for banks to accept the IOUs at face value:
California’s controller will start paying many of the state’s bills with promissory notes as soon as Thursday after lawmakers failed to close the state’s worsening budget deficit, adding a new measure of indignity to a state sinking deeper into dysfunction. …
State Controller John Chiang said his office is prepared to issue promissory notes totaling $3.3 billion in July.
It will be the first time since 1992 that California will have issued promissory notes. The move is almost certain to further damage state’s credit rating, already the lowest of any of the 50 U.S. states, saddling taxpayers with billions of dollars in higher interest payments on bonds that have yet to be sold.
Issuing the promissory notes — formally referred to as individual registered warrants — also will have real-world consequences for those on the receiving end. Small businesses that rely on state contracts will be most affected. …
Bank of America announced Wednesday it would cash the state’s promissory notes for its customers through July 10, bank spokeswoman Colleen Haggerty said. Schwarzenegger and state officials asked other banks to do the same, noting that California has never defaulted.
“We will make those payments,” he said. “We are responsible.”
If they were responsible, they wouldn’t have to issue IOUs now. The state government has been a model of irresponsibility for the past couple of years as this utterly predictable budget crisis approached.
(Excerpt) Read more at hotair.com ...
The Bank of America is saying it will buy them dollar for dollar.
ML/NJ
Right. I’m sure all you’ve got in your wallet are pieces of eight. Numerous articles on the web says the “emit bills of credit” part of Section 10 is not operative. Just the way it is.
As far as I know, the constitution is whatever the courts might say it is, tomorrow. Precedents are out the window on the 2nd amendment, I presume precedents are out the window for everything else, now that we are a nation of men, rather than a nation of laws.
An interest-bearing certificate that was issued by Missouri, and usable in the payment of taxes, was thus ruled to be an unconstitutional bill of credit.
I for one am getting tired of being peod on.
But seriously, I think IOU's are not the same as a "bill of credit." A bill of credit is the creation of money out of thin air. The entity that performs that function in the US is a private corporation known as "Federal Reserve."
Bills of Credit are non-interest-bearing government obligations that circulate as money.
How nice! Not operative! And from a supposed FReeper too.
Is there anything in the Constitution that you do consider "operative," PAL?
ML/NJ
I assume the IOUs are for people/companies doing business with the state government..
Seems to me they deserve everything they get for doing business with a corrupt criminal entity, that aids and abets illegal aliens, while forcing the legitimate working men and women to pay for it.
Voters delivered a crushing blow to the state finances in May, when they rejected five ballot proposals that would have eased the budget strain.
Too bad
Who is affected
To save money for education and debt payments, Chiang plans to withhold $424 million that would go for state operations, primarily to vendors, as well as another $141 million in payments to small businesses.
Doing business with a corrupt government, that aids and abets illegals aliens while forcing law abiding tax payers to pay for it. Serves them right!
Lots of pain. We need more.
Cool.
So can we do this also?
Can I stop my witholdings to the Feds, and send them IOU’s instead?
You'd be lucky to find a remnant of people anywhere who have both read the Constitution and actually believe in what it says.
But try to have a bit of compassion for those who fail to meet that standard; too many people aren't ready to admit that the Republic is dead and that their government is merely a shell of legitimacy filled with vile corruption worse than any decent person could imagine.
Just look at the depths to which they are willing to sink to maintain their cocaine supply.
If that means that the CA IOU's are not bills of credit, I agree. But it would be false to say that states are free to emit bills of credit. If a state started issuing notes/money -outside of the federal banking system- they would be shot down, pronto.
Dense reading, but see Craig v. Missouri, 29 U.S. 410 (1830).
Easier reading, and additional case citations at, "Bills of Credit" from The Constitutional Law Of The United States, by Westel Woodbury Willoughby (1910).
Just relaying what the Law Professor wrote in 1915. That’s all. I didn’t personally nullify that clause.
You bet..
Been coming a long time now...The clues being obvious.
A government that wont secure and protect it's own sovereign legitimate borders, will itself, eventually become illegitimate.
Like flooding the county with billion in counterfeit currency, backed by nothing...
These are country killers.
Time for California to secede and then print their own money.
As a State California could mint gold and silver as money. The California dollar could be one gram of Silver (31 grams to an ounce).
one of the state senators has a bill to allow joe-sixpack to send the State of California an IOU whenever the citizen receives an IOU from the state...an offset.
Does anyone have the bill number?
What you did is known a an "appeal to authority" which is a type of fallacious argument. You could also tell me what Barney Frank said or what Obama said as if it had some merit.
ML/NJ
The people allowed the chains on government to rust away through neglect;and for long years the beast was content to bide its time ,snapping up only the unwary fringes of society;but now the beast is about to devour the whole country.
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