Skip to comments.Move Over Fed, California's Now Printing Its Own Money
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.
Californias 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.
“will you take a registered warrant?”
Get out your wheel barrows! It’s time for Arnie Bucks!
Soon to be “little orphan Arnie”
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.)
I went to pick up some tuna for my dawg yesterday.
It was like 50c to 75c a can... Now? $2.09 a can.
Here comes inflation.
Not a chance!
I Predict Obama calls for yet another “stimulus”
Kinda like in the cartoons when they hold you upside down and shake you to get the “change” in your pockets.
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.
It is my understanding that they will only be issued to banks and businesses.
Thank you. Wow—fast reply.
La Raza and the ReConquista’s have won and no one sees it.
I Predict Obama calls for yet another stimulus
Kinda like in the cartoons when they hold you upside down and shake you to get the change in your pockets.
Stimulus = Stealfromus
Yeah but now we have Pollo Loco’s on every corner!
IOW, California can't do this?
I dont know
It’s quite a mess.
< sputter>But, there are so many inflationary strategies we haven't tried! < /sputter>
It would be funny, if it wasn't so serious.
0: "I predict unemployment will rise to 7, maybe 8 percent. No wait, make that 9. Okay, 10 is possible, but 11 will be the highest. After 12, we shouldn't see 13 for a while."
J. Carter is heaving a HUGE sigh of relief, now that he's off the hook as the biggest clown in modern presidencies.
Obama is no Carter. Carter was a misguided rube, This guy is calculating and purposeful in his destruction of America.
No State shall... coin Money; emit Bills of Credit;...
Registered warrants are the root of all evil.
Yeah. Seems like Ahhnald kinda got the cart ahead of the horse here.
I was on the fence for a while on this but with each passing day I'm coming to the same conclusion. What is happening may be due to naivete but it certainly isn't occurring by chance.
Good point -- 0 continues to blatantly lie while he cynically plays to the entitlement mentality of a large section of American populace.
It's sad that he's getting away with it so cleanly, with a compliant press and worshipful interviews.
It's gotten to the point of rediculous. When he's speaking, even during a press conference, it's like he's watching a tennis match -- teleprompter left, teleprompter right, glance down, teleprompter left, teleprompter right, glance down.
It is my personal opinion that Obama’s motivations go back to his Kenyan roots.
He was likely raised on a steady diet of how the “west” oppressed the third world and amassed wealth on the backs of the down trodden.
IMHO his intent is to destroy that wealth in order to “level” the playing field.
Sadly, China is likely to become the dominant power in the world if he continues.
Does anyone really think China will be a more benevolent super power than the US?
His actions to date have been reprehensible.
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.
Obama doesnt surprise me, he isnt an American anyway. but what about the Democrats in the House and Senate who are going along with this BS.?
/s taken, but I dont think JP Morgan will bite.
They are still standing because they have avoided most of the foolishness.
Here’s an article written by a woman from Nigeria, I believe, who talks all about Hussein, his African roots and the effects thereof.
Yes. I have seen that article.
How on Earth is a Republican going to be elected governor next time around after having to follow Arnold. This is so embarassing that Arnold is Republican...I wish he was at least Independent so the poor Republicans who are running for governor does not have to hear from constituents “Arnold was a Republican...look at the mess...And you want ME to elect another Republican?” I really feel sorry for the Republican candidates in the next governor’s election. They are going to have a very difficult time.
BTW, I formulated my opinion prior to seeing that article.
All Ahnald has to do is say he “inherited” the mess from Gray Davis /s
The US Constitution ALSO says that “No State shall make anything but gold and silver coin legal tender”.
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.
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.