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Move Over Fed, California's Now Printing Its Own Money
Seeking Alpha ^ | July 02, 2009

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.


TOPICS: Business/Economy; Government; News/Current Events; US: California
KEYWORDS: iou
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To: Aldebert

No state can print money. It is a Federal Task. These “notes” are really worthless kinda like bad checks....


41 posted on 07/03/2009 4:39:14 AM PDT by Sacajaweau
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To: Mr Ramsbotham
-- Registered warrants are the root of all evil. --

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."

North Carolina Bill of Credit - 1778

42 posted on 07/03/2009 4:44:23 AM PDT by Cboldt
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To: Sacajaweau

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/


43 posted on 07/03/2009 4:47:04 AM PDT by bintenn
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To: mylife
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.

44 posted on 07/03/2009 4:51:43 AM PDT by ALPAPilot
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To: ALPAPilot

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.


45 posted on 07/03/2009 4:52:49 AM PDT by MrB (Go Galt now, save Bowman for later)
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To: ALPAPilot

We’ll see how it all plays out.

This administration has demonstrated over and over that it has NO regard for the constitution.


46 posted on 07/03/2009 4:55:00 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: Quiller

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.


47 posted on 07/03/2009 4:55:30 AM PDT by Lonesome in Massachussets (AGWT is very robust with respect to data. All observations confirm it at the 100% confidence level.)
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To: napscoordinator
This is a good question and one that deserves a response.

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.

48 posted on 07/03/2009 5:01:43 AM PDT by EBH (it is the Right of the People to alter or to abolish it, and to institute a new Government)
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To: mylife
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.
49 posted on 07/03/2009 5:15:13 AM PDT by olrtex
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To: spikeytx86
Photobucket
50 posted on 07/03/2009 5:15:49 AM PDT by Kozak (USA 7/4/1776 to 1/20/2009 Reqiescat in Pace)
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To: olrtex

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


51 posted on 07/03/2009 5:17:51 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: olrtex

BTW, it is exceedingly clear that Obama is playing the role of FDR II with some LBJ on the side


52 posted on 07/03/2009 5:19:31 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: MediaMole

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.


53 posted on 07/03/2009 5:27:27 AM PDT by JudgemAll (control freaks, their world & their problem with my gun and my protecting my private party)
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To: mylife

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


54 posted on 07/03/2009 5:36:14 AM PDT by Vaduz
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To: mylife

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.


55 posted on 07/03/2009 5:36:16 AM PDT by broken_arrow1 (I regret that I have but one life to give for my country - Nathan Hale "Patriot")
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To: Vaduz

Interest bearing note.


56 posted on 07/03/2009 5:39:14 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: broken_arrow1

A so called Republican is backing this.


57 posted on 07/03/2009 5:40:52 AM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: Venturer
As to an explanation of the actions of Congress the matter is rather simple...follow the Benjamins. They'll whore themselves for whatever they can get. Just look at Crap and Tax as an example. That 300 page amendment posted at 3AM was loaded with giveaways to recalcitrant “members.” We've come full course from a nation represented by Statesmen to a nation represented by whores. They'd sell their own soul for a piece of pork.
58 posted on 07/03/2009 5:42:09 AM PDT by RU88 (Bow to no man)
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To: mylife

Do you shop at a military commissary? I haven’t seen tuna for 50-75¢ in 10 years.


59 posted on 07/03/2009 5:44:56 AM PDT by randita
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To: Vaduz

I found this article helpful in explaining how these IOU’s are going to work.

http://www.freerepublic.com/focus/f-news/2283682/posts


60 posted on 07/03/2009 5:46:12 AM PDT by EBH (it is the Right of the People to alter or to abolish it, and to institute a new Government)
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