Nick Rowe use California's IOUs and Canadian Tire money to illustrate possible outcomes when two currencies circulate side by side: The State(s) Theory of Money: California and Canadian Tire, by Nick Rowe: I learn via [this] that there is a distinct chance that California will allow taxes to be paid in the new scrip it issued when it ran out of funds. I have no idea whether this will happen, or whether the Federal government will stop it. Let me just assume that it does happen, and that the Federal government does not stop it. I'm (almost) hoping that it does happen, and that the Fed doesn't stop it, because it would be such a fascinating experiment in monetary theory.
The State(s) Theory of Money: California and Canadian Tire, by Nick Rowe: I learn via [this] that there is a distinct chance that California will allow taxes to be paid in the new scrip it issued when it ran out of funds. I have no idea whether this will happen, or whether the Federal government will stop it. Let me just assume that it does happen, and that the Federal government does not stop it. I'm (almost) hoping that it does happen, and that the Fed doesn't stop it, because it would be such a fascinating experiment in monetary theory.
A market is set to emerge this week in Californian IOUs in a crucial test of appetite for the emergency instruments being issued by the financially troubled US state. California is printing $3bn of IOUs for businesses, individual taxpayers and local counties in lieu of cash. It has sent more than $450m of the IOUs to court-appointed attorneys, county-run health schemes and taxpayers awaiting rebates, among others. IOUs will continue to be issued until Arnold Schwarzenegger, California's governor, and the state legislature agree a deal to close a $26bn budget deficit.SecondMarket, a New York firm that trades illiquid assets, has launched a platform for trading the IOUs.
California is printing $3bn of IOUs for businesses, individual taxpayers and local counties in lieu of cash. It has sent more than $450m of the IOUs to court-appointed attorneys, county-run health schemes and taxpayers awaiting rebates, among others. IOUs will continue to be issued until Arnold Schwarzenegger, California's governor, and the state legislature agree a deal to close a $26bn budget deficit.
SecondMarket, a New York firm that trades illiquid assets, has launched a platform for trading the IOUs.
