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The State of California is missing a golden opportunity for a (successful) experiment in local currency.

Instead, they're alienating everyone and likely failing at their fiscal goals.

A man of words and not of deeds is like a garden full of weeds; a man of deeds and not of words is like a garden full of turds — Anonymous

by Migeru (migeru at eurotrib dot com) on Wed Jul 8th, 2009 at 06:01:26 AM EST
[ Parent ]
Uh... why?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Wed Jul 8th, 2009 at 10:50:42 AM EST
[ Parent ]
Creditors (big banks) have already said they won't accept the IOUs...

A man of words and not of deeds is like a garden full of weeds; a man of deeds and not of words is like a garden full of turds — Anonymous
by Migeru (migeru at eurotrib dot com) on Wed Jul 8th, 2009 at 10:52:39 AM EST
[ Parent ]
Of course they won't.

Breaking the Money Monopoly would undercut one of their major pillars of dominance.  

by ATinNM on Wed Jul 8th, 2009 at 10:57:14 AM EST
[ Parent ]
But the State of California is allegedly making the IOUs more illiquid than they need to be by adding a "notarization" hurdle to transfer of IOUs.

They're shooting themselves in the foot by doing that because (never mind the big banks) people, by design, can't find a use for those IOUs before maturity.

A man of words and not of deeds is like a garden full of weeds; a man of deeds and not of words is like a garden full of turds — Anonymous

by Migeru (migeru at eurotrib dot com) on Wed Jul 8th, 2009 at 11:00:50 AM EST
[ Parent ]
I can think of five reasons:

  1.  The State Controller's Office didn't think it through

  2.  A secondary market establishes a "Market Price" and should (when?) the face value falls the state would have to increase the interest rate

  3.  There are some fairly arcane laws regarding who can issue money and this is a way to get around them

  4.  Given their experience with electric deregulation the state is trying to avoid Goldman Sachs, or whoever, from buying these things up, and pulling some kind of scam

  5.  Something else ;-)
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by ATinNM on Thu Jul 9th, 2009 at 11:17:56 AM EST
[ Parent ]

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