Thursday, July 02, 2009

California IOUs

So the budget problem in California has gotten bad enough that instead of paying their suppliers and contractors with Federal Reserve Notes (aka US Dollars), they're paying some with IOUs. This is the result of a system that makes it very difficult for the legislature to raise taxes, alongside a initiative system that makes it very easy for "citizens" (actually groups with enough money to circulate and advertise the petitions necessary to get initiatives on the ballot) to force spending. Like that isn't going to result in a problem?

But what I'm wondering about is this: are IOUs technically the same thing as "Bills of Credit", which are forbidden to the States under Article 1, Section 10 of the US Constition? Would anyone care if they were?

The Constitution is not a living document. It is quite dead, in my opinion.

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