battleofwits said:

California is going to issue IOUs to pay its expenses.

http://www.telegraph.co.uk/fin.....risis.html

This is a most interesting development. With a bit of creativity, it could lead to a new form of money that bypasses the banking system. The Canadian Province of Alberta, faced with the same problem, developed a system of branches of the Provincial Treasury ("Threasury Branaches, now ATB Financial), which operated "on a one per cent reserve and a hot liine to the United States" (in the words of the then Provincial Treasurer, Ted Hinman). If California can develop a system whereby these IOU's can be made transferable, then a lot of its problems would be under control - and the tax burden also much relieved.

"A day after the state Senate failed in a late-night bid to close part of a deficit now projected at $26.3 billion, California Controller John Chiang took steps to begin issuing IOUs today to tens of thousands of companies and individuals that are owed millions of dollars by the state.

Chiang was set to print 28,742 IOUs starting at 2 p.m., said Garin Casaleggio, a spokesman for the controller. The initial warrants, which total $53.3 million, will go primarily to people who are expecting state income-tax refunds. The state last issued IOUs in 1992.

Republicans in the state Senate, acting with the governor's support, blocked $3.3 billion in cuts in a series of party-line votes before midnight Tuesday, a move that effectively forced the state to begin issuing IOUs."

I can't believe California had already issued IOUs before. Great job failing to cut any spending.

http://www.telegraph.co.uk/fin.....risis.html