California has apparently invented the IOU-squared or the IOU-IOU, however you want to put it.
Vendors in the state say, according to NYT, that they’ve not received the IOUs they were promised — a problem, since banks have threatened to stop accepting them as cash by this Friday. Some vendors say they know of nobody who’s received an IOU yet.
Not getting the IOUs out seems like an amazingly stupid move on California’s part, which is already suffering from a crisis of confidence. On the other hand, what’s stopping people from trading notional IOUs, too. More paper to the rescue!
Update: Amazing! More signs that California really is moving to turn these IOUs into a real currency. The legislature is considering a law that would require the state to accept them for taxes and services. On one hand, if California is paying them out, then it should be forced to take them as payment. That being said, we kidn of doubt Arnie will sign a bill like this, since it would have the affect of removing pressure on lawmakers to get a real US Dollars budget done.
Folks, you’re seeing the creation of fiat currency in action. (via Winterspeak)
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