Friday, July 10, 2009

California says all I need are some tasty waves, a cool buzz, and I'm fine

Voltron says: I find it amazing how blasé people are about the fact that California is broke. California is now issuing IOUs, which the banks have stopped accepting as of today. They are being bought for 50-88 cents on the dollar on ebay and craigslist. California is basically trying to print it's own money. Fiat money (i.e. money not backed by gold or silver) originally derived its value from the fact that it was accepted for payment of taxes. California is going to have to accept these IOUs at 100 cents on the dollar for taxes, fines, fees, etc. All of the IOUs will end up being returned to the state, requiring the state to issue more and more IOUs, in a financial death-spiral.

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