Chris Whalen is on tech/ticker saying California is going to default. The interview is well worth watching. Whalen says California will either default or "start issuing its own currency again." It might be better not as either/or, but, and/both proposition, that is, default and begin issuing some sort of California currency -- the state and municipalities get in some aspect of the money creation business. The real and important point Whalen hits on is how are we going to begin restructuring all the world's bad debt, meaning bondholders are going to have to take haircuts, and just as importantly, we're going to have to fundamentally reassess how much of our economy works, this is imperative, and must go along with any notion of restructuring.I didn't hear the words "default" or "California currency" come out of the former/future governor's mouth over the course of the campaign. But it's something he should give great thought, once again California could provide leadership for the world, this time getting the bankers to begin toeing the line. After all, default and local currencies, call it sound money, those are radically conservative notions, something a good Jesuit could appreciate.
All CA has to do is to issue state IOU's and accept them in payment of CA state taxes, fines and fees. Voila. CA money. It may not be strictly constitutional, but who is going to bust them for doing it? It's like asking who will be to account in the present crisis. (Hint: No one.)
ReplyDelete