Article

2009-07-12 Economy

SEC Tries To Get Federal Control Over State Issued Scrip Currencies

Archived material is restricted to Rantburg regulars and members. If you need access email fred.pruitt=at=gmail.com with your nick to be added to the members list. There is no charge to join Rantburg as a member.

Posted by Anonymoose 2009-07-12 10:57|| || Front Page|| [5 views ] Top

#1 This would be a huge seizure of federal power from the States, counties, cities and private organizations, in effect the federal government taking over regulatory control of all *alternatives* to the dollar.

This opens the door to a massive power grab. During the Great Depression, there were over 450 instances of mostly cities issuing scrip, which strongly helped the local community. By federalizing this, it would ruin the usefulness of scrip.

Posted by Anonymoose 2009-07-12 11:04|| 2009-07-12 11:04|| Front Page Top

#2 Dunno, 'moose. I don't question your analysis, but would the death of scrip - which seems to be merely one more infantile effort to bypass/defer responsible fiscal behavior - be such a bad thing?

Aside from that, it's nice to have the SEC confirm that Ahnold has violated the CA constitution, which forbids issuance of debt (in effect, bonds) to cover operational costs/without direct approval of voters. Gray Davis got in trouble for trying this, and it was considered audacious (I know, that was a few years ago in an America that is hard to even imagine any more).

Where are the lawsuits to invalidate the IOUs as unconstitutional debt issuance without an election? Oh, right. That would smack of common sense and the rule of law. Not gonna happen.

Would this stupid state just collapse already? I don't expect any epiphanies or turn-arounds any more, I just want to savor the anguish of the idiots who've brought this on themselves and the rest of us.

Posted by Verlaine 2009-07-12 11:49|| 2009-07-12 11:49|| Front Page Top

#3 ...The problem here - IMHO - is that if the states can deal with their problem (or at least keep it under control) by issuing scrip, then that means the don't need Federal assistance. And that is the LAST thing the current administration wants. Everything they've done so far seems to be intended to keep people and organizations (including states) dependent on the Federal government.

Mike

Posted by Mike Kozlowski 2009-07-12 12:48|| 2009-07-12 12:48|| Front Page Top

#4 Right now the Federal Govt is in the scatological equivalent of King Midas. Everything they touch turns to sh*t. The SEC was marvelously successful in protecting investors so far.

California is issuing scrip with the hope that that they can pull a rabbit out of the govt's a$$ when the scrip is due. They will not cut, which is the painful action they need to do to fiscally survive.

California has as much or better chance of getting out of this financial bind than the Federal govt.

Posted by Alaska Paul 2009-07-12 13:19|| 2009-07-12 13:19|| Front Page Top

#5 Verlaine: at the local level, scrip is a godsend. It permits local government and markets to function when the dollar is either scarce or fluctuating wildly. This is because it is a very controlled, debt free currency. It doesn't as much replace the dollar as complement it.

IOUs are a primitive and partial form of scrip. The full blown stuff is very popular when used.

Posted by Anonymoose 2009-07-12 13:56|| 2009-07-12 13:56|| Front Page Top

#6 How many California IOU's can I get for a GM bond?

Posted by DMFD 2009-07-12 14:21|| 2009-07-12 14:21|| Front Page Top

#7 Thanks, AP, your "scatological equivalent of King Midas" comment is the best analysis I have seen for the Obama administration. It made me laugh out loud.

Posted by rwv 2009-07-12 14:27|| 2009-07-12 14:27|| Front Page Top

#8 You're welcome rwv. We are here to help, and to add imagery to otherwise boring type fonts, heh.

But the analogy holds truer than one can fathom.

Posted by Alaska Paul 2009-07-12 15:39|| 2009-07-12 15:39|| Front Page Top

#9 In a very real sense, bank checks ARE iou's. Likewise Credit/Debit cards,

There's your "Alternate Currency" right there in circulation today.

Checks are increasingly useful because they're NOT subject to the Government's artificial "Limits"
(By refusing to corculate any bill greater than a one hundred) You're NOT limited to issuing ten checks for a thousand bucks bill.

Posted by Redneck Jim 2009-07-12 18:56|| 2009-07-12 18:56|| Front Page Top

#10 I'd prefer they don't honor them. Might up the "sense of crisis" against the Donks, who are refusing to cut spending

Posted by Frank G">Frank G 2009-07-12 19:02|| 2009-07-12 19:02|| Front Page Top

#11 These IOUs are in effect interest bearing currency.

Now, given a choice between holding a currency that produces interest and one that doesn't, which would you chose?

Therein lies the Feds problem, because currently they can issue vast quantities of zero interest debt in the form of USD currency.

Posted by Phil_B 2009-07-12 19:26|| 2009-07-12 19:26|| Front Page Top

#12 I don't question the value of scrip, in general, nor do I care. My point is that CA IOUs - or scrip if it comes to that - have a pernicious effect in that they are part of the dwindling pathetic bag of tricks being used to put off the reckoning in CA.

Frank G restates my point here: until there is a REAL sense of crisis, nothing will happen. Look at the fiscal train-wreck that is CA - it developed over many years, and very few parts of this debacle were not explicitly discussed and warned of, many times, along the way.

The selfishness and incompetence of the political class and the irresponsibility of the electorate will not be cured or likely even affected by a budget showdown, but it has to happen. Anything that delays if, or softens it (i.e., hides it or defers it) is pernicious.

Not that it matters.

Posted by Verlaine 2009-07-12 23:42|| 2009-07-12 23:42|| Front Page Top

23:42 Verlaine
23:25 crosspatch
23:23 crosspatch
22:38 Old Patriot
22:33 Old Patriot
22:02 Alaska Paul
21:57 Mike Hunt
21:50 badanov
21:31 JosephMendiola
21:29 Frank G
21:29 CrazyFool
21:29 JosephMendiola
21:26 CrazyFool
21:13 Frank G
21:11 JosephMendiola
21:01 Atomic Conspiracy
20:50 Atomic Conspiracy
20:43 JosephMendiola
20:39 Free Radical
20:37 Phil_B
20:31 Halliburton - Mysterious Conspiracy Division
20:06 Cornsilk Blondie
19:51 trailing wife
19:46 Hellfish