During the Great Depression, governments and companies printed an estimated $1 billion in scrips (money substitutes) on things as varied as car tires and seashells. Today California is doing its best impression of those times and issuing IOUs to cover certain contractual obligations. The Wall Street Journal published an article taking a look back at some historic scrips from the Great Depression.
- So Money! From ceasol
Since the California IOU program began, 194,000 IOUs worth over $1 billion have been issued. California recently forced its budget problems down the road with a gimmicky budget compromise. Still, IOU issuance will soon come to an end. What will this do to the market for California IOUs?
Obviously, any redeemed registered warrants will pay the value of the contract. The real interest might be if enough IOUs are redeemed that there is a scarcity of IOUs still in existence. Counting on this would be foolhardy, but California registered warrants might be an interesting memory of our current tough times in the future. A memory is all you should count on your IOUs to be, but for a counterexample take a look at Crescent City, California. They issued a 10 cent IOU printed on a seashell back during the Great Depression. The article estimates it’s value at $500 today. That’s around 80 years at an 11.23% annualized return. Not too shabby! In my opinion, it’s unlikely California warrants would ever deliver that sort of return; they aren’t even printed on a seashell! What do you think?
For more information, see DepressionScrip, a resource on IOUs from the Great Depression.
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Jct: There’s nothing wrong with small denomination municipal or California State IOUs if anyone can pay their taxes with them. When Argentina’s government workers were faced with cuts, their unions talked 6 state governments into paying them with small-denomination state bonds which could be used to pay for state services and taxes by everyone.
When the local currency is pegged to the Time Standard of Money (how many dollars per unskilled hour child labor) Hours earned locally can be intertraded with other timebanks globally! In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours.
U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
See http://youtube.com/kingofthepaupers on growth of the international time-trading network.
Too bad California IOUs won’t be accepted in payment for state taxes and services like state bonds were in Argentina. Too bad California IOUs will be denominated too big to use as local currency. Too bad Argentina people were smart enough to avoid the tent-cities catastrophe and California people are too stupid to follow their example.
If they make IOUs legal tender, I’ll take back every joke I ever made about Girlieman Governor Musclehead if he engineers the California state currency lifeboat.