When IOUs become currency

By Felix Salmon
July 13, 2009

OK, this is getting REALLY annoying — it’s happened again! Why is Ecto killing my posts when I publish them? Here’s a shorter version of my now-lost IOU post:

Yglesias says California’s IOUs are “arguably” unconstitutional. Babcock demonstrates if they’re not unconstitutional already, they will be if California starts accepting them in payment of taxes. Are we moving towards an alternative currency like the patacón? Will California banks start opening IOU-denominated bank accounts? Will California effectively devalue against the dollar? And how can that possibly be good for the nation as a whole? Geithner should put a stop to all this nonsense once and for all, ban the IOUs, and just bail out California already. It’s inevitable he’ll do it sooner or later, so best do it before Americans’ faith in fiat currency is shaken up too much.

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