California’s Alternative Currency
California’s IOUs Actually a Cleverly-Disguised Alternative Currency?
By accepting the IOUs as legal payment for state taxes, the state is imparting legitimacy on the notes—a move that could go a long way toward greasing the gears of commerce that have been so badly gummed up lately.
This still represents debt... which is not really valuable and thus prone to inflation. In the interim, it's still better than having the Federal Reserve.
As our money lost it's value by going off the gold standard, it was traded in for future ability to pay. This has made it very unstable and helped put us in the situation we are in.
Allowing (Californias') IOUs to become an acceptable payment method for state taxes, instantly imparts value to them - in effect, what you have is a state of the union creating a parallel currency right under the noses of the Treasury, alleviating its fiscal straitjacket in the process.
This is how a real currency should work. The government is the source of money and the government is the sink of money. In this way they can actually control inflation by changing taxes. This may mean more volatility in our taxes but i believe we could put in place a system that would minimize that volatility and still control inflation. At least the hidden tax of inflation would have representation. To maintain a stable currency, the government could use something valuable, like gold, silver, or infrastructure as collateral value.
When will the Federal Government issue real money? It's written right in the Constitution that they can and should. It's what our founding fathers commanded through the Constitution.
If the Federal Government issues it's own money, the exchange value, I'm assuming, would be set by the Federal Government. I can only imagine that the only way to keep this country solvent would be to nearly completely ditch the old money. The only safe investments are things of real value. This may make other countries (like China) very mad because they have sent us all kinds of manufactured goods for the last few decades and suddenly they won't have anything to show for it. Granted, it helped them create a competitive market economy under communism but that may not be enough.