Wednesday, July 08, 2009

Big Banks Don't Want CA IOUs

From the Wall Street Journal:

A group of the biggest U.S. banks said they would stop accepting California's IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.
The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others. The banks had previously committed to accepting state IOUs as payment. California plans to issue more than $3 billion of IOUs in July. (Emphasis added.)


Of course, if you or I were to send the government an IOU in lieu of taxes, we'd have out assets seized and/or get tossed in jail.

With Federal tax receipts dropping and investors starting to look askance at buying Treasury Bonds, how long until the Feds start issuing IOUs?

1 comment:

Anonymous said...

Apparently you don't understand that the "Federal Reserve Note" is an IOU.

It isn't backed by anything but debt, the ability to tax them back and the ability to print more if they run low.