Mike Norman Economics reports from the San Diego Union that California has a bill in its Assembly to make its IOUs legal tender for the payment of State taxes, thus creating its own fiat currency. It will be interesting to see how this plays out legally. I suspect that it will be found unconstitutional because of Article I, Section 10, which prohibits States from emitting Bills of Credit or making anything except gold and silver coin a legal tender for the payment of debts.
What scares me is that the courts will allow it, and Ohio starts to get the same idea, instead of the sounder approach I suggested yesterday.
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