Arnie’s Apocalypse
It’s Arnie’s world and the rest of us are just living in it. The San Diego Union Tribune is reporting that California is on the precipice of mandating that debtor institutions accept its IOUs as payment.
While this would nominally allow California to stave off impending fiscal doom, the ramifications of doing so are fantastically interesting.
If this measure goes through, and is approved of by the feds, California will, for all intents and purposes, have coined a new form of currency. As soon as rating agencies determine the value of a California IOU, (or Arnie Buck) based on the state’s relative fiscal faculties, you’ll have an official exchange rate that will measure Arnie Buck’s versus the Yen, the Euro, and the once fashionable US dollar.
And, of course, once Cali fiats its way out of bankruptcy, what’s to stop other state governments from doing the same thing? Why wouldn’t New York start printing Bloombergs? Surely they’ll trade for a higher rate than Arnie Bucks.
Welcome to the new Confederacy of Autonomous Economies. Make sure you carry a large billfold. And while you’re at the bank trying to figure out how many Kentucky Boones you can get for a Ticonderoga, just remember that this was all started by a young Austrian with a dream…