My Nobel Prize for Economics

Rich Galen
  • How much do Members of the U.S. House and Senate make? Are they suffering as are regular people? Do they feel the pain of tax increases and new regulations? 
  • In reverse order: No. No. And $174,000 per year.
  • In addition, Members of Congress get a tax break on their housing, have health care completely paid for by you and me, and have a pretty good retirement system although the other benefits are so good you can't get them to retire much before their 113th birthday, on average.
  • That $174,000 is for the rank-and-file, show-up-for-work four-days-a-week members of the House and Senate. You want to be really aggravated? The Speaker of the House, who happens to be Nancy Pelosi and who happens to be one of the wealthiest members of Congress, makes $223,500.
  • And she gets to fly home on an Air Force jet which the rank-and-file, show-up-for-work four-days-a-week members of the House and Senate do not get to do.
  • I do not mention this because I am particularly angry with Members of the House and Senate - at least not any more than usual. I mention all this because of California.
  •  The California fiscal year ended at midnight last night, June 30. They ain't got no money.
  • California - the state which is held in such high regard by the Obama Administration that they just shoved through a global warming bill which is largely based on California standards - is more than in fiscal distress. It is bankrupt. Bust. Broke. Penniless. Insolvent.
  • Starting July 1st the State of California is, according to the Associates Press, "talking about handing out $3 billion in IOUs to everyone from contractors to welfare recipients."
  • In spite of the fact that the State of California is about $24 billion in the hole, state legislators still get a $36,000 tax-free annual expense benefit plus a $4,200 annual reimbursement for the costs of their cars.
  • Who pays for your car? YOU? Bwaaaahhhhhahahahaha! Run for public office, Sparky. Let the little people pick up the tab!
  • I think is going to start issuing IOUs to its vendors.
  • You think Blue Cross will continue to cover me if I send an IOU instead of an ever-larger chekc they have been demanding? You think Safeway will allow me to continue to buy my favorite cheap red wine if I present a IOU instead of an American Express Card? Do you think my favorite Exxon station in Old Town Alexandria, Virginia will allow me to hand them an IOU for the $75 bucks it takes to fill the tank of the MullMobile?
  • I. Don't. Think. So.
  • Since 1789, States have not been allowed to print their own money - unlike the Federal government which simply buys more green-tinted paper then runs the presses 24/7 until is has enough to stimulate every real and potential Obama voter in the land.
  • Article I, section 8 of the Constitution states the Congress has the power:
    To coin money, regulate the value thereof ... and to provide for the punishment of counterfeiting the securities and current coin of the United States.
  • But think about this. If I were a store keeper in California and a state employee, or vendor, or whomever walked in with an offical state IOU to buy something... what would stop me from taking that piece of paper in lieu of cash?
  • I mean, the only thing which makes a $10 bill worth $10 is if you and I agree it is worth $10.
  • So, if Californians decide that IOUs have the value of whatever it says on that paper, then the IOU becomes... currency.
  • What if, say, Ford Motor Company decides to accept Cailfornia IOUs in payment for cars? And if Ford's vendors say they will, in turn, accept Ford IOUs (based on the California IOUs) in payment for brake pads and carburetors, then Ford IOUs becomes, for all intents and purposes, money.


    Everyone who thought - all the way through college - that the phrase "all intents and purporses" was really "all intensive purposes" raise hands.



  • This IOU thing is really important, especially in the face of Cap-and-Trade. Think about General Electric or U.S. Steel or 3-M issuing IOUs for their carbon production instead trying to buy carbon credits for cash.
  • Corporate and State IOUs could replace Dollars, Euros, Dinars, and Yuans.
  • If you think Ford is good for its IOUs you'll take them as payment. If you don't think GM's IOUs are worth a crap, you won't.
  • The free market will, in spite of Barack Obama, prevail. Get me John Galt on the phone.
  • What's the address of those Nobel Prize for Economics guys?

Rich Galen, columnist
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