IOU One More Piece of Paper Money

California has so degraded itself into a laughably Leftist socialist/commie-
think nightmare that they have, as all socialist/commie-think countries always
do, finally bankrupted itself. As Margaret Thatcher, erstwhile prime minister of
England, once said, “The problem with socialism is that you eventually run out
of other people’s money.” Hahaha! Exactly!

And now California has run out of money! Exactly!

Now, to demonstrate their complete worthlessness as thinking, rational beings,
California has decided that it will not cut expenses overmuch, but will pay
for things not with money, but with IOUs!
Hahaha! IOUs! Hahahaha!

There is Something Beyond Surreal (SMS) about all this, and it’s that very
farcical stupidity that explains why hyperventilating conspiracy theorists like
me come up with the weird conspiracy theories that we do; it is just too
damned weird to be real!

I mean, the fiat currency of the USA has been so abused by over-issuance that
it has lost about 96% of its purchasing power since the loathsome Federal
Reserve took over in 1913, and is now about to be reprised by California
issuing another paper money! Hahaha! Paper money everywhere! The state
with two fiat currencies! Hahaha!

This may have something to do with how California has seen a precipitous
drop in tax revenues, which in turn may have something to do with the Labor
Department releasing its Metropolitan Area Employment report which shows
that “In May, 112 metropolitan areas reported jobless rates of at least 10.0
which I admit does not have much to do with California until we get
to the part where El Centro, Calif., “recorded the highest unemployment rate,
26.8 percent,” and “Among the 15 areas with job-less rates of at least 15.0
percent, 7 were located in California.”

This is, as Margaret Thatcher said, because Californians have run out of money
to support everyone who ever walked up with their hand out looking for a free
lunch, and the wealthy people in California are leaving the state to keep from
having everything they have taxed away. Bummer!

Actually, California is a beautiful place unfortunately populated by Leftist
idiots, and as such is but a pale microcosm of the Whole Freaking Country
(WFC), and as a result, as Bill Bonner here at The Daily Reckoning said,
America’s position relative to the rest of the world is weak and in decline.
She is not a creditor; she is a debtor. She is not a low-cost competitor; she is a
high-cost competitor. She no longer has a free and flexible economy; she has
one freighted with central planners, regulators and busybodies.”

And California is not the only one hurting, as Byron King of Outstanding
writes that everybody has taken a whack to the wallet, as “There’s
no disputing the extraordinary shock to household wealth in the US. From mid-
2007 to March 2009, according to the Federal Reserve, household net worth
plunged $14 trillion, or 21.5%.”

A fifth! A fifth of everything we thought we had is gone!

In fact, most of the losses were recent, as “Just during the second half of 2008,
household net worth plummeted nearly $8 trillion – with an eye-popping $4.9
trillion dip in the fourth quarter.”

Wow! No wonder people are being laid off! No wonder spending is down! No
wonder we are screwed!

Until next time,

The Mogambo Guru
for The Daily Reckoning