My question relates to Article I Sect 10: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Whenever the State of California runs low on cash they issue "IOUs" (as they like to term it).
The California Bankers Association has deemed IOUs to be negotiable instruments under the Uniform Commercial Code. Meaning an individual can deposit an IOU into a bank acount.
There are two problems with this. Either A) California is issuing bills of credit or B) banks are accepting "IOUs" which are basically promissary notes- mini loans to the account holder- of which the bank would need to offset their balance sheet and show these IOUs as liabilities (which they don't!).
Why are IOUs issued by California not considered Bills of Credit (and thus illegal)?
Bill of Credit as defined here:
A bill of credit is some sort of paper medium by which value is exchanged between the government and individuals. Money is a bill of credit, but a bill of credit need not be money. An interest-bearing certificate that was issued by Missouri, and usable in the payment of taxes, was thus ruled to be an unconstitutional bill of credit.
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Thanks for doing this AMA.
My question relates to Article I Sect 10: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Whenever the State of California runs low on cash they issue "IOUs" (as they like to term it).
The California Bankers Association has deemed IOUs to be negotiable instruments under the Uniform Commercial Code. Meaning an individual can deposit an IOU into a bank acount.
Source: http://www.redding.com/news/2009/jul/03/banks-say-they-will-accept-state-ious/
There are two problems with this. Either A) California is issuing bills of credit or B) banks are accepting "IOUs" which are basically promissary notes- mini loans to the account holder- of which the bank would need to offset their balance sheet and show these IOUs as liabilities (which they don't!).
Why are IOUs issued by California not considered Bills of Credit (and thus illegal)?
Bill of Credit as defined here: A bill of credit is some sort of paper medium by which value is exchanged between the government and individuals. Money is a bill of credit, but a bill of credit need not be money. An interest-bearing certificate that was issued by Missouri, and usable in the payment of taxes, was thus ruled to be an unconstitutional bill of credit.
http://www.usconstitution.net/glossary.html
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