The Return of Wile E. Coyote
Walter Russell Mead links to a New York Times article saying that the local government in the Empire State is basically broke and getting deeper in the hole by the minute. Mead observes that while the NYT reports the dire facts it averts its eyes from the conclusion that what can’t go on won’t, and preferred to allude to an expected financial counter-attack by Steiner … er forces from Albany to save the day.
Gov. Andrew M. Cuomo is suggesting new strategies, proposing in his budget to allow municipalities like Albany to receive millions of dollars more in state aid over the next fiscal year in exchange for receiving less in the future. The governor is also proposing that the state assume a greater share of Medicaid cost increases borne by local governments, and that state and local governments be allowed to reduce the pension benefits of future public workers.
But as Richard Brodsky, a former assemblyman who is advising Yonkers says, “these municipalities will not recover when the economy recovers”. That’s how deep the hole they are in is.
Mead claims it is yet another example of the failing Blue Model, which is broken so badly even its proponents know it can’t keep going. But without another horse to ride they’ll keep going on the same faltering nag until it dies under them. Then they’ll eat it.
Mead said, “while the Times carefully avoided drawing any indelicate conclusions that might upset its liberal readership, the review of government finance at the state and local level reveals an appalling picture of blue model thinking at its worst. New York state and local politicians, egged on by public sector unions, have dug the state into such a deep hole that it will be hard to emerge.” The ratings agencies are downgrading the municipal bonds, raising the prospect of Greece in New York State.
And the unions — along with the pro-bankruptcy wing of the Democratic Party — want to keep digging.
The reality is that from Long Island to Buffalo, New York cities and counties face severe and growing fiscal woes. The chief drivers of the crisis: blue sweetheart programs that are out of control: state pensions, Medicaid, and retiree health costs.
Example: New York City’s annual out of pocket pension costs have ballooned from $1.5 billion a year ten years ago to $8 billion today. This is the cost of the lies New York politicians have told their sheep like constituents for many years, promising fat pensions to workers while refusing to raise taxes to put enough money away for when the bills come due. According to the eye popping numbers in the Times, 3 percent of New York city property tax revenues went to pay pension costs in 2001; 35 percent of those revenues will go to pensions by 2015.
Just how entrenched the public sector unions are was illustrated by a Wall Street Journal article three days ago. It dealt with another flagship of the Blue Model, Detroit. The article said “with Detroit projected to run out of money in May, Mayor Dave Bing is calling on Michigan’s governor to give the city a loan rather than appoint a financial overseer who would have broad power to cut costs and break union contracts.”
The governor is under political pressure from various groups, including unions and Democratic lawmakers at the state and federal level, not to appoint a manager for Detroit.
As ever, racism was invoked. “Opponents of putting Detroit under the control of an emergency manager say it would disenfranchise the city’s mostly minority population.”
But that still doesn’t answer the question of what happens when the money runs out and Detroit burns through the loan that it can never pay back. Mead says the well is dry. “But the feds can’t — and won’t — pay up.” They’re in a bigger hole themselves. But so what: the impossibility of conjuring money out of thin air is not nearly so infeasible as the one thing that definitely won’t happen, at least voluntarily — ever — which is that the Blue Model should give up its gains.
There is among some people the actual belief that even when the system actually runs out of money it can keep going on forever — like Wile E. Coyote after running past the edge of a cliff — for so long as nobody looks down. The physical implementation of the Wile E. Coyote strategy consists in simply printing more money and doing whatever is necessary to keep the music playing.
It’s sometimes been argued that if reality really had any actual existence then Europe would be to hell and gone by now, and probably California too. It hasn’t happened so maybe reality doesn’t exist. It’s worth a hope anyhow. “There’s a lot of ruin in a nation,” Adam Smith once said. Maybe, it is thought, an inexhaustible amount of ruin.
Detroit’s loan application reminds me of an acquaintance who borrowed some money from me years ago. Months after he promised to pay, I casually reminded him of the debt to which he cheerfully replied, “if I had any money to pay you would I have borrowed in the first place?” You had to admit he had a point. Detroit should certainly be lent the money without any expectation of repayment. After all, if it had any money to pay back its debts, would they be borrowing any to begin with?
How to Publish on Amazon’s Kindle for $2.99
The Three Conjectures at Amazon Kindle for $1.99
Storming the Castle at Amazon Kindle for $3.99
No Way In at Amazon Kindle $3.99, print $9.99
” … the city’s mostly-minority population.”
Lemme see: ”mostly-minority” means they’re the majority, right? And that means the whites (if there are any) are the mostly-majority minority?
Detroit reminds of the old joke about jumping off a building: it ain’t the fall that hurts, it’s that sudden stop at the bottom.
Rule #1 in lending. Loan what you can afford to write off. Always assume that the person will not pay it back. When you do get it back, treat it as a pleasant surprise.
There are any number of sellers of fake gold jewelry on Manila sidewalks. One customer, suspicious of the provenance of the “gold jewelry” brought along some vinegar because it was known to turn the fake plating black. When he immersed the “gold” in the vinegar to test it, the jewelry turned black. The customer gave an accusing look at the vendor, who promptly retorted, “that only proves your vinegar is fake.”
When Detroit burns through its loan, no doubt it will be because the loan wasn’t big enough. It sounds funny, I know. It is even funnier when you realize that if you are a taxpayer, then you are going to pay for it.
This begs the question, as the blue model fails, how do we protect ourselves from being collateral damage?
One is try to be in a red state. But how to protect from the Federal intervention? After all, Detroit will get its money, just like the unions that ruined Detroit got their money…from us, through the gov’t courtesy of the being held at gunpoint by the IRS. Michigan may not give them the money, but the Feds will either give Michigan the money to give Detroit, or give it directly. It may not be called bailing out blue Detroit, but it will happen. It will stop eventually, but they will kick the can a few more times.
We are all going to pay, whether in taxes or in money whose value is inflated away. We will all be hurt…how to minimize the extent to which we are forced to pay for that which we oppose?
Don’t Worry, be Happy…. the spiral is speeding up, soon the parts will begin to fly off the core! Sad for all those folks over sea’s they may never see their homeland again.
Detroit is a Model City. The Democrats had the model city program in the 1960s. President Obama has wisely taken the model to the national level. You see, the problem is that people moved out of Detroit instead of staying and doing what is right and making the model work. If the model is national then people won’t be able to move to escape their duty to the new model nation. The problem is not with the model, it is with the people. No, not those people. The other ones.
This morning I glanced at an article about the five most prosperous counties in the US. Four of them were near DC. DC is the true model. If only we could find people who would send trillions of dollars to every city in America and people could be paid well to attend meetings to discuss all the good they could do with that money. Then every American city would only have the problems D.C. has: illiteracy, murder, and too many expensive restaurants.
There is a solution. Just give the states the same magic power the Fed has. Give each state a printing press and let them create money. If Turbo Tim and The Bernanke can do it then why not Cuomo? We can pay the government pensions in NY Imperials/Attitudes or MI Rusties or IL Grafts or CA Moonbeams.
Suppose we try to defend the Wile E. Coyote model on the theory that there really is a lot more wealth and resilience in the system than the numbers would suggest. Someone said to me the other night, “Greece is always on the point of failing, but it never actually fails. It just gets a little more miserable.” Since California starts off a whole lot richer than Greece it may take decades of ruin before Californians finally get the idea that something is wrong.
There have been many countries in history which have sped past crush depth and astonished all observers by returning to the surface. China was once a byword for hopelessness and poverty. Within a decade and a half of Weimar, Germany was the master of Europe. Britain has been declining for ages and yet is still relatively free from poverty and some might say, richer than ever in material terms.
So what’s to prevent Barack Obama and the Blue Model from running through the air to 2012 and beyond provided the media doesn’t look down? There’s a lot of ruin in America, especially if the media keeps feeding the population opiates. There’s no inherent reason bankruptcy, inflation, high gas prices, unemployment etc won’t keep Barack from being re-elected. Not with all those unions and interests at his back seeking to protect their gains.
One can laugh at Detroit and the Blue Model, but they have lost none of their power to coerce payments from others to sustain themselves. Need thousands of dollars in contraception while in law school sure. It’s a right. Convenient parking? It’s a right. A college degree? It’s a right. Hell they’re all rights. The only right you don’t have is the right to to look down.
So Wile E. Coyote can keep running a long, long time. Maybe not forever, but perhaps for decades more. It sounds impossible, but is it?
BFP #7
That was a BLAST from the future.
Funny
I have an idea. Lets tax the estates of the mostly 1%er politicians who designed and implemented these unsustainable social policies. Tax ‘em at a marginal rate of say, 95%. That should bring in some cash and stave off bankruptcy a little longer. What could liberals possibly object to? The tax is very “progressive” both ideologically and fiscally, teaching nasty rich people a lesson. I know a lot of these guys are probably dead, but taxing their estates is virtually the same principal as the goofy “reparations for slavery” idea that liberals bring up every couple years, so what’s not to like. The voting records are all available at least back into the 30′s when all this crap started, so we can see who voted for what, and if it was some unsustainable union scam or divisive racial spoils or do-nothing government program, add its legislative proponents estate to the tax rolls. Ought to have bipartisan support, no?
And the unions — along with the pro-bankruptcy wing of the Democratic Party — want to keep digging.
+1 for good writing.
Of course, and sadly, that is the history of unions, they seldom work for the common good until it is already (way, (way, …)) too late. One may speculate as to why this is, or even whether any alternative makes sense.
Is New York in worse shape than California? Maybe they’d better elect Jeremy Lin treasurer or governor or something. Here in California, well, eventually the quake will hit and the ocean will wash away our sins.
–
So Wile E. Coyote can keep running a long, long time. Maybe not forever, but perhaps for decades more. It sounds impossible, but is it?
Four years and counting on Bernankecare.
–
rs @ 71 (previous thread): One of the fascinating things about the history of the financial crisis is that it is pretty clear that Paulson did not step in and save Lehman because he just didn’t like the guys running the place.
True, but also there was pressure to *let* someone fail, as many people believed that was the right thing to do. So, Lehman volunteered, sort of. After the fact most of Wall Street bemoaned the event and it has yet to be repeated. I have a friend who lost some modest money in the event, on what he had thought a super-safe investment. Yet, it is very hard (for me) to make a final judgement on the matter.
Wimpy – I’ll gladly pay you Tuesday for a hamburger today! http://tinyurl.com/6wbx5q2
Popeye, My Hero!!!
http://tinyurl.com/7wtppn5
@Wretchard #8,
You beat me to it. It is indeed possible for the blue model to just keep on chugging. With a reasonably well-managed fiat currency, the Fed can continue creating money to cover the deficit, and the only outward sign will be a certain amount of commodity inflation and capital flight. However, the capital flight is kept under control by the new IRS regulations penalizing foreign investment by U.S. citizens, so capital will only dribble out for a good long while. What will happen is that the government will become the fount of all money, just like the third-world countries that suffer from the “oil curse”. The powers that be will have found the simple solution to maintaining power–just print money and make sure their supporters are first in line when they add another zero to the bills.
That’s why this fight has to be fought on a moral plane; there is every reason to believe that there will be no catastrophe until well after the rot has gone beyond the point of no return. The clock will just run down slowly–a little more unemployment, a little lower standard of living, a little less freedom–until it’s too late.
Tax revolt is the only way it stops. The Tea Party is more apt than first thought by many. I can imagine the Left’s reaction when we finally refuse to pay anymore as “Geez, what took them so long?”
There may be another explanation along the lines of the old Jewish joke.
A Jewish husband and his wife are in bed, when the husband gets up and starts pacing around, fretting mightily. After several minutes of this his wife asks him what’s wrong.
“What’s wrong?” he says, “I owe Yankel $50,000 and I’m suppose to pay him tomorrow!”
“Do you have the money?” she asks.
“No!”
“Then come to bed. Yankel is the one who has to worry now.”
I’m sure we can purchase some device from the Acme Co. that will solve our problems. You know, like a strap-on rocket or something.
In economic as in military matters, Wretchard, to quote an old phrase, “the enemy gets a vote, too.” Yes, I agree Obama and the unions and state and federal bureaucrats can keep right on taxing, spending, and electing (bribing) their way past the next election – but that will not defuse the financial time bomb ticking away. Right now, according to todays Wall St. Journal, the fed is desperately trying to keep interest rates low, and they are suceeding – so far.
This makes interest on federal debt low, which in turn makes it that much cheaper to borrow and spend. This cannot and will not last. Someday, soon, people will start demading more to loan the USA money, and if the interest rate at which the government borrows goes from todays 2.5% or so back to the more historically accurate 5 or 6%, the amount of interest owed on the federal debt will increase – drastically.
Of course, the natural democratic inclination will be to raise taxes drastically, via VAT and others, but that will simply soak up income and strangle whatever job growth there is. IF one also adds to that pressure from foreign borrowers (cough, China, cough); well, the temptation to simply inflate the debt away will no doubt look more and more appealing.
High taxes, extreme regulation that strangles jobs and economic growth, endless debt, inflation, losing wars, terrorism, (and as soon as Iran has their own nuclear umbrella, lots of terrorism directed at the USA, on the model of the Mumbay attacks in India), health care “reform ” that will inevitably result in rationing and denial of care – at some point, SOMETHING is going to be the straw that breaks the camels back. What follows will not be pretty. It might result in an American Bonaparte – and that is by no means a worst case.
11. Josh
One may speculate as to why this is, or even whether any alternative makes sense.
No need to speculate, the whole premise behind unions is extortion. Give us what we want or we will destroy what you have built. When you start with lawless behavior, what else would you expect to happen?
16. Roughcoat “I’m sure we can purchase some device from the Acme Co. that will solve our problems. You know, like a strap-on rocket or something.”
Sorry, Acme was bought out by Solyndra. Explains a lot doesn’t it?
acme probably has a product that can “fix” this
I keep saying this: Starve the Beast. Government that keeps receiving money will keep spending it. Don’t pay your taxes. 5,000 people not paying taxes have a problem with the IRS.
The IRS has a problem with 5,000,000 people not paying taxes.
The fact is that there are legions of young Ivy League graduates who could become a despotic dictator of the
United States. We are now on the edge of becoming a totalitarian state.
National and world events are trending in this direction.
A second term for BHO, an Ivy League graduate, could make it a reality.
Hyperinflation is already here. You all just don’t know it, yet. Steel 1970 12 cents a pound. Steel 1975 23 cents a pound. Steel 2002 16 cents a pound. Steel 2006 23 cents, 2007 50 cents. Steel today 70 cents a pound and climbing. It ain’t just gas and food. I’ve had to almost double my prices, and keep getting more work. What’s wrong with this picture?
Is all this stuff going up at the same time indicative of something? Yes. Bernanke printed so much money, he flooded the markets. The Dow should be 8,000, not 12. Wall Street scum can’t spend it fast enough. New yachts, all around!
If I could get someone to let me borrow any amount of money I want at no interest, why would I not? Any rube can make a percent or two, relatively safely. If I could just get a billion or two to invest, I’d be in fat city.
Besides, now we have “too big to fail”, so there’s only risk if you are stupid enough to use your own money. Given Jon Corzine, there’s not too much risk if you lose other people’s either.
Enjoy that trip to the bottom.
It is telling that while Bernake & company say they aren’t printing money, more money from the Fed keeps getting poured into the system. It is almost as if the idea of printing money is starting to get toxic, hmmmmmm? The US has already had one downgrade from S&P one wonders if they are starting to think about the consequences of another one before November. Tis interesting to watch the dance between gold and silver prices, oil prices, and the value of a dollar. Charts are often like bibles, you can read what you want to read into them, but watching the pricing on Gold Exchange Traded Funds give one the idea that someone is trying to repress the price of gold but it keeps creeping up on them.
I go with the idea when the system fails it will go suddenly and “unexpectedly”.
22. sirWalterRalegh
Not unless he/she has the support of the military. At least until the 2nd Ammendment is negated and the resulting civil war runs its course.
4 and out.
Want to save Detroit? Two words. Paul Krugman( that guy knows everything. )
#21 Stumbley. Reagan missed a nuance. Before you can starve the beast, you must first take away the beast’s credit card.
There is among some people the actual belief that even when the system actually runs out of money it can keep going on forever
Precisely the belief of the EU lordships. As long as the ECB can still borrow, why yes, all the PIIGS need are some new bailouts with stern warnings. Just don’t try to borrow from the folks who, with languid inattention from the media, were forced into the 74% ‘haircut’ on the monies that Greece so fervently promised to repay, not so long ago. So crank up the presses! Another round of Euros on the house!
Many good comments here.
“But without another horse to ride they’ll keep going on the same faltering nag until it dies under them. Then they’ll eat it.”
Wrong metaphor. Think “Animal Farm”. The hogs kept breeding, and they retired the horse, by sending him off to the glue factory. They got every last thing out of him they could. Probably stole his fillings, first.
When they run out of other options, they will steal the savings accounts. They’ll call it “guaranteeing safe retirement accounts”. “Can’t trust it to a volatile market.” That process will start when they try to “save” SS/Medicare. They will find all kinds of excuses to steal assets, just like they did with drug-law seizures. They will criminalize all kinds of things, then your car and house will be forfeit, as will your retirement money.
They will probably do it with ObamaCare. “You failed to buy adequate insurance.” Or via the EPA. Like with the folks who are being fined $37,500/day for building their house on a wetlands that wasn’t a wetlands at all. They will use every way they can think of. It all adds up to big money for them.
“But how to protect from the Federal intervention?”
It’s the escape clause in the Constitution, states convention. When 3/4th of the rest of the states decide they’re not going to be the field workers for the 1/4 of the big states living the Plantation life, it’ll stop. The whole thing was a compromise to begin with to prevent such a situation. It’ll end the same way.
yes, but mostly somewhat changed. The people at the helm when the ship surfaced were usually not the same folks who had called out “DIVE! DIVE!” to begin the descent. When the rivits started popping, the crew got nervous enough to mutiny.
This is the key to how they’ve defied gravity this long. They’ve been mortgaging the future. Thei’re doing it faster and faster now, selling everything unborn generations haven’t bothered to nail down just to keep up their current lifestyle. They assume, maybe just hope, that they can keep the shuffle going long enough for it to be someone else’s problem when it all goes splat.
The problem for them is, they can mortgage whatever they want, but someone else still has to sign the other side of the document. Someone has to give them a hamburger today in exchange for next Tuesday’s promise. And the hamburger makers aren’t just running out of patience, they’re running out of burgers. The weakness of the Blue Model isn’t the transfers, it’s the lack of productivity. If we’re productive enough, we can support a relatively large layout class. We did for quite a while. But the moral hazard gets you in the end. It’s not just that selected Peter runs out of money for you to rob to pay for collective Paul, it’s that the Peters eventually give up and become Pauls. Once Paul not only lives at Peter’s expense, but lives better than Peter, unless you can limit the number of Pauls, the jig is mammary-glands-to-the-sky. Then you have plenty of money but nothing your money can buy, and the Gods of the Copybook headings say if you dont’ work, you die.
In 1962 I went with the curator of herpetology from the Detroit Zoo to west
Texas to collect rare ratsnakes. On the way through Poplarville, Mississippi, he eloquently denounced the not-to-distantly-past lynching of Mack Parker, rapist. Decades later he struggled as Director of the Detroit Aquarium to keep the facility open despite the massive indifference of Detroit’s minority majority. It closed in 2005. He learned that ethnic groups are not interchangeable after all.
It might go on another year or two, at the national level, but not indefinitely. The debt crises in Europe have stimulated a flight-to-safety rush into U.S. treasuries, but if Europe gets things under control even temporarily the safe haven money will leave to find a safer haven and interest rates will return to market, say 5%, or higher. At 5% we will be paying $1T per year in interest. Continuing to print money at that point would generate ruinous inflation.
If Obama is re-elected I hate to think what would happen in the scenario above. Martial law? Suppression of dissent? Suspension of elections? I fear the republic may not survive a second term.
With the amount of money printing that we are doing in order to keep running in mid-air, isn’t it obvious that all Federal taxes are purely punitive now? They certainly aren’t necessary under Bernankecare, as Josh calls it.
(A small side note: whomever booked the Progressive Champion (plow down the 99% in my Mercedes) Alan Grayson and America’s Unions ads for PJMedia is a funny, funny guy)
I’ve been listening to the Mark Levin show on WABC radio in New York. Several times tonight I’ve heard a commercial for a public sector union about proposed changes in their pension plan. It features a very belligerent-sounding voice saying things like, “We’re going to fight for what’s ours!” and “We won’t let the governor, the legislature, the mayor, or anyone else get away with this!”
They want to hold off collapse for just another year, figuring that when next year comes, they may hold it off another year. Meanwhile, they can stash a little more getaway money somewhere.
Besides, if they buy themselves yet another year, maybe the horse will learn to sing
Blast #7:
During the Great Depression cities did just that – issued their own script in lieu of Federally printed cash. My grandfather, a police officer in 1930′s Columbia, SC, was paid that way for a time
I think it’s generally agree that we’ve been doing a Wile E. Coyote since March 2009 by propping up a bankrupt system with freshly printed fiat money. The stock market has done well by almost doubling since March 2009. I live in the San Francisco Bay Area. Two of the big companies here are Apple and Google. Money from Apple and Google drives most of the local economy. Supposedly Apple has more cash on hand than the entire semiconductor industry and most of retail. Apple has gone up by a factor of five since March 2009. How much of Apple’s cash was printed by the Federal Reserve and handed to Apple via the PPT? If the PPT suddenly wanted all of their money back, would Apple drop back to 1/5 of its current value? Can Wile E. Coyote stay in the air forever because the Fed can print infinite money? When are people going to realize that the US dollar is just so much linen and green ink with nothing backing it up?
Gov. Andrew M. Cuomo is suggesting new strategies, proposing in his budget to allow municipalities like Albany to receive millions of dollars more in state aid over the next fiscal year in exchange for receiving less in the future.
Let’s see, the federal government funds state governments and state governments fund local governments. Why are the spenders so far removed from the voters? In a perfect world, the money flow would go the other way.
Silly people.
Obama wants this crisis. The people around him, chiefly Peter Orszag and company, believe that the U.S. is undertaxed.
They believe that by instituting a Value Added Tax, in addition to the Income Tax and by raising Capital Gains, all will be well with the Blue Model.
The problem of a Wile E. Coyote system is that when it finally goes, it doesn’t go gradually. It shatters like glass.
Think communism, 1989. Or Monarchy, 1914. In the future, students of history will add, “and like the United States, 20**.”
We’ll continually look pretty good – right up until the day that we don’t. And then it will be over.
It is still possible to conjure goodies out of thin air. The US Federal government is still able to borrow to pay for pensions, medical care, wars, and all the other goodies it distributes. The population doesn’t pay for what it gets.
As long as they can borrow, it will continue. Those fools in Washington won’t give up their power of the purse unless it is cut out of their hands, which won’t happen, so they won’t lose it.
What will change the situation, and this is not too far off, is when people have to start paying. Taxes are going to go up in return services are going to go down.
If the Republicans are smart, which is in doubt, they will campaign on a simple truth. The Democrats want you to pay more for less. We want you to pay the same or less for less. You will get less no matter what.
It is ending in Europe. Not with a bang, but a splutter and fizz, where more and more people will find it advantageous to not participate, either give or take in the european project. The only control the Eurocrats have is the power to hand out candy. When there is less candy to give out, they will have no control. Wrong word, more like relevance. They may exist in theory, be discussed in august groups as the center of power, be quoted by the media. But irrelevant in more and more people’s lives.
Same will happen, already is happening in the US. It is already far better to work underground, at least partially. Get the goodies, and keep what you make for yourself. You become one of the group no longer looking for employment, officially.
These fools still believe that central control can work. It never has, never will, but the illusion of control and the self blinding to evidence to the contrary will maintain the fiction for a long time.
It isn’t that it stops. It just becomes irrelevant.
I agree with Section 9.
The Bernank, come hell or high water , will print to get us through this year and cover, legal or not, the deficits of the Californias, New Yorks, Illnois and Detroits of our world. The Oligarchy has already won. Doesn’t matter whether its Buraq or Willard, next year the President, whomever that might be, will declare a fiscal emergency and demand new taxes like a VAT. THe Rino’s and Progressives in Congress will happily oblige. Problem solved for a few more years till we really run out of money and are totally and completely screwed.
Both Obama and Willard in their own ways have said they want to raise taxes bigtime and are not going to cut spending.
Kick the can. Kick the can. Kick the can. Till we can’t no mo.
Regarding state currency (7, 37) — Someone in Marin County, California has been creating and circulating three-dollar coins. I picked one up last year because they are kind of pretty. There was a sign at the counter equating the use of these to buying local. I don’t actually get the point of this. How would it help to spend these coins instead of real money?
#44 Sarah Rolph
I suspect that the reasons are:
1.) You buy the coin from a local merchant, giving him the cost of the coin.
2.) It being a local currency, it has to be used locally at local merchants.
3.) The supply of local $3 coins is a miniscule fraction of the purchases in the local area. Therefore, all things bought over the number of $3 coins used will be paid to local merchants in either Federal Reserve Notes or demand deposits denominated in US dollars. As to the question of whether the Federal Reserve Notes/demand deposits are “real money”; that is being settled in the markets as we write. The government practice of inflating the currency by creating dollars out of thin air is reducing the value of the dollar and that is something that cannot continue indefinitely.
I personally know of areas where barter and a black market [in legal substances and services] are replacing currency transactions. The increased economic efficiency to both parties in the transaction by not supporting the tax collector or the government bureaucracy outweighs the advantages of currency exchanges.
And just today I found out that there is a black market using TIDE detergent as a medium of exchange back east. If they can use soap [makes sense in a way, it is expensive, in demand, and widely used] as a “currency”, why shouldn’t merchants mint $3 coins?
Subotai Bahadur
“Opponents of putting Detroit under the control of an emergency manager say it would disenfranchise the city’s mostly minority population.”
Hmmmmmm…… When MOST of the population is a minority, then isn’t the minority the MAJORITY???
Just sayin’ ………………
44. Sarah Rolph
It is unconstitutional for anyone other than the Federal Government to mint denominated coins.
To do so is to incur the wrath of the Secret Service.
The penalty is a 40-year slide in club fed.
———-
Wooden-nickels were tokens created during the 1837 Depression to skirt the Constitutional prohibition: they could ONLY be redeemed at the SAME merchant that issued them.
Further, they were not specie.
They also couldn’t fool even a blind man into thinking they were the real deal.
———-
Anything like reeded edges and specific weight of metals will trigger the cops.
Canadian Maple Leafs and the like trade as foreign coinage.
Certain mints crank out collectables. However, these are so contrived as to NEVER TRADE at anything like face value — from day one. That’s their ‘out.’
The gold plated buffalo coin is a perfect example of such a ‘collectable.’ No one in their right mind would take it in trade for anything. Branded nicknacks would make more sense.
We talk of Greece and Spain going bankrupt, that the Euro must be supported by Germany and France so that United Europe can proceed. But the people of Germany and France are saying enough is enough. Why should they pay for Greece’s government worker benefits. But look at CA, IL, and NY, all having more debt in pensions than any tax base can support, and not a whimper from the MSM or anyone. That critical services such as fire, police, EMTs, and even nurses (state paid) will be terminated or reduced when the bills must be paid. No one comes to work long without a paycheck, they get hungry and if the state can’t pay, they will go elsewhere. The politicians, being so, got in bed with the unions to get union $upport to be re-elected. Now those chickens (pensions) are coming home to roost, finding no food, no hen house, but only only a cold gray sky (reality) with hungry foxes and coyotes (the people). Union workers need to wake up, voters need to wake up, and politicians must make hard choices. I am afraid that many will need to die for lack of these essential services before such an awaking occurs. Off to buy a gun, stock pile food and ammunition, re-enforce my doors, and re-read my bible. Love ya, SgtPete
#21: “The IRS has a problem with 5,000,000 people not paying taxes.”
You’re too optimistic. The IRS will select some number from the 5,000,000 and prosecute them mercilessly, the matter to frighten the rest into line.
#42: “If the Republicans are smart, which is in doubt, they will campaign on a simple truth. The Democrats want you to pay more for less. We want you to pay the same or less for less. You will get less no matter what.”
Right. Think Mondale 1984 and how his message about raising taxes to pay for goodies got him elected. Oh-wait.
Telling the good citizens of this country the harsh truth will get the Republicans returned to the country club.
#2