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Thread: Can individual states print their own money? State deficits?

  1. #1

    Default Can individual states print their own money? State deficits?

    http://www.statesman.com/news/texas-...et-522870.html

    I was reading about the Texas budget deficit problem and it made me curious...can individual states print their own money? How do they spend more than what they take in taxes?

    On the federal level, I always thought the deficit was a figure of how much worthless paper currency is polluting the system...but on a state level they have to balance things properly because they can't print willy nilly...or can they?



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  3. #2

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    states and local gov'ts can and do issue bonds to finance their debts.

  4. #3

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    but private buyers have to buy the bonds, so its not like printing your own money.
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  5. #4

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    Quote Originally Posted by squarepusher View Post
    but private buyers have to buy the bonds, so its not like printing your own money.
    didnt cali send out IOUs? that isn't even a bond.

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  6. #5

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    Quote Originally Posted by torchbearer View Post
    didnt cali send out IOUs? that isn't even a bond.
    i would hardly call it printing money like what the federal government does.
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  7. #6

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    Quote Originally Posted by squarepusher View Post
    i would hardly call it printing money like what the federal government does.
    aren't FRNs IOUs also?

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  8. #7

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    lets compare.

    California issued millions of dollars of IOU's, for a 3-6 month period, and paid them all back last September or so. (net balance $0)

    The federal government/reserve printed somewhere around $2-3 trillion dollars, which remain in the system forever in the past year

    Unless California takes it to extremes, like issues mandatory 10 year IOU's, printing the way out of a problem will not be a states answer similar to how the fed's work (edit: which is what will cause the downfall of states power and states rights in comparison to the federal govt')
    We'll know our disinformation program is complete when everything the American public believes is false. -- William Casey, CIA Director

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  9. #8

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    Quote Originally Posted by squarepusher View Post
    The federal government/reserve printed somewhere around $2-3 trillion dollars, which remain in the system forever in the past year
    Incorrect. Net reserve creation has been about $1 trillion. If you include the deposits the Treasury has been making recently with the Fed (which drains reserves), you are talking about a little under $1.3 trillion.

    Fed assets do not remain in the system forever. As the assets mature, the corresponding reserves are extinguished. The Fed can then opt to purchase more assets. Traditionally, any maturing Treasury assets the Fed wishes to replace are replaced at Treasury auction (listed under the SOMA portfolio category in the auction report).

    Brian

  10. #9

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    Quote Originally Posted by squarepusher View Post
    but private buyers have to buy the bonds, so its not like printing your own money.
    no, actually many state and local gov't entities buy bonds as well. taken to a further level, many gov't run retirement systems buy state and local gov't bonds. it's really kind of incestuous on many levels.

  11. #10

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    Quote Originally Posted by torchbearer View Post
    aren't FRNs IOUs also?
    Yes, they are.

    California IOU's were unconstitutional.

  12. #11
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    Quote Originally Posted by Paladin69 View Post
    http://www.statesman.com/news/texas-...et-522870.html

    I was reading about the Texas budget deficit problem and it made me curious...can individual states print their own money? How do they spend more than what they take in taxes?

    On the federal level, I always thought the deficit was a figure of how much worthless paper currency is polluting the system...but on a state level they have to balance things properly because they can't print willy nilly...or can they?
    I think it depends on who they are paying. Im a little lazy to go look it up but Im pretty sure the Constitution says something like "no payment shall be made except in gold or silver", but I dont remember who it applies to, who has to pay who, or how it applies...
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  13. #12

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    Quote Originally Posted by DamianTV View Post
    I think it depends on who they are paying. Im a little lazy to go look it up but Im pretty sure the Constitution says something like "no payment shall be made except in gold or silver", but I dont remember who it applies to, who has to pay who, or how it applies...
    It says that no State shall pay in anything except gold and silver, but it is implied that the Federal goverment has no right except the ones delegated by the states. Therefore if the states can not do something, the Federal goverment can not do it neither. That is the argument that is used against FRN.





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