Yes, it sounds ridiculous, but it’s true. California Controller John Chiang announced that the State of California will be suspending the payment of welfare checks, student grants and, get this, tax refunds.
The liberal tax and spend policies in the world’s eigth largest economy are finally hitting the fan. California has a $42 Billion dollar budget deficit, and as a result, Chiang is now forced to suspend $3.7 billion in outgoing payments. Over 50% of these payments are tax refunds due to citizens.
State officials have already designed an IOU template (audio). From what I understand, the way this is supposed to work is that California sends you an IOU, you take it to the bank, and the bank takes the deposit. Or perhaps you have to hold the IOU until California can pay you, at which point you earn 5% interest. It almost sounds like a better deal then holding US Treasuries, unless of course you have to use your welfare check to pay the rent. Perhaps landlord of welfare recipients will take IOU’s as well?
We should start seeing similar ideas coming from more states in the next year, as nearly all 50 states currently have budget deficits.
IfÂ I operated my business the way state legislatures operate the government, I’d be in prison.
If I operated my personal finances the way state legislatures operate their governments, I’d be homeless.