Red Blooded American Boy

Archive for the ‘IOU’ Category

Some banks in California are starting to see the trees in the forest.  In fact, the forest is now almost a field since the trees have been cut down to print more American dollars.  Lucky for the liberal test-tube state, scrap wood on the ground can be smashed into paper and turned into something called an IOU.  Banks in California have been accepting this form of payment, but are now starting to wonder if they will get their money. 

You don’t remember what an IOU is?  It is one of those “Paper Fortune Teller” things that you used to make in school.  No, it was not cool.  You were an annoying little snot with that thing.  Anyway, financially stable banks such as Bank of America, Citigroup, Wells Fargo and JP Morgan Chase must be tired of playing with them, too.

To make the paper toys more creditworthy, the SEC has declared that this IOU money be treated as securities.  According to the SEC, this will prevent fraudulent exchanges and hopefully offer some aura of security.  Not a chance.  The current dollar is based on a fractional reserve system that is sort of built upon a stash of gold in Fort Knox.  What part of the fraction will the IOU belong?

More than likely it will be the something divided into zero.  If you do not work for the SEC then you should know what the result of that math would be.