Will California Find the Money It Can Only Borrow If Congress Guarantees Repayment?

["John Gelles" <indexed-savings@xxxxxxxxxxxxx>]

  Will California Find the Money It Can Only Borrow
              If Congress Guarantees Repayment?

Some say California must raise taxes. Some say it must cut
spending. Some say it must borrow -- but its credit is none
too good.

Maybe higher taxes will drive more business out of the state --
making things worse than if taxes are left alone.

Spending cuts may not be possible. Why not get federal
loan guarantees?  Why not have the Federal Reserve buy
California bonds the way it bought federal treasury bonds
in the 1940's -- charging California no interest the way it
charged Uncle Sam no interest at that time?

Only Congress can answer these questions.  Economists
can point out that such a bail out of California may
encourage the fifty states to be more corrupt than they
are. On the other hand, failure to rescue California could
leave America unable to defend democracy at home and
abroad.

We have seen communist Russia unable to defend
socialism -- and suffering a great deal of pain. Perhaps
they are developing a low tax low interest capitalism that
we will one day follow. But perhaps not.

In all events, it would seem that money ought to be
managed for its effect on price not created in the image
of deposits and loans. Sovereign spending of money
into circulation seems to be a remedy whose time is now.

If we don't do it we have a race to the bottom to lose,
a clash of civilizations to endure, and an end of history
that resemble the end of hope.

John Gelles