California on the Way to Creating its Own Currency

California is probably going to issue registered warrants (i.e. IOUs) again this summer. However, this time the state may be required to accept them as payment too:

California lawmakers passed a bill to let recipients use state IOUs to pay fees and taxes owed to the government in Sacramento, if the warrants are issued.

The bill, from Assemblyman Joel Anderson, a San Diego Republican, passed the Senate unanimously. It requires all state agencies to accept registered warrants issued to pay for goods and services. The Assembly unanimously approved the measure in September. The Senate vote puts the legislation before Governor Arnold Schwarzenegger, whose budget aides oppose it.

Currency substitutes are another Great Depression parallel. From a website called depressionscrip:

History is full of examples of successful local initiatives aimed at providing exchange media, but the Great Depression of the 1930's saw this done on an unprecedented scale. There were literally hundreds of scrip issues that were put into circulation by a variety of agencies, including state governments, municipalities, school districts, clearing house associations, manufacturers, merchants, chambers of commerce, business associations, local relief committees, cooperatives, and even individuals. These issues went by different names, depending on who issued them and the circumstances of their issuance. Common scrip types were certificates of indebtedness, tax anticipation notes, payroll warrants, trade scrip, clearing house certificates, credit vouchers, moratorium certificates, and merchandise bonds.

Here's an interesting proposition from that same site:

I think the key to the failure of Caslow's scrip might be found in his refusal to accept it in payment for his own services (advertising). One of the fundamental rules of currency issuance is that the issuer be willing to redeem his/her own currency at face value (par), and that s/he be able to generate enough value in goods and/or services to redeem the issue at the rate of about 1% per day, which is equivalent to being able to redeem the entire issue in about 3 months time. More will be said about this question later on.