From 1936 to 1945, Alberta was in default on its provincial debt, managing only partial coupon payments and no principal repayments.
Out of cash and out of options, Alberta did what every bankrupt EU country wishes it could do again – Alberta started printing its own currency. Of course Alberta didn’t call it that, this fiat currency came with the nifty moniker of Alberta Prosperity Certificates (“APCs”):
Name notwithstanding, fiat currency was effectively what it was. The APCs were introduced in August 1936 and were used to pay government bills. Most interesting, under the plan, the recipient of the APC was required to purchase a stamp equal to 1% of the face value each week. The stamps had to be placed on the back of the APCs for them to be valid. For bearers of the APC, the result was that they experienced a 50% loss of purchasing power during the course of a year if they failed to spend them. Voila, negative nominal interest rates! Talk about increasing the fabled “velocity of money”. Surely a scheme like this is the consummation of the secret dreams of every consumption obsessed, Keynesian central banker on the planet. Let’s not tell them shall we?