The Trump Presidency Message Board

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Politics : The Trump Presidency

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To: neolib who wrote (69521)	5/2/2018 7:37:11 PM
From: TimF	Read Replies (1) of 353904

No magic comes in. Its just that the treasuries are an equal and opposite asset and liability. No net asset. That's not nutty that's just looking at the overall picture from 10,000 feet rather than down in the weeds. 1) SS consists of mandated retirement savings accounts (IRA's) that can be self-directed. Law simply mandates that the % be based on the same rate as current employment tax. You can invest with any institution, and retain control. BUT you can't purchase Treasuries or any government debt! Here you don't have any net asset for the government either. Instead of having an equal and opposite asset and liability in different funds, you have a private asset that's a liability to a private entity or a government entity other than the federal government. 2) Same as 1) but allowed to buy Treasuries. The money that does get invested in treasuries is a liability to the government they have to pay it back (they can roll over what they borrow but it would probably be from someone else not you, and even if you do buy government debt for the exact same amount when you treasury matures its a new loan from you to the government the old loan was paid) 3) SS consists of mandated employment withholdings that go to special SS accounts offered only by financial firms that choose to participate and are somehow "certified". Not self-directed. The financial institutions adhere to some federal policies on investment options and risk, and get an administrative fee. Cannot invest in Treasuries or any government debt. Private asset and private liability again (again with the exception that some of the money might go to non-federal government debt) ... In all of the cases if your not loaning to the feds you don't have a fed asset and liability so you have a net of zero because 0-0=0. In all of the cases where the feds loan money to themselves you have a net of zero because X-X=0. When you are loaning money to the government then you give the government an asset. Your cash is an asset, and it also gains an equal liability (the requirement to pay it back to you, yes it has to pay interest to you as well but that's basically time value of money plus an amount for your risk). It then spends the asset and just has the liability left. In that case you don't have a net of zero for the feds because they spent the money and still owe it, its a net liability a net increase in the national debt. But then the spending level isn't determined by the fact that you loaned them money or not. Yes if lenders were generally going to be more reluctant to lend to the feds they would have to pay more interest, and taken to an extreme that would impact spending, but its not like interest rates are high, and even when they where the feds still spent a ton.

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