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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (215372)	1/19/2005 3:24:04 AM
From: Tenchusatsu	Read Replies (1) \| Respond to of 1573812

Neolib, Forget owing yourself the money, you own the Corvette. The 401K and the Corvette are both assets. What if Tim took all the money out of his 401k and spent it on his father's health care (which is essentially what SS ends up doing anyway)? Will Tim be assured of his own retirement because he promises to pay himself back with interest? Of course, there is a big difference between Tim and the federal government. Tim can't force his employer to raise his salary. Tenchusatsu

To: neolib who wrote (215372)	2/2/2005 7:51:10 PM
From: TimF	Read Replies (1) \| Respond to of 1573812

You seem to be arguing that when I send a check made in US funds to the US Treasury, the money vanishes. Not at all. I am arguing that when the government spends money it no longer has it. It doesn't really vanish it, it goes to employees, contractors; people who received transfer payments, ect. but its no longer in any government trust fund. So I guess if I take all the money out of my 401K to go buy a Corvette my retirement is just fine because I owe the money to myself and because this is a loan it is an asswet to my retirement account?? Forget owing yourself the money, you own the Corvette. And the government owns aircraft carriers and office buildings that it buys with Social Security money, but the aircraft carriers and office buildings are not useful assets for the social security retirees and wouldn't be given to them even if they where. Similarly the Corvette probably won't help me much when retire. Its more likely to depreciate in value rather then appreciate. In any case your missing the point. My argument isn't about the relative value of Corvettes (or Aircraft Carriers) in retirement. Its about the accounting for the money spent on such things. If have a "retirement account", and an "Corvette buying account" and I lend the entire value of my retirement account to my corvette buying account, and my corvette account issues bonds to my retirement account, its not reasonable to say that my retirement is taken care of because of these bonds. I can't live off the income stream from these bonds because I am paying the income stream from these bonds. You say I could sell the Vette (even if it is depreciated and has cost money in the mean time) and I suppose the government could sell carriers and office buildings, but that's not a way to plan for retirement. Also a lot of the money wasn't spent on hard assets but on salaries and transfer payments. Instead of buying the Vette, imagine I paid for maid service and took fancy vacations with my retirement money. Is my retirement safe because the "retirement funds" has bonds from my "general fund" or my "vacation fund"? Please point out the effective difference between these two scenarios: 1) The government mandates all workers wages be taxed at 12% and sent to the US Treasury. The Treasury maintains an exact account for each individuals tax, and purchases T-bills. The government uses the T-bill proceeds in any fashion it does with such things. At maturity, the T-bills are redeemed by the government from whatever sources the government has at the maturity date (taxes, more T-bills, etc) 2) The government mandates all workers wages be taxed at 12% and deposited in individual investment accounts with registered financial institutions. These institutions do the relevant accounting, and purchase T-bills which they hold for the worker. The government uses the T-bill proceeds in any fashion it does with such things. At maturity, the T-bills are redeemed by the government from whatever sources the government has at the maturity date (taxes, more T-bills, etc) There is not much difference. In either case the government has an asset (the T-Bills) in one account, and an obligation (the same T-Bills) in another. The problem is with the claim that the government really has a trust fund when the fund is owed to itself. I can take a twenty from my wallet and put it in my coat pocket, and say my coat pocket owes my wallet $20 but I don't actually get any wealthier from the transaction. TBills are loans to the government. If you break the government down in to pieces a piece can have a net asset in T-Bills but the federal government as a whole can not. Also if you have no national debt then you have no T-Bills (or you have few of them that are offset but other financial assets for no net debt). You said - "Even more astonishing, some people will actually try to claim that the government cannot hold and invest funds (in Treasuries) since this is just one branch of the government giving an IOU to another. What fools! Any loan is an IOU! The fact that the government repays those loans with tax income is completely irrelevant to who the made the loan. Taxes used to repay T-bills held by Joe 6P American, or the Bank of Japan, or the IOU's to the SS trust fund are absolutely no different from each other." But there is a difference from shifting funds around that you own, and lending money to someone else with a reasonable rate for real return. If I lend money to myself I can't get interest on it, because every penny in interest I pay comes from me anyway. Its the same with the principle. However if I lend money to you and you pay me back with interest it might actually be profitable to me. Tim