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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (45003)	8/19/2010 6:42:44 PM
From: TimF	Read Replies (1) \| Respond to of 71588

Re: [If it is "meaningless" then ALL US Treasury Bonds are "meaningless".] "Totally false." WHY? Because a debt to yourself is not a real debt. Or because if you insist it is, then you are the creditor of the debt, and as creditor you can release yourself without it being a default, or affecting your credit in any way. The more important point is from the reverse side, that a debt you hold owed to you by yourself is not an asset, or if you insist on looking at is as one its an asset that is exactly canceled out by an equivalent liability providing a net zero value. Its the same as me shuffleing money from my right pocket to my left, writing "IOU, the right pocket $X, signed left pocket", and thinking that piece of paper is an asset. The form this IOU takes is a lot more formal looking, its the form of a government bond. But the function is what's important. Functionally the government bond is in this case a "self-debt" (to use my own term, but I've explained what I mean above), and thus no debt or asset at all. Its just an accounting entry that only has importance because the law says that when that accounting entry is zero, than if FICA taxes can't pay Social Security fully, the payments have to be cut. Other than that law, the whole idea of the trust fund is without meaning, and without real effect. Refusing to pay a debt is repudiating that debt, plain and simple. Not requiring yourself to pay back a debt isn't refusing to service a debt, and debt to yourself isn't really a debt in the first place.