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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (107421)	7/10/2011 9:00:35 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 224755

Even if they where tradable on the open market, it wouldn't matter much. The important point is there is no real asset for the government. Currently as the "trust fund is paid back", the feds have to tax the people to get the money (or borrow it), just as they would if there was no nominal/fictional fund and they wanted to pay benefits. If they where marketable, the SSA could sell them. They probably wouldn't since they follow federal policy (and if the feds wanted them to be sold to the public they could just change the law and make them marketable, so it seems they don't want to do so). If they where made in to marketable securities, and the SSA did sell them, then the government would raise a bunch of money from the sale (although it couldn't dump them all at once without lowering their value, and raising the rate the treasury has to pay to sell the other bonds it normally sells). Then the SSA would have a bunch of cash. What would it do with the cash left over after paying current benefit claims? It would either buy treasuries (making the whole point of selling them rather meaningless, except that there might be some transaction costs involved), or it would make other investments. If the government wanted the SSA to make other investments (after changing the law to allow this), then it could do so, for new Social Security tax money even if it didn't make the bonds marketable. Obviously it doesn't want to do this. Also as both the "creditor" and the "debtor" the government could set the value of the "trust fund" to zero, or to a quintillion dollars, without default, and without changing the point that the debt matches the credit, and nets out at zero. The important point, isn't the marketability issue, its that loans to yourself, whether your an individual or the federal government, don't represent a real asset.