Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Wayners who wrote (107460)	7/10/2011 10:54:19 PM
From: TimF	1 Recommendation Read Replies (3) \| Respond to of 224756

Actually the Feds aren't required to do anything. These aren't real bonds in the normal sense. At the whim of Politicans, the bonds can simply be shredded and that's the end of that. But it wouldn't matter if they where. The feds are both the bond holders and the bond issuers. Since they are the bond holders they could cancel the debt without default. And since they are both the holders and the issuers the net value is zero. Even if they where exactly like regular treasury bonds they can be shredded and the debt is over. Total and utter default. No. No default. If the holder of debt cancels it, it isn't a default. Since the feds are the holder (and the issuer, but that's not relevant to this specific point), they can cancel the debt, and there is no default involved. They could do this with ordinary treasury bonds, these special type of bonds, or any other debt, as long as they are the creditor they can cancel the debt. Can you sue and win. No. And rightfully not. You are not the creditor, there is no debt obligation to you. The bond itself is in effect a nullity (since the creditor and the debtor are the same entity), but technically is own by the SSA. If there was any suit for non-payment it would be from the SSA. Since SSA is under direction from congress, and is part of the government, that isn't going to happen, even in the unlikely event the debt is canceled. Congress could make it illegal for them to sue, or they could just cancel the debt from the creditor side (have the SSA cancel the debt), rather than the debtor side (which would be a default of sorts if it was done), and thus there would be nothing to sue over. As for the benefits 1 - They are a separate thing from the bonds. 2 - You can't sue over them either, but that has nothing to do with the bonds. The program is called an entitlement, but you aren't entitled to the benefits as a mater of debt or contract, only current law, which can be changed at any time. For a bond to be a real bond, there needs to be at least two parties, for example, the U.S. and a citizen who owns a U.S. treasury bond, or the U.S. as owner of a German bond and Germany. The U.S. cannot issue "bonds" to itself and have their terms bind future Congresses. Bottom line: These social security "bonds" are neither assets of the U.S. nor property of workers and their families. Exactly. But that's a factor of the fact that the same entity who owes the debt also is owed the debt, not really, or at least not mostly, a factor of the special non-tradeable character of these bonds. Its most realistic to think of the trust fund as a nullity. Just like moving a $20 from my left pocket to my right doesn't create a real debt or a real asset, moving money around within the federal government doesn't create an enforceable debt. Except in the sense that current Social Security law calls for an automatic cut back of payments to equal the income from Social Security tax revenue should the nominal (and otherwise meaningless) value in the trust fund run out, and current SS tax revenue fail to equal current benefits under the ordinary calculation. But congress can change that aspect of law at any time. ** In one sense inter-government debt has some meaning. One department can owe money to another. But that's internal accounting, the central controlling body over all of the sub parts (in this case congress) can cancel that internal accounting debt at any time.