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

To: Wharf Rat who wrote (761868)	1/6/2014 6:58:27 PM
From: combjelly	1 Recommendation Recommended By Don Hurst Read Replies (3) \| Respond to of 1574876

Yer just playing word games. Tim does a lot of that. Tail chasing too.

To: Wharf Rat who wrote (761868)	1/6/2014 7:14:27 PM
From: TimF	Respond to of 1574876

Well they might have spent it on dropping bombs on Iraq, but the plane and the bombs were assets originally created with borrowed money. Would you say such assets had a positive economic return? Well I suppose one could (although I doubt you would, and from anyone it could easily be questioned), that by preventing the possibility of a Saddam with WMD (if not then, or now, or soon, then eventually) and with dominance over the local area. I am almost certain you consider that a low, possibly even near zero possibility scenario, and you might also argue that other negative scenarios are now far more likely post and because of the invasion of Iraq. But to try to make the "created a productive asset" argument as strong as possible, lets say for the sake of argument that this is true. That the invasion was justified, and necessary and very useful. Or alternatively we can view the purchase of nuclear weapons as a successful deterrent of attack by the USSR back in the Cold War, and can consider such deterence to be a big benefit leaving us with larger and healthier economy then we otherwise would have had. Even then the purchase of the military equipment and the invasion (or deterrence) would not normally be considered and economic asset. It would be looked at as consumption more than investment. The purchased assets are not themselves directly economically productive. Bombs and missiles and bullets don't produce more resources. Many of them get used up, others sit around, do little or nothing., and then become obsolete. They can prevent future losses, but not in a way that's highly predictable or models well as return on investment. "Borrowed money can be used to buy an asset," well, there ya go; it was an investment after all. No, the investment is what you might decide to purchase. The borrowing is not an asset. Also for the bonds in question you don't even really have borrowing. If you consider it borrowing, the borrowing and the lending by the same entity cancel each other out. As the borrower and the lender (and the maker of laws), the feds could, without default or contract violation, arbitrarily set the "trust fund" to be equal to zero, or a quadrillion dollars. The economic effect of either level would be the same as the current level. The political effect might be different for two reasons, one being that even though there is no real asset in the trust fund it is perceived to be of importance and thus has an impact on politics, the 2nd is that when the the nominal value of the trust fund equals zero, then the law calls for SS spending to not exceed SS tax income. The feds could change that law (or raise SS taxes) to keep the spending going, or it could allow spending to be suddenly reduced. If tomorrow the feds changed the nominal value of the trust fund to zero, and at the same time removed the law calling for cuts under such a zero balance scenario, the short term economic effect (at least absent possible changes in investor and consumer confidence, and possible effects in politics which could themselves have economic results) would be zero. Today with a "positive balance in the trust fund", we take non SS tax money and use it to pay SS payments that are not covered by SS taxes, and in the hypothetical I laid out above we would take the same amount of non-SS tax money, and use it for the same purpose.