Re: social security bankruptcy in 2010?

In article <5dee50cb-653e-46c9-add4-350837de3d1b@xxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
Allan <allan.sanger@xxxxxxxxx> wrote:

On Aug 25, 6:19 am, Rumpelstiltskin
<PleaseDoNotReplyByEm...@xxxxxxxxxxx> wrote:
> On Tue, 25 Aug 2009 05:15:35 -0700 (PDT), Allan
>
> <allan.san...@xxxxxxxxx> wrote:
> >On Aug 17, 3:51 pm, Nestor <nes...@xxxxxxxxx> wrote:
>
> <snip>
>
>
>
> >> Those are special bonds, sure. What makes them special is that the Trust
> >> Fund may redeem them at its discretion at any time for par value.
>
> >Yes they may - just like the Chinese redeem the T-bills they hold.
> >The only difference is when the Chinese redeem their holdings the
> >money comes from the US government, not the Chinese government whereas
> >when the Trust redeems its bonds the money comes for the US
> >government.
>
> >Ooops - wait a second, there is no difference.
>
> >It's like borrowing against your 410K - when you retire, the money you
> >borrowed doesn't magically reappear.
>
> >Whether the are marketable or not the point.
>
> >We are in a world of hurt in Social Security, of that there is no
> >doubt.
>
> >Allan
>
>     No, you're just as deluded as Lawrence.  

Which means what exactly?

snip

>  If I put money into SS and the government borrows
> some, then the government owes it to SS, not to the
> person or persons who borrowed it.

Exactly. If I put money into my 401K and I borrow against it, I have
to pay it back. If I put money into a 401K and the bank loans it to
you, you have to pay it back....very good.

>  I didn't borrow
> it, John D. Rockefeller borrowed it.  He has to pay
> me back, I'm not responsible for the fact that he
> borrowed the money and spent it, and now doesn't
> want to pay it back.  My SS taxes were not general
> revenue.  They were collected mostly from just one
> segment of the population: the middle class.  They
> were borrowed mostly to relieve a different segment
> of the population via tax cuts: the more privileged.

It's not a class warwe are talking about - please stay on topic. When
you let your political ideology get the better of you it may challenge
you to think clearly.

>    They were not a regressive general tax revenue,
> they were collected for the specific purpose of
> making sure SS had money to pay people
> according to the agreement when they retired.  

Exactly - SS isd NOT welfare - it is prepaid retirement.

> We
> do know what was collected for SS.  We do know
> what was borrowed from SS.  Any 12-year-old can
> understand this, but you and Lawrence and the
> Heritage Foundation find it inconvenient to
> understand what any 12-year-old can understand
> without difficulty.

The problem with a 12 year old is that when he spends his allowance he
can get more from his parents by borrowing against next weeks
allowance. And in most cases he never has to pay it back.

Here is the problem - there is no cash in the trust fund. Any payment
made from the fund has to come from the government paying back what it
borrowed. Since the government can only raise revenue by taxes, that
means the trust fund is not funded by cash but by future tax flows.
And that is the problem.

Everything was fine as long as todays inflows were sufficient to pay
todays outflows (living hand to mouth). As soon as that stops (next
year or the year after), then the difference has to come from
somewhere. And that somewhere is not the trust fund, but rather
taxes.

Is that too difficult to understand? If the trust fund had real money
in it (like German government treasuries) this would not be a problem
for American tax payers - just a problem for Germans. But alas poor
rumpie, it does not.

Allan

Don't get your panties in a twist. It's just finance. One kind of government
debt will become another kind of government debt. Yawn.

People will go back to work. Probably on Wall Street where the real money is.

--
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washingtonpost.com/wp-dyn/content/article/2009/08/16/AR2009081602304.html
.

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