tag:blogger.com,1999:blog-6244999628674918029.post2550091604539163675..comments2024-03-28T23:57:50.103-05:00Comments on Bayou Renaissance Man: Why rising interest rates may destroy the US national budgetPeterhttp://www.blogger.com/profile/10595089829300831372noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6244999628674918029.post-11992239229037702772015-07-30T13:55:16.043-05:002015-07-30T13:55:16.043-05:00The way I like to describe what our government has...The way I like to describe what our government has done to the Social Security trust fund is that it is the moral equivalent of mom and pop borrowing the kid's college money to buy beer and smokes, leaving paper IOUs in place of the cash. <br />Now it's time for college and all junior has is a stack of those IOUs. And since mom and pop could not seem to live within their means before, what is the likelihood they will pony up the cash to pay for junior's college now?<br />Way it used to work was all that lovely money came in from all those hard working Americans' payroll deductions. A lot of it was paid back out in benefits, and the rest went into the general fund while its equivalent in US bonds was placed in the SS trust fund. Over time the book value of the trust fund became enormous. And congress got a very nice influx of cash to play with, do "good work" with, reward their friends, and feather their own nests. Then low and behold somewhere about a year or so ago we reached a tipping point where the funds coming in no longer covered the benefits being paid out. No problem of course just tap that trust fund. Of course the only thing in that fund is US bonds that have to be cashed in to cover Social Security's obligations. And the mechanism to do that is to draw from the general fund. So the entire Social Security Ponzi scheme turned from a cash cow into a money pit.<br />And that is why no one working in DC likes to talk about Social Security.Uncle Larhttps://www.blogger.com/profile/04008207593205949098noreply@blogger.comtag:blogger.com,1999:blog-6244999628674918029.post-8963674892392841302015-07-30T10:11:03.096-05:002015-07-30T10:11:03.096-05:00I have wasted a fair bit of time arguing about the...I have wasted a fair bit of time arguing about the Social Security "trust fund" over the years. It's amazing how many people simply can't get beyond arguing the trust fund is "safe" because it's held in the form of government bonds. Of course, only the government can buy those bonds, but they just can't see the problem in that situation.<br /><br />I've tried explaining it with an example using their personal savings account and IOUs -- every time you take money out of the savings account, you write yourself an IOU (which you call "personal bonds"). If you start with $10,000 in savings but, a year later have replaced the money with $10,000 in personal bonds, do you have $10,000 more than your yearly income or $10,000 less? While people generally understand that example, they always come back to "But with Social Security it's the government!"<br /><br />Argh! (A word I used a lot back in my comic book writing days which is uniquely suited to this sort of head-against-the-wall level of frustration such arguments cause.)Henryhttps://www.blogger.com/profile/05813572493834867342noreply@blogger.com