Social Security is Not a Ponzi Scheme, Mr. Perry

[Toddsterpatriot]

OOpYdOO:

Your link says that the FICA tax does not create a contract between individual taxpayer and the government. I said that the Treasuries in the Trust Fund represent an obligation of the Treasury to the Trust Fund. Those are different things.

Sadly you're right on this one. No obligation to the clients.. And nothing to stop the Clown College from mucking with the rules of the Trust Fund.. In fact, at any point the Treasury could inform Congress that it has no money to prop up the SS books and CONGRESS could decide any dam thing they want.

I think we saw that last month -- didn't we?

Yeah. The Tea party wanted us to default. You're right. That would have been stupid. There's not really a way we can protect much of anything from stupidity.

The Tea Party wanted us to default?
How is preventing new borrowing equivalent to wanting us to default?
Please spell it out. Thanks.

 

[OohPooPahDoo]

They are technically borrowing the money from the government, so the government requires that the loan be secured, mostly by pieces of paper that says the government owes them money. That does not mean the collateral backs the money, it backs the loan of the money.

Can you explain why the government would require a private bank to carry collateral that backs government currency? Once you get over that little hump in your comprehension you will see that US dollars are not backed by anything other than the government.

The Fed does not borrow money from the government.

I said technically.

It doesn't technically borrow money from the government either shit for brains.

 

[OohPooPahDoo]

OOpYdOO:



Sadly you're right on this one. No obligation to the clients.. And nothing to stop the Clown College from mucking with the rules of the Trust Fund.. In fact, at any point the Treasury could inform Congress that it has no money to prop up the SS books and CONGRESS could decide any dam thing they want.

I think we saw that last month -- didn't we?

Yeah. The Tea party wanted us to default. You're right. That would have been stupid. There's not really a way we can protect much of anything from stupidity.

The Tea Party wanted us to default?
How is preventing new borrowing equivalent to wanting us to default?
Please spell it out. Thanks.

It wasn't realistically possible for the government to cut spending by 40% overnight, and the market that buys and sells Treasuries knows this.


And of course the Tea Baggers wants default. They want everything to go wrong with the economy. They actually favor deflation.

 

[Quantum Windbag]

The Fed is part of the government. Now explain why it has so many liquid assets.

The State Department is part of the government, does it back the dollar?

The Fed does not have a lot of liquid assets.



According to their own figures they have $2.1 trillion in assets against $9.5 trillion in circulation. I would be more than willing to borrow $100 from you and only pay back $45.

Its the M2 money supply that's 9.5 trillion, not the monetary base. Do you know what the hell you're talking about?

Yes I do. M1 is the liquid assets of the government, M2 is a better measure of the actual money supply because it includes those gold certificates you think back the dollar, and everything else that can actually be exchanged for dollars on demand.

 

[Quantum Windbag]

According to their own figures they have $2.1 trillion in assets against $9.5 trillion in circulation. I would be more than willing to borrow $100 from you and only pay back $45.

FRB: H.6 Release--Money Stock and Debt Measures--September 15, 2011

M2 money supply includes more than the FRNs in circulation.

So does M1, what's your point?

 

[Toddsterpatriot]

Can you explain how taking money away from the taxpayer to pay interest owed to the taxpayer is a profit for that taxpayer?

If the Treasury borrows $100 for 1 year at 4% interest, net interest paid is $4.

If the Fed buys $50 of the $100 of Treasuries and returns the $2 interest to the Treasury, the taxpayer didn't just save $2?

No

Net interest of $2 instead of $4 isn't saving money?
Are you sure?

 

[flacaltenn]

[Why is it that when you open the drawer and pull out that bond in 2010 to cover the shortfall in SS income/benefits that the Treasury has to issue ANOTHER PUBLICALLY traded T-BOND to cover the shortfall?

.

Because when the government borrows money it spends it. Whether it borrows from the Chinese, or American banks, or insurance companies investing their premiums, or money market funds, or Social Security, or your kid's savings bond, the government borrows the money and spends it on government expenses.

The government also takes in revenue. If SS needs to draw on principal or interest, the government can pay that out of revenues, or by borrowing.

In those cases it receives money from third parties and pays interest and premium to third parties. When it embezzles from FICA funds and then defers issuing REAL debt at the same time, it is hoping that you are stupid enough to die already or be to old to remember that you already paid for 2010 SS deficits back in 1998.

The government also takes in revenue. If SS needs to draw on principal or interest, the government can pay that out of revenues, or by borrowin

You left out the key first 4 questions. So your analysis is incomplete. Why does the govt need to borrow that $58Bill + phoney interest again in 2010 if they already spent the $58Bill back in 1998? Are they spending it TWICE? Realize at this point Social Security benefits are only getting paid ONCE..

(disregarding the shenanignans that they are playing by showing more "redemption" for 2010 than was neccessary to actually pay beneficiaries)

What EXACTLY was of value in the Trust Fund in between 1998 and 2010 due to the pocketing of the $58Bill? And what kind of "investment" was it exactly?

Bottom line is NYC.. Back in 1998 they TOOK the FICA excess with only a promise to pay future beneficiaries with future funds. Defeated the whole PURPOSE of a Trust Fund for a "pay as you go" system to smooth out bumps in demographics.

The whole concept of the Trust Fund was to store value to DEFRAY future liabilities.. Didn't happen. It's a complete fiction. It's Aesop's Fables for govt lovers..

REALITY?? We are on own as deficits arise in the SS balance sheets. Kiss the old FICA overcharges goodbye. They do us no good now. Congress NEUTERED the Trust Fund as a buffer for defraying future costs by stuffing it with IOUs. They are winging it as they go along..

Tell me whether you're interested in going back to what SHOULD have happened..

 

[Quantum Windbag]

The Fed does not borrow money from the government.

I said technically.

The Federal Reserve and the Department of the Treasury also work together to borrow money when the government needs to raise cash. The Federal Reserve issues U.S. Treasury securities and conducts Treasury securities auctions, selling these securities on behalf of the Department of the Treasury. Examples of Treasury securities include:

The Treasury And The Federal Reserve

If the Fed buys Treasury securities, that means the Treasury is borrowing from the Fed, not the other way around. Technically.

Technically it is borrowing from itself since it actually issues them when the Treasury needs them.

 

[Toddsterpatriot]

Yeah. The Tea party wanted us to default. You're right. That would have been stupid. There's not really a way we can protect much of anything from stupidity.

The Tea Party wanted us to default?
How is preventing new borrowing equivalent to wanting us to default?
Please spell it out. Thanks.

It wasn't realistically possible for the government to cut spending by 40% overnight, and the market that buys and sells Treasuries knows this.


And of course the Tea Baggers wants default. They want everything to go wrong with the economy. They actually favor deflation.

Reducing spending isn't a better way to prevent default than increasing borrowing?

I'm afraid to see how you handle your own balance sheet.

 

[Quantum Windbag]

The Constitution does not require we adhere to a gold standard.

The government technically defaulted on the dent when it devalued the dollar from the gold standard because previous dollars were redeemable in gold.

No it didn't default, not technically, not otherwise. You have no idea what you're even talking about

You are the one that tired to argue the Constitution prevents the US from defaulting, why is it I am wrong for pointing out a way that the government already got around that part of the Constitution?

You haven't and you're stupid.

You don't think telling people that their gold certificates are not redeemable for gold is a default? I bet you think we didn't default in 1971 either.

 

[Quantum Windbag]

If the Treasury borrows $100 for 1 year at 4% interest, net interest paid is $4.

If the Fed buys $50 of the $100 of Treasuries and returns the $2 interest to the Treasury, the taxpayer didn't just save $2?

No

Net interest of $2 instead of $4 isn't saving money?
Are you sure?

It doesn't work that way. The Fed has expenses, and those are deducted from that interest payment first. That makes the answer to your question no.

 

[Toddsterpatriot]

No

Net interest of $2 instead of $4 isn't saving money?
Are you sure?

It doesn't work that way. The Fed has expenses, and those are deducted from that interest payment first. That makes the answer to your question no.

The $2 they returned is net of expenses.

 

[Quantum Windbag]

Net interest of $2 instead of $4 isn't saving money?
Are you sure?

It doesn't work that way. The Fed has expenses, and those are deducted from that interest payment first. That makes the answer to your question no.

The $2 they returned is net of expenses.

It was dinner time earlier, so I rushed my response.

Legally, the Fed cannot actually buy T-bills directly from the Treasury. What happens is the Treasury sells the T-bill to Jon Q. Public, and the Fed buys it from him. John Q., being a smart investor, wants to get a profit off of the T-bill he bough, and he knows that if he waits he will get 4 dollars. The Fed actually pays him something more than what he paid for the bill, but less than the value of the bill if it matured. This has the benefit of transferring the debt from the public to the government, effectively canceling the Treasury debt from the point of view of the taxpayer.

Unfortunately, it does no such thing for the Treasury or the Fed. At some point the Treasury has to buy the T-bill back from the Fed. Let us assume that in doing so they pay $4 dollars in interest, and the Fed, being a non profit, remits $2 back to the Treasury. The Treasury does count this as revenue, and uses it to reduce the deficit.

Does it save the taxpayer money?

Getting cookies on sale for $2 instead of paying $4 doesn't actually save a person money unless they put it in a savings account instead of spending it on something else. The government does not have a savings account, so it will promptly spend that $2 dollars on something else. No net savings to the taxpayer at all.

 

[Toddsterpatriot]

It doesn't work that way. The Fed has expenses, and those are deducted from that interest payment first. That makes the answer to your question no.

The $2 they returned is net of expenses.

It was dinner time earlier, so I rushed my response.

Legally, the Fed cannot actually buy T-bills directly from the Treasury. What happens is the Treasury sells the T-bill to Jon Q. Public, and the Fed buys it from him. John Q., being a smart investor, wants to get a profit off of the T-bill he bough, and he knows that if he waits he will get 4 dollars. The Fed actually pays him something more than what he paid for the bill, but less than the value of the bill if it matured. This has the benefit of transferring the debt from the public to the government, effectively canceling the Treasury debt from the point of view of the taxpayer.

Unfortunately, it does no such thing for the Treasury or the Fed. At some point the Treasury has to buy the T-bill back from the Fed. Let us assume that in doing so they pay $4 dollars in interest, and the Fed, being a non profit, remits $2 back to the Treasury. The Treasury does count this as revenue, and uses it to reduce the deficit.

Does it save the taxpayer money?

Getting cookies on sale for $2 instead of paying $4 doesn't actually save a person money unless they put it in a savings account instead of spending it on something else. The government does not have a savings account, so it will promptly spend that $2 dollars on something else. No net savings to the taxpayer at all.

Yes, the Fed saved the Treasury (and the taxpayer) about $80 billion last year. Some from Treasuries, some from financial services, some from short term loans and some from MBS.
If the government wasted the $80 billion, that's a totally separate issue.

 

[Lovebears65]

[ame=http://www.youtube.com/watch?v=1Ge5hB6JLfY]Social Security a Ponzi Scheme?! (CROWDER CALLS THE SEC!) - YouTube[/ame]

 

[JakeStarkey]

Patriots and non-racists voted in great numbers for both candidates.

Some Hard Left kooks and some Hard Right reactionaries and libertarians often are not patriots and often indeed are racists.

 

[Toddsterpatriot]

Patriots and non-racists voted in great numbers for both candidates.

Some Hard Left kooks and some Hard Right reactionaries and libertarians often are not patriots and often indeed are racists.

Don't leave out the Hard Left kooks who often are not patriots and often indeed are racists.

 

[Quantum Windbag]

The $2 they returned is net of expenses.

It was dinner time earlier, so I rushed my response.

Legally, the Fed cannot actually buy T-bills directly from the Treasury. What happens is the Treasury sells the T-bill to Jon Q. Public, and the Fed buys it from him. John Q., being a smart investor, wants to get a profit off of the T-bill he bough, and he knows that if he waits he will get 4 dollars. The Fed actually pays him something more than what he paid for the bill, but less than the value of the bill if it matured. This has the benefit of transferring the debt from the public to the government, effectively canceling the Treasury debt from the point of view of the taxpayer.

Unfortunately, it does no such thing for the Treasury or the Fed. At some point the Treasury has to buy the T-bill back from the Fed. Let us assume that in doing so they pay $4 dollars in interest, and the Fed, being a non profit, remits $2 back to the Treasury. The Treasury does count this as revenue, and uses it to reduce the deficit.

Does it save the taxpayer money?

Getting cookies on sale for $2 instead of paying $4 doesn't actually save a person money unless they put it in a savings account instead of spending it on something else. The government does not have a savings account, so it will promptly spend that $2 dollars on something else. No net savings to the taxpayer at all.

Yes, the Fed saved the Treasury (and the taxpayer) about $80 billion last year. Some from Treasuries, some from financial services, some from short term loans and some from MBS.
If the government wasted the $80 billion, that's a totally separate issue.

Not from the taxpayer's POV, which is what you asked initially.

 

[NYcarbineer]

[Why is it that when you open the drawer and pull out that bond in 2010 to cover the shortfall in SS income/benefits that the Treasury has to issue ANOTHER PUBLICALLY traded T-BOND to cover the shortfall?

.

Because when the government borrows money it spends it. Whether it borrows from the Chinese, or American banks, or insurance companies investing their premiums, or money market funds, or Social Security, or your kid's savings bond, the government borrows the money and spends it on government expenses.

The government also takes in revenue. If SS needs to draw on principal or interest, the government can pay that out of revenues, or by borrowing.

In those cases it receives money from third parties and pays interest and premium to third parties. When it embezzles from FICA funds and then defers issuing REAL debt at the same time, it is hoping that you are stupid enough to die already or be to old to remember that you already paid for 2010 SS deficits back in 1998.

The government also takes in revenue. If SS needs to draw on principal or interest, the government can pay that out of revenues, or by borrowin

You left out the key first 4 questions. So your analysis is incomplete. Why does the govt need to borrow that $58Bill + phoney interest again in 2010 if they already spent the $58Bill back in 1998? Are they spending it TWICE? Realize at this point Social Security benefits are only getting paid ONCE..

(disregarding the shenanignans that they are playing by showing more "redemption" for 2010 than was neccessary to actually pay beneficiaries)

What EXACTLY was of value in the Trust Fund in between 1998 and 2010 due to the pocketing of the $58Bill? And what kind of "investment" was it exactly?

Bottom line is NYC.. Back in 1998 they TOOK the FICA excess with only a promise to pay future beneficiaries with future funds. Defeated the whole PURPOSE of a Trust Fund for a "pay as you go" system to smooth out bumps in demographics.

The whole concept of the Trust Fund was to store value to DEFRAY future liabilities.. Didn't happen. It's a complete fiction. It's Aesop's Fables for govt lovers..

REALITY?? We are on own as deficits arise in the SS balance sheets. Kiss the old FICA overcharges goodbye. They do us no good now. Congress NEUTERED the Trust Fund as a buffer for defraying future costs by stuffing it with IOUs. They are winging it as they go along..

Tell me whether you're interested in going back to what SHOULD have happened..

What the **** are you talking about?

Social Security took in 677 billion last year and paid out 584 billion. that's not a deficit.

The Trust Fund's purpose is to produce interest income, which when added to the payroll tax revenue for any given year, pays the current recipients. Adjustments to income vs. outflow are all that are needed to keep from any unmangeable drawdown of the principal in the Trust fund.

 

[OohPooPahDoo]

The State Department is part of the government, does it back the dollar?

The Fed does not have a lot of liquid assets.



According to their own figures they have $2.1 trillion in assets against $9.5 trillion in circulation. I would be more than willing to borrow $100 from you and only pay back $45.

Its the M2 money supply that's 9.5 trillion, not the monetary base. Do you know what the hell you're talking about?

Yes I do. M1 is the liquid assets of the government,

No, it isn't. please go educate yourself and stop making yourself look stupid.

M2 is a better measure of the actual money supply because it includes those gold certificates you think back the dollar, and everything else that can actually be exchanged for dollars on demand.

M2 does not include the gold certificates on the Fed's balance sheet. Those are part of the monetary base.