Okay, in something safe like Enron stock, perhaps?
If I have some T-bills in my IRA, does it count as putting money aside? But not if SS does it?
If I were allowed to print money, it wouldn’t be too bad. Ditto if my assistant could go around and collect money from people - and break their legs if they didn’t pay.
Yes, exactly.
It’s like the difference I mentioned above between you giving yourself a check for $2000 and somebody else giving you a check for $2000. It doesn’t matter if you have the money in your checking account to cover the check - you don’t make any money by writing checks to yourself even if they’re good checks.
Fine. Please cite the law or accounting principle that demonstrates what you’re alleging.
You can read the results of the latest SSA audit by Grant Thornton, an independent auditing firm, below. They state that the SSA is fairly reporting its financial position in all material aspects in conformity with generally accepted accounting principles.
http://www.ssa.gov/finance/2012/Auditor’s%20Reports.pdf
I cannot understand how SSA can fairly state its financial position if it is totally broke and the Trust Fund is empty. Why are independent accountants wrong and you are right?
No, this isn’t my first day on the internet. I’m not falling for the “permit me to avoid your argument by asking for a cite.”
I posted that there’s a difference between giving yourself a check for $2000 and somebody else giving you a check for $2000. If you want to debate that point, then do so.
Say that you agree there’s a difference. Tell me you don’t think there’s a difference. Even tell me you don’t think the analogy applies. Give your reasons. But don’t try and change the subject.
It’s good that you’ve taken my advice and are comparing real scenarios rather than indulging in useless word play. What you need now is correctness. Let me help.
Scenario 1. Uncle Benny’s Pub gives you a $2000 check as your bartending salary. You mentally earmark it for retirement but, to increase your chances of making it to retirement, spend it on a a Glock-19 pistol with accessories.
- $2000 pistol.
Total net worth: $2000.
Scenario 2. Similar to Scenario 1, but yours was a self-check and bounced.
- $2000 pistol
- $2000 debt your bank has sent out for collection
Total net worth: Zero
Score one for Little Nemo
Scenario 3. SSTF collects $1 billion from paychecks, earmarking them for retirement. Little Nemo wrote “The idea of stacking up big piles of cash as a savings plan is pretty bad (and I’ve never advocated it)” so we change the money into … (I dunno, Nemo won’t tell us) … Beanie Baby Dolls. To increase the chance Americans make it to retirement, the Congress buys a squadron of shiny fighter jets for $1 billion, borrowing the money from Kuwait.
- $1 billion shiny fighter jets
- $1 billion Beanie Baby Dolls
- $1 billion debt owed to Kuwait
Total net worth: $1 billion
Scenario 4. Same as Scenario 3, but SSTF buys U.S. Treasury bonds instead of Beanie Babies.
- $1 billion shiny fighter jets
- $1 billion paper held by SSTF
- $1 billion debt owed to SSTF
Total net worth: $1 billion
Perhaps this is confusing because self-debt vanishes. Let’s try it again:
- $1 billion shiny fighter jets
Total net worth: $1 billion
Oops. Little Nemo’s analogy relating Scenarios 3 & 4 to Scenarios 1 & 2 fails.
Hope this helps (but would lay odds against that).
You’re still arguing about the color of the bridge.
I keep trying to drag people back to the central issue and you guys want to ignore that and argue about side issues. But if you don’t deal with the central issue, arguing about the side issues is pointless.
There’s no point in arguing what color the bridge will be and how many lanes it will have and how high it will be before you figure out how to pay for the bridge. Because even if you settle all of those other questions, the answers will be pointless if you don’t figure out the answer to how to pay for the bridge.
You’re wasting your time avoiding the real issue and I’m apparently wasting my time getting you to acknowledge something you don’t want to admit is there.
Everyone acknowledges that deficit spending and the demographics of SocSec merit debate. In this subthread we’re just trying to get you past your confused thought that the meme of “worthless self-debt” has any utility in the debates.
BTW, have you picked an umpire yet to settle our bet about the “roulette martingale”? How much is our wager?
I’m saying that this is a matter of fact and law, not a matter of rhetoric and argument. Support your case with citations to facts and law, not more opinions or analogies. The latter are a dime a dozen.
Fact: The SSA is audited every couple of years. Independent auditors have given them either a clean or a qualified bill of health. If the SSA were based upon such dubious financial legerdemain as you assert, I think auditors would have said something. They did not. Explain why.
I’m sorry, they’re not the same at all. YOu still didn’t answer the question. YOu said the money disappeared…where did it go? Give me a situation where the money would NOT have disappeared. What would you have done with the money so that it wouldn’t disappear? Would you put 4 trillion into a safety deposit box? Do you earn interest on money in a safety deposit box? How? Who pays it?
It’s like in a 401K, when you save your money, where does it go? To a warehouse? No it goes into “an account”, which is really just an accounting entry. The actual money is SPENT, LOOTED, STOLEN, just like SSTF money. The 401K administrator calls it an “investment” but that’s obviously a lie, because the money is GONE.
That’s the level of your logic.
Or are you arguing…gee, so the SSTF will save “your” money, but the gov’t really spends it. So to pay YOU back, you’re going to have to pay taxes in the future to the gov’t to pay back the debt the government incurred when it borrowed YOUR money in the first place? There’s no real “money” in your account, it’s “gone”, so to repay it…the gov’t will have to tax YOU.
Well that sounds like it makes sense, but they are different populations. I won’t be paying much in taxes at all when I’m retired and the money is paid back. And the money is paid back from general taxes, not social security taxes.
IBM pension fund buys US treasury bonds…that’s in investment (and a very safe one at that). SSTF buys US treasury bonds…that’s a scam, a looting, stolen, etc.
How is the gov’t going to get back the money to pay back IBM? It will tax YOU, the IBM pensioner!!! The person with the IBM pension fund (who thinks he has actual MONEY in the account, but it’s actually been SPENT, LOOTED, STOLEN). So the IBM pensioner will have to pay taxes to the gov’t so that the gov’t can pay back the money it borrowed from the IBM pension plan in the first place!! How is that legal??? That’s your logic. He pays back his own borrowed money from his own income taxes!!! And people with McDonald’s 401ks and every other 401K hell all borrowing in the country…it’s the same thing!
So you’re argument is that all gov’t borrowing is illegitimate, because people think they have “savings”, but really there’s nothing there…and they themselves are going to be taxes in order to pay themselves back!! Brilliant! Kind of.
[QUOTE=septimus]
Oh my. I had a pile of banknotes I was about to use to buy a pickup, but decided to think on it for a few weeks. I put the banknotes in my bank account.
When I went to buy the pickup a few weeks later, the original banknotes that were supposed to be used were gone. I had to withdraw new ones from the bank account.
[/QUOTE]
If you meant this as an analogy to the Social Security trust fund, you failed.
An accurate analogy would be -
[ul][li]You had a pile of banknotes you wanted to use to buy a pickup.[/li][li]You deposited them into a bank account.[/li][li]Then you went to withdraw them so you could buy your pickup.[/li][li]The bank informed you that they had spent all your money on something else.[/li][li]Then you had to give the bank the same amount as what you originally deposited, plus interest, again. [/li][li]Then you could withdraw the money and buy your truck. [/ul]Your “investment”, IOW, consisted of giving them the money twice. [/li]
If you think that is a good investment, then send me a PM and we can set something up.
Cash only.
Regards,
Shodan
Do you think an accountant would give a clean audit opinion to your scheme? If not, why is the financial status of the SSA given the thumbs up?
And do you literally think that when you make a deposit to a bank, that all the money just sits there in “a pile” (although maybe a very secure pile) until you come back to get it? That may be the bigger problem here.
So your case assumes U.S.Treasury default. Got it.
Best wishes,
Septimus
The bank has almost certainly spent the money on something else, perhaps giving someone a mortgage. When you ask for your money, it comes from funds deposited by someone else.
When SS cashes in its bonds, the money can easily come from other bonds sold to pay back these bonds. $1 million in SS bonds redeemed, $1 million in new bonds, net difference 0.
But that’s exactly what does happen. The bank “spends” the money and receives an IOU from the person they lent it to.
You don’t have to “pay back your own loan”. Why would you have to do that?
So you make no sense whatsoever.
Here’s a situation:
The non SS part of the gov’t runs a 800 billion deficit.
SS part runs a 300B cash surplus. It puts the money in a warehouse.
The gov’t borrows 800 billion.
Taxpayers have to pay back 800 billion with taxes when the bill comes due.
This situation has your approval.
Here’s another:
The non SS part of the gov’t runs a 800 billion deficit.
SS part runs a 300B cash surplus. It buys 300B in newly issued bonds from the gov’t.
The gov’t borrows an additional 500B for a total of 800 billion.
Taxpayers have to pay back 800 billion with taxes when the bill comes due.
This situation does not have your approval.
So what is the difference? In both cases the taxpayers have to pay back 800 billion. What difference does it make to whom? In the second case, the SSTF can actually earn interest.
This was explained about 50 times.
The debt is not “to the gov’t as a whole”. There is no net debt.
It’s an asset to the SSTF.
It’s a liability to the regular gov’t.
It’s nets to zero.
I even drew up a balance sheet a while back.
SSTF has 4 trillion in assets and owes x to people who eventually will retire.
Gov’t has 4 trillion in liab (to the SSTF)
So the net is that the gov’t (if you include the SSTF) owes NOTHING to itself and owes x to the eventual recipients. This is pretty simple.
The SSTF says it has 4 trillion in assets (ie gov’t bonds). The regular gov’t says it owes 12 trillion to non-SS and 4 trillion to SS. Thus 16 trillion in total. And that is exactly the number quoted.
And “promises to pay” are hardly an “intangible asset”. The financial system is driven by promises to pay. That’s what a bond is. What do banks, insurance companies, pension funds invest in? Warehouses to stack their money? How do they earn interest?
That is exactly what they are doing. It’s called a “loan”. That’s how they earn interest. The alternative is to build a warehouse and stack it in there.
This is a basic concept, you don’t seem to grasp it.
The gov’t isn’t “making money” by writing a check to itself.
It’s an accounting issue. It’s trying to make sure SS is self sufficient, that is it doesn’t need to draw on funds from the general taxation fund. That’s how SS was set up in the 1930s.
THis is so simple, but you don’t seem to actually read what people write and you come up with ridiculous analogies.
And you never explained what the gov’t should do with the SS cash. Don’t stack it in warehouses. OK, then what? Buy something? What?
The key here being the phrase “someone else”. In the case of the Social Security trust fund, there is no “someone else”. The American taxpayer is the source of the money going into the SSTF, as well as the source of the money to put the money back into the trust fund to replace the money that was spent. No “someone else” is involved.
And where does the $1 million come from to pay back the new bonds?
Of course, if you are suggesting that we borrow to service our debt, you don’t apparently understand that bonds are interest-bearing instruments. So the net difference is not zero.
Apply your idea to normal life. I borrow money to buy a house. When the mortgage comes dues, I can easily pay for it by borrowing the money and paying off the mortgage. Right?
Regards,
Shodan
Because that is how the Social Security trust fund is being run. The taxpayer has to pay back the money the government took out of the SSTF, plus interest. The taxpayer also paid in the money that the government took out of the SSTF.
Social Security is drawing on funds from general taxation. Cite. Social Security will also have to draw on funds from general taxation in order to repay the money that has been borrowed out of the Social Security trust fund.
800B - 300B ≠ 800B.
Perhaps you should brush up on your arithmetic before you attempt to debate.
Regards,
Shodan