SS Trust Fund Treasuries: due and payable

[Days]

Okay, so Congress borrowed something like $3.75 Trillion from the Social Security Trust Fund. That trust fund belongs to the people, not Congress... IOW, it is a criminal act for a Trustee to borrow money from the funds placed in trust to the Trustee; but no one knows how to prosecute both houses of government. And so it sits there, all this theft is recorded in Treasuries that are mostly matured and just sitting there - mostly a matter of record.... all this money owed to the people, but Congress is never going to pay up, everyone knows that.

What to do?

Well, you can always go on an internet site and say vicious things about both houses of Congress, although I don't think words could do the matter justice; Congress deserves much worse than a cyber scolding that they won't read, let alone care about.

The folks at the USTreasury all know perfectly well how to pay off those bonds... just give them out to the beneficiaries. That's who they are owed to. Instead of writing checks from the general fund (aka the checking account at the Federal Reserve) all these Social Security payments could be arriving in the form of US Treasuries, which then could be subtracted from the debt recorded by Congress. Ever cash in a USTreasury (like a US savings bond)? It isn't very hard, you bring it to your bank, the same as you would do with the Social Security check... deposit it in your account.

this is hard?

Why hasn't anyone suggested it?

Because it is a fiat money system and the Federal Reserve has usurped the fiat and your puppet leaders all bow down to the Federal Reserve. The Federal Reserve doesn't want that Social Security Fund payed out, they want it to sit in a file cabinet... and that's where it sits.

SS Treasuries are owed to the beneficiaries of SS. But the Trustee refuses to deliver the monies in the fund to the beneficiaries. That's just as criminal an act as them borrowing it in the first place.

And no one says a word, cuz Americans have a kindergaten level understanding of money. It isn't so easy to take candy from a baby, but it is easy to take money from a baby... because babies don't see any value in money... just like Americans don't see any value in the $3.75 Trillion owed them, sitting in a file cabinet over at the Treasury.

its just a payroll tax, they say...

those Treasuries aren't worth anything, they say...

US Treasuries are US Treasuries... they are due and payable, people. It's your money, it is owed to you and it just sits there; the Treasury could pay it out, but no one even asks for them to do so.

 

[fairsheet]

Your screed is bogus. Social Security's charter requires it to invest its surplus in U.S. Treasuries. Thus.....Congress is required by law, to borrow from the Social Security trust fund.

Some are convinced that maybe Social Security should've stuffed its excess dough in a mattress...or a "lockbox". But of course, given the inexorability of inflation, that would've been really really stupid. But....maybe someone could suggest a better place Social Security should've invested all that money? Something tells me that those who THINK they have a better idea, probably haven't thought it all the way through.

 

[Days]

Fair, do you understand what circular reasoning is? Like if I say, both the sky and the lake are blue, therefore the sky is the lake. That's called circular reasoning, it is flawed reasoning, it makes no sense, the conclusion doesn't flow from the evidence, there is no chain of logic.

Let me give another example. The Social Security Trust Fund has Congress as its Trustee, the Treasury as its executor, and the American people as its beneficiaries. If Treasuries are placed in the fund by its executor, those Treasuries are owed to the beneficiaries. That's a trust fund. That's how it works. But you come along and say that the fund is set up to place Treasuries for its excess, so that proves that the American people are no longer the beneficiaries? Or what exactly, you just make some bland statement that the top post is bogus, without explaining what it bogus and without citing anything incorrect in the top post, but you toss out an additional bit of evidence and then conclude that it some how makes the entire top post bogus... classic example of circular reasoning; flawed logic. You then extend upon your error and say that this storing of excess funds in Treasuries actually forces the Trustee to borrow from the fund????

Storing excess funds in Treasuries happened for decades before Congress started borrowing from the fund... the trust fund was set up to save its excess for its beneficiaries, that hardly forces the Trustee to borrow those savings from the trust fund. That's like saying, the cookie jar forced me to steal cookies from it.

Well, you completely missed what the top post was saying.

The funds that Congress raided, were collected FICA taxes. They may have been stored as Treasuries, but they originated as FICA taxes. The Treasuries that were placed by Congress, that exist in the fund today, are special place holder bonds that keep record of what Congress owes the fund. They did not originate from the currency, that's why they are not thought of as part of the currency. Never the less, they are Treasuries. Since the entire currency is formed by some form of debt anyway, those Treasuries are part of the money supply, they just are not being put into circulation. When I propose sending out those Treasuries to the beneficiaries instead of writing a check form the general fund, it circulates the stored Treasuries; paying them off. Now follow the bouncing ball, this is totally legal, and here's why... when you take those Treasuries you receive for your benefit payment and drop them in your bank account, what happens? The bank is going to either redeem the Treasuries or simply hold them, or trade them on the bond market. So it is just circulating an area of the bond market that currently is sitting idle.

Why am I bothering to do this? Because for one, it adds more volume to throughput, which will help stimulate the economy, and it adds another source of funds to the budget. In essence, I want to spend those FICA taxes twice; but the 2nd time, on what they were collected for; the beneficiaries. By doing that, you don't need to sell more Treasuries at the monthly auctions. So instead of creating new bonds and adding them to the market, just add the old bonds to the market... same difference, as far as the bond market is concerned.

But here's the difference. While we put those $4+ Trillion bonds holed up in the multiple government trust funds back onto the market, we are not producing new debt; hence our national debt is not rising. This whole debacle over the sequester is squabbling over reducing the deficit... a deficit that isn't coming down very fast, and currently is right around a trillion. Even if they reduce it over ten years, it likely will eat up those four trillion in place holder bonds within six years. So why not put them into circulation versus creating four new trillion in Treasuries?

Some of us have thought it all the way through, Fair. Some of us have spent years arguing about this over at moneybox. Learn the currency before you make statements like "Congress is forced to borrow from government Trust Funds" ... it is totally illegal for a Trustee to touch the monies in a Trust Fund, even to 'borrow" from it. Ask Ken Lay about that. That was his defense, he claimed he was just borrowing from the corporate employee retirement fund... brilliant defense! He confessed to the crime.

 

[EatTheRich]

Of course, if they do send out all those bonds, they become next to worthless as the printing press starts to work its magic. Let's demand gold and silver instead.

 

[Days]

We are going to introduce new bonds into the market. Introducing older bonds in place of brand new bonds will not change the volume of bonds introduced into the market; hence, value reduction due to market volume is absolutely unchanged. Think it through.

 

[fairsheet]

Fair, do you understand what circular reasoning is? Like if I say, both the sky and the lake are blue, therefore the sky is the lake. That's called circular reasoning, it is flawed reasoning, it makes no sense, the conclusion doesn't flow from the evidence, there is no chain of logic.

Let me give another example. The Social Security Trust Fund has Congress as its Trustee, the Treasury as its executor, and the American people as its beneficiaries. If Treasuries are placed in the fund by its executor, those Treasuries are owed to the beneficiaries. That's a trust fund. That's how it works. But you come along and say that the fund is set up to place Treasuries for its excess, so that proves that the American people are no longer the beneficiaries? Or what exactly, you just make some bland statement that the top post is bogus, without explaining what it bogus and without citing anything incorrect in the top post, but you toss out an additional bit of evidence and then conclude that it some how makes the entire top post bogus... classic example of circular reasoning; flawed logic. You then extend upon your error and say that this storing of excess funds in Treasuries actually forces the Trustee to borrow from the fund????

Storing excess funds in Treasuries happened for decades before Congress started borrowing from the fund... the trust fund was set up to save its excess for its beneficiaries, that hardly forces the Trustee to borrow those savings from the trust fund. That's like saying, the cookie jar forced me to steal cookies from it.

Well, you completely missed what the top post was saying.

The funds that Congress raided, were collected FICA taxes. They may have been stored as Treasuries, but they originated as FICA taxes. The Treasuries that were placed by Congress, that exist in the fund today, are special place holder bonds that keep record of what Congress owes the fund. They did not originate from the currency, that's why they are not thought of as part of the currency. Never the less, they are Treasuries. Since the entire currency is formed by some form of debt anyway, those Treasuries are part of the money supply, they just are not being put into circulation. When I propose sending out those Treasuries to the beneficiaries instead of writing a check form the general fund, it circulates the stored Treasuries; paying them off. Now follow the bouncing ball, this is totally legal, and here's why... when you take those Treasuries you receive for your benefit payment and drop them in your bank account, what happens? The bank is going to either redeem the Treasuries or simply hold them, or trade them on the bond market. So it is just circulating an area of the bond market that currently is sitting idle.

Why am I bothering to do this? Because for one, it adds more volume to throughput, which will help stimulate the economy, and it adds another source of funds to the budget. In essence, I want to spend those FICA taxes twice; but the 2nd time, on what they were collected for; the beneficiaries. By doing that, you don't need to sell more Treasuries at the monthly auctions. So instead of creating new bonds and adding them to the market, just add the old bonds to the market... same difference, as far as the bond market is concerned.

But here's the difference. While we put those $4+ Trillion bonds holed up in the multiple government trust funds back onto the market, we are not producing new debt; hence our national debt is not rising. This whole debacle over the sequester is squabbling over reducing the deficit... a deficit that isn't coming down very fast, and currently is right around a trillion. Even if they reduce it over ten years, it likely will eat up those four trillion in place holder bonds within six years. So why not put them into circulation versus creating four new trillion in Treasuries?

Some of us have thought it all the way through, Fair. Some of us have spent years arguing about this over at moneybox. Learn the currency before you make statements like "Congress is forced to borrow from government Trust Funds" ... it is totally illegal for a Trustee to touch the monies in a Trust Fund, even to 'borrow" from it. Ask Ken Lay about that. That was his defense, he claimed he was just borrowing from the corporate employee retirement fund... brilliant defense! He confessed to the crime.

That was one big ol' mountain of diversion, to suggest that Social Security's excess should've been "stored" somewhere other than in U.S. Treasuries. So..where do YOU suggest they should have "stored" it?

 

[Woolleybugger]

OK, I will jump in since I like Days. Here is how it worked: For years we paid more in benefits than we took in because SS taxation was very low at the beginning. Every dollar in excess of revenues were taken from the general fund until SS revenues started creeping up. At some point, SS revenues exceeded payouts which means that our payout was X and the taxes generated by SS were X+Y or Z. The amount Y was invested in the safest instrument possible so that the fund could pay for future retirees. It could have been put in a lock box but it was instead thrown into the general fund so that the excess revenue could support a war and a low tax rate elsewhere. The fund keeps growing and the economy grows as well. Until we get to the era of massive continuous deficits during the Reagan era, this does not pose any problems. As long as the economy grows and taxes are sufficient to cover expenses, SS is secure. When we get into situation like we have today, then someone has to divvy up the funds according to national priorities and political will. All the talk about fiat money is a theoretical puzzle that would not change one bit if we decided to go on the gold or silver standard. You would still have money created out of thin air based upon a false sense of value in a metal instead of an economy. You would still have the problem of controlled lending or the expansion of the money supply regardless of the value you put on the metal to currency exchange. If we did was Days wants, someone would have to value all the gold and silver in circulation along with all the values of assets and deposits and then divide it into the metals on reserve to get a multiple. The only way the money supply could grow then was to find more metals or by changing the value of those metals meaning a run up in prices. You get the same problem at the end of the day as long as the people, the banks and the government cannot control their irrational behavior. The key is changing the behavior. If you believe that lower taxes pay for themselves, your behavior needs attention. If you believe in massive deficits as a way of standard operating procedure, your behavior needs attention. If you believe that the market is efficient and that everyone acts rationally, the same thing needs attention. There is no substitute for mature, pragmatic and prudent money management, tax policies and political leadership.

 

[trapdoor]

The T-bonds in the Social Security Trust fund would be useless to Social Security beneficiaries. They're non-negotiable bonds serving only as a place-holder for the money received via FICA taxation. They are not the T-bonds traders can by in Federal Reserve auctions.

The simple fact of the matter is that the trust fund is an accounting fiction. Let's say you hit a slot machine jackpot for $700. Instead of putting it into your checking account, you put it in a jar on top of your dresser -- you now have $700 in "surplus" income analogous to the FICA surplus in the Trust Fund.

Now, the day comes when your salary doesn't meet all your expenses -- you write a check for $700 to yourself, put it in the jar, and then spend the $700. That check represents the T-bonds in the trust fund.

Later on, you need to use the money in the "trust fund" represented by the check in the jar. In order to do that ,you have to find money from ANOTHER SOURCE and redeem the check. That's where Social Security is today. For years, the surpluse (the $700) has been used to finance general fund shortfalls (your one-time shortage), but now we need to redeem the bonds (cash the check you wrote to yourself), and a source of revenue to do that is required.

 

[Days]

And the bonds are recorded in huge chunks, obviously, I'm not talking about sending the same bonds that are in the file cabinet. But like you said, they are accounting actions. All the Treasury needs to do is issue Social Security benefits in special benefit bonds and subtract those amounts from the Social Security place holder bonds. Its an accounting action.

 

[Days]

I didn't suggest anything like that. I suggested issuing Congress' stored debt to the Trust fund as bond payments to the beneficiaries. I'm taking advantage of those Treasuries, not decrying them.

 

[Days]

Since I stole your line for this top post "due and payable" I was hoping you might stumble into this. But you reacted more to my idea of coining silver again, than you did to this top post. Although your points on money management all apply in either case. One thing I would point out about the silver; I wanted to go back to silver dollars, but I didn't want the fiat currency to define the silver; in other words, I wanted a separate value for the silver, which it would almost certainly attain anyway because a pure silver coin is worth one heck of a lot more than a paper dollar. Then it works to retain value for wages just because it is limited. You still have the fiat currency, we did this for a long time in America, we had silver, we had gold, and we had bank coupons for currency. It worked quite well. Then they took away the silver and the economy went in the toilet. Bringing back the silver wont suddenly open new factories, it isn't going to create wealth, but it is a long term project to stabilize value for wages... you still have to fight to bring back wages but at least you have a retainer for value to secure those victories.

This idea of issuing the new bonds from the Congressional debt (why do they call it part of the national debt; that particular debt is owed to the people, not by the people - so I am calling it what it is; the Congressional debt) makes sense because those bonds are useless sitting in a file cabinet. Why are we creating new bonds every month for auction and holding $4trillion in bonds for nothing? If we kick out bonds onto the market anyway, let's send the beneficiaries their bonds, they are due to the beneficiaries, let's give them to them. We are going to run enormous deficits, let's use up these bonds instead of writing new debt. Does it change redemption rates? I figure it creates a whole new market action, so that market action will create its own redemption rate, it might be stronger and it might be weaker, that's not going to change the bigger picture. The banks will redeem the bonds for the people, but they might decide to hold them in place of buying new bonds... especially if the auctions are turned off, so in the final analysis, it is just a different avenue for issuing Treasuries. But you have to love the accounting; the National debt remains the same for the next $4trillion in deficits.

 

[fairsheet]

You say that the debt as it relates to Social Security is "owed to the people, not by the people". You are mistaken. It is owed to the people AND by the people. The "idea" that we should owe no one anything, is so counter to the fundaments of democratic capitalism, that I don't find it even worth discussing.

SO....since we need to owe someone something, what better position could we be in, than to owe it to ourselves?

 

[Days]

you are starting to make sense, it is officially called intra-government debt. As in, it is debt between branches of the government. The idea there is, Congress owes the Trust Fund those Taxes. So, as far as the accounting is concerned, the Treasuries placed in the trust funds were issued by Congress. But the Social Security Trust Fund has a beneficiary. So anything in the Trust Fund is owed to the beneficiary.

Here's what's not so wonderful about carrying extra debt: it is hurting our credit rating. That's a double whammy because the credit rating causes the interest rate on the debt to rise. This debt is already written, so lets issue these Treasuries instead adding new ones on top of them. simple stuff, but $4trillion in national debt is serious stuff.

 

[fairsheet]

you are starting to make sense, it is officially called intra-government debt. As in, it is debt between branches of the government. The idea there is, Congress owes the Trust Fund those Taxes. So, as far as the accounting is concerned, the Treasuries placed in the trust funds were issued by Congress. But the Social Security Trust Fund has a beneficiary. So anything in the Trust Fund is owed to the beneficiary.

Here's what's not so wonderful about carrying extra debt: it is hurting our credit rating. That's a double whammy because the credit rating causes the interest rate on the debt to rise. This debt is already written, so lets issue these Treasuries instead adding new ones on top of them. simple stuff, but $4trillion in national debt is serious stuff.

Until the Li'l Georgiean Depression, Social Security didn't even represent debt, and even now it represents but a minscule part of our overall debt. That's probably why all the hyper-inflation-sky-is-fallingers have had such egg on their faces voer the last 5 years. Our creditors don't give a shit about the debt we owe to ourselves.

It's like this...let's say you want to buy a car for $1,000. You can borrow the dough from the "Buy Here, Pay Here" dude, or yuo can borrow it from your wife. In the former instance you start out at roughly at par. You owe him $1,000, but you've presumably
got an asset worth $1000. The problem with that of course, is that depending upon how long it takes you to pay it off, your debt may grow even as your asset depreciates. In the latter instance though - since what's yours is your wife's and what's hers is yours, you actually start out $1,000 ahead! Your loan zeroes itself out since you've got both a balance owing of $1,000 and you've got a balance due of $1,000. And then...you toss in your asset in the $1,000 car! You don't have to worry about your debt growing due to interest, because your "owing" is in balance with your "due"!

 

[Days]

Our creditors down graded us, remember? And it is happening all over the planet for everyone steeped in debt.

The current national debt

Debt held by the public includes all outstanding Treasuries, whether they are held by banks or are savings bonds, whatever.

Intragovernmental Holdings are those place holder bonds keeping track of monies borrowed by Congress from government trust funds.

$4trillion is serious.

 

[fairsheet]

Even as those of us who despise the Teabagger/GOP love to make note of how their childishness around the debt ceiling "caused" our credit rating to decline, the fact is that we're currently paying historically low rates.

The hyper-inflation shriekers have come a cropper over the last 5 years. So TOO, have those who would yowl that our debt might cause our interest rates to become an issue for us.

 

[Days]

Rates are a non-factor to my plan. The bonds would be issued at market rate, this would not change the deficit, this is just a different way of issuing the bonds. Tea baggers are screaming about the one trillion dollar deficit; I screamed for five years that it was coming and nobody believed me. The deficit is too high, no argument there, unless you think a trillion dollar deficit is anything like normal... but this plan doesn't affect the deficit, it won't change the deficit, I'm not saying word one about the budget... I'm just looking at a trillion dollar deficit and a $4.8 trillion intragovernment debt and I'm hooking the two up. Accounting fancy foot work. Cleaning up the books. Tea baggers haven't a clue what this is about... I'm not on anyone's side in the political landscape - I'm a veteran of the bond market, an old mortgage banker, this is just about debt management.

 

[trapdoor]

I didn't suggest anything like that. I suggested issuing Congress' stored debt to the Trust fund as bond payments to the beneficiaries. I'm taking advantage of those Treasuries, not decrying them.

But to take advantage of the treasuries, there must be a revenue stream with which to redeem them. Where does that come from?

 

[Woolleybugger]

The nature of all public debt is that you either redeem them at value or you turn them over and continue paying interest on them. The SS debt can be repaid whenever our incomes from taxation are less than the outlays. So if the current intra-government debt for SS was 1 trillion and this year we were short 25 billion to pay out SS, we could call the deficit funding a form of lowering the long term intra-governmental debt by the same amount. I hope this is what we are doing. If you think of it this way then SS is solvent for a long, long time.

 

[Days]

Its called the bond market.