Social Security is Not a Ponzi Scheme, Mr. Perry

[Quantum Windbag]

United States Notes - which are no longer circulated - are backed by the U.S. Government. Federal Reserve Notes are indirectly backed by the U.S Government, but they are first backed by the assets of the Federal Reserve.

Wrong. Any currency the Fed puts into circulation must be exchanged for an asset or collateralized by an asset.

You should inform the federal reserve they have no idea what they are talking about.



FRB: Federal Reserve Act: Section 16

I keep having this problem when talking to you, whether I should be the entire fucking world, or you. I keep picking the world because I am an asshole.

Did you bother to keep reading your own damn link? The banks can't get the notes without COLLATERAL moron. And that collateral can be gold - among other things.

2. Application for Notes by Federal Reserve Banks
Any Federal Reserve bank may make application to the local Federal Reserve agent for such amount of the Federal Reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under section 10A, 10B, 13, or 13A of this Act, or bills of exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of section 14 of this Act, or bankers' acceptances purchased under the provisions of said section 14, or gold certificates, or Special Drawing Right certificates, or any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof, or assets that Federal Reserve banks may purchase or hold under section 14 of this Act or any other asset of a Federal reserve bank. In no event shall such collateral security be less than the amount of Federal Reserve notes applied for. The Federal Reserve agent shall each day notify the Board of Governors of the Federal Reserve System of all issues and withdrawals of Federal Reserve notes to and by the Federal Reserve bank to which he is accredited. The said Board of Governors of the Federal Reserve System may at any time call upon a Federal Reserve bank for additional security to protect the Federal Reserve notes issued to it. Collateral shall not be required fo

Did you?

[12 USC 412. As amended by the acts of Sept. 7, 1916 (39 Stat. 754); June 21, 1917 (40 Stat. 236); Feb. 27, 1932 (47 Stat. 57); Feb. 3, 1933 (47 Stat. 794); Jan. 30, 1934 (48 Stat. 338); March 6, 1934 (48 Stat. 991); June 30, 1941 (55 Stat. 395); May 25, 1943 (57 Stat. 85); June 12, 1945 (59 Stat. 237); June 19, 1968 (82 Stat. 189); Nov. 10, 1978 (92 Stat. 3672); March 31, 1980 (94 Stat. 140); Dec. 6, 1999 (113 Stat. 1638); and Oct. 28, 2003 (117 Stat. 1193).]

Go educate yourself and look up all those amendments to the section you just quoted. I don't expect you to actually admit you are wrong, but at least you will know it and I can call you a liar with a liar conscious.

 

[Quantum Windbag]

See last part of post directly above.

Sorry I use facts. I could just make it all up like you guys I suppose.

Oh NOW you move on outright lies. Your collateralized money drivel is the best joke of the day from you.

I quoted the federal reserve act.

The old one, which is no longer in force.

 

[OohPooPahDoo]

You should inform the federal reserve they have no idea what they are talking about.



FRB: Federal Reserve Act: Section 16

I keep having this problem when talking to you, whether I should be the entire fucking world, or you. I keep picking the world because I am an asshole.

Did you bother to keep reading your own damn link? The banks can't get the notes without COLLATERAL moron. And that collateral can be gold - among other things.

Did you?

[12 USC 412. As amended by the acts of Sept. 7, 1916 (39 Stat. 754); June 21, 1917 (40 Stat. 236); Feb. 27, 1932 (47 Stat. 57); Feb. 3, 1933 (47 Stat. 794); Jan. 30, 1934 (48 Stat. 338); March 6, 1934 (48 Stat. 991); June 30, 1941 (55 Stat. 395); May 25, 1943 (57 Stat. 85); June 12, 1945 (59 Stat. 237); June 19, 1968 (82 Stat. 189); Nov. 10, 1978 (92 Stat. 3672); March 31, 1980 (94 Stat. 140); Dec. 6, 1999 (113 Stat. 1638); and Oct. 28, 2003 (117 Stat. 1193).]

Go educate yourself and look up all those amendments to the section you just quoted. I don't expect you to actually admit you are wrong, but at least you will know it and I can call you a liar with a liar conscious.

Tell you what, I'll just quote and link to current U.S. Code, does that work for you?


United States Code: Title 12,412. Application for notes; collateral required | LII / Legal Information Institute

Any Federal Reserve bank may make application to the local Federal Reserve agent for such amount of the Federal Reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under section 92, 342 to 348, 349 to 352, 361, 372, or 373 of this title, or bills of exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of sections 348a and 353 to 359 of this title, or bankers’ acceptances purchased under the provisions of said sections 348a and 353 to 359 of this title, or gold certificates, or Special Drawing Right certificates, or any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof, or assets that Federal Reserve banks may purchase or hold under sections 348a and 353 to 359 of this title or any other asset of a Federal Reserve bank. In no event shall such collateral security be less than the amount of Federal Reserve notes applied for. The Federal Reserve agent shall each day notify the Board of Governors of the Federal Reserve System of all issues and withdrawals of Federal Reserve notes to and by the Federal Reserve bank to which he is accredited. The said Board of Governors of the Federal Reserve System may at any time call upon a Federal Reserve bank for additional security to protect the Federal Reserve notes issued to it. Collateral shall not be required for Federal Reserve notes which are held in the vaults of, or are otherwise held by or on behalf of, Federal Reserve banks.

There. Satisfied, moron?

 

[OohPooPahDoo]

Oh NOW you move on outright lies. Your collateralized money drivel is the best joke of the day from you.

I quoted the federal reserve act.

The old one, which is no longer in force.

YOU QUOTED THE SAME THING YOURSELF HYPOCRITE


Link and quote to current law above. Looks like it hasn't changed much for the purpose of our discussion.

You clearly have no idea at all how central banking works.

 

[Quantum Windbag]

Did you bother to keep reading your own damn link? The banks can't get the notes without COLLATERAL moron. And that collateral can be gold - among other things.

Did you?



Go educate yourself and look up all those amendments to the section you just quoted. I don't expect you to actually admit you are wrong, but at least you will know it and I can call you a liar with a liar conscious.

Tell you what, I'll just quote and link to current U.S. Code, does that work for you?


United States Code: Title 12,412. Application for notes; collateral required | LII / Legal Information Institute

Any Federal Reserve bank may make application to the local Federal Reserve agent for such amount of the Federal Reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under section 92, 342 to 348, 349 to 352, 361, 372, or 373 of this title, or bills of exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of sections 348a and 353 to 359 of this title, or bankers’ acceptances purchased under the provisions of said sections 348a and 353 to 359 of this title, or gold certificates, or Special Drawing Right certificates, or any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof, or assets that Federal Reserve banks may purchase or hold under sections 348a and 353 to 359 of this title or any other asset of a Federal Reserve bank. In no event shall such collateral security be less than the amount of Federal Reserve notes applied for. The Federal Reserve agent shall each day notify the Board of Governors of the Federal Reserve System of all issues and withdrawals of Federal Reserve notes to and by the Federal Reserve bank to which he is accredited. The said Board of Governors of the Federal Reserve System may at any time call upon a Federal Reserve bank for additional security to protect the Federal Reserve notes issued to it. Collateral shall not be required for Federal Reserve notes which are held in the vaults of, or are otherwise held by or on behalf of, Federal Reserve banks.

There. Satisfied, moron?

Very good.

Now show me, from the section you just quoted, where it says anything about the Federal Reserve itself actually needing collateral to do something like buying T-bills. In fact, if you read the law carefully, you will see that the Federal Reserve banks are actually able to use T-bills they purchase through quantitative easing as collateral to get more money form the Federal Reserve.

Think about that for a minute. The Federal Reserve bank, in order to increase the money supply, buys T-bills, and then uses those T-bills to get more money, which it uses to get more T-bills...

Can you see a problem with that, or are you still going to insist that it is backed by gold.

 

[Quantum Windbag]

I quoted the federal reserve act.

The old one, which is no longer in force.

YOU QUOTED THE SAME THING YOURSELF HYPOCRITE


Link and quote to current law above. Looks like it hasn't changed much for the purpose of our discussion.

You clearly have no idea at all how central banking works.

I quoted a section with a lot fewer amendments, and did so knowing that the law is no longer applicable. You fell into the trap of not actually reading my link. That is not my problem.

 

[OohPooPahDoo]

I quoted a section with a lot fewer amendments, and did so knowing that the law is no longer applicable.

Well then you were wrong, because the link you provided has the Federal Reserve Act AS AMENDED - that means the amendments to the act are included in the wording you moron. You can't understand basic English. HERE is the text of the original Federal Reserve Act of 1913, shit for brains.

You fell into the trap of not actually reading my link. That is not my problem.

Great. You want to tell me which one of the two links doesn't support my position?

 

[Raoul_Duke]

You can start by looking at CBO figures and see in 2037 the light go out on SS. Then check the assumptions made to make it last that long and see we will not do that well.

The light does not go out in 2037. The worst that happens is that SS can only pay 75% of projected benefits. And because SS is indexed to wages, and because wages go up faster than prices, 75% of 2037 benefits will afford 2037 retirees a higher standard of living than 2011 benefits give 2011 retirees.

And all we have to do to fix SS for the next 75 year long term projection is raise another 0.6% of GDP. This can be done with small phased in payment increases and benefit cuts over the next 20 years, or removing the payroll tax cap, or a whole bunch of other measures.

The problem is NOT in 2037.. The problem has ALREADY ARRIVED.. Soc Sec annual books went NEGATIVE in 2010.. Read the thread. Learn something.. There is NOTHING OF VALUE in the Trust Fund. This payback of interest from "investments" is a fiction.

It is the SAME taxpayers who had their excess FICA ripped off for 30 years that are paying AGAIN for the "interest and principle" from the Trust Fund..

And NO -- it is NOT invested. There's a big diff between

A) ...taking the 1998 excess FICA payments and actually buying EXISTING REAL treas bills from the open market and placing them into the Trust Fund (did not happen) AND

B) Spending the surplus. Placing a non-transferable, non-negotiable IOU in there that's backed only by a promise to issue FUTURE DEBT and interest on the backs of some of same taxpayers who got robbed.

There you lazy poster. I've given you the Cliff Notes and the answers on the test. Think you can pass the quiz now???

SS is taking in less money than paying out due to a massive payroll tax cut and a massive recession. And the trust fund contains a couple of trillion dollars of US bonds, which as recent events have showed are the safest investment on the planet. Are you saying that US bonds are wothless IOUs? Because the world's investors don't agree with you on that one.

 

[OohPooPahDoo]

SS is taking in less money than paying out due to a massive payroll tax cut and a massive recession. And the trust fund contains a couple of trillion dollars of US bonds, which as recent events have showed are the safest investment on the planet......

Cue retarded comments about S&P's downgrade......

 

[Raoul_Duke]

As has subsequently and I'm sure previously pointed out to you, that is indeed the case. You pay the SS fund money and that insures you against, for instance, disability leaving you in chronic poverty. And it also provides you with retirement income. And it operates much like any insurance scheme. You pay premiums and the insurance company pays out claims with the premiums and keeps some as profit. Except SS doesn't take a profit so there's an actual difference between SS social insurance and standard insurance.

Insurance is a transfer of risk. SS is currently a retirement program, not an insurance program.

What I'm saying is quite clear. A Ponzi scheme operates by defrauding investors. It claims that the money it's paying out is from profits it made investing investors' money, but this is obviously not the case. SS never makes such claims. And every penny in and out is publically accounted for by insurance actuaries in public reports every year. So SS (public, transparent) and Ponzi schemes (private, fradulent information and claims only issued) are two entirely different things. What part of this don't you understand?

What I am saying is very clear. SS security works like a Ponzi game in that it takes money from workers and uses it to pay retirees. I can provide links to multiple economists, two of whom have one Nobel Prizes, multitudes of politicians from both parties, and the current sitting president of the US, all of whom agree with me. All you can do is try to parse language and insist that, because SS is honest about being a Ponzi game, and is run by the government, that proves that it is not one.

Please, keep arguing, it is fun.

It's social insurance. Let's say you're 23. You have a car accident that's not your fault and you're disabled and unable to pay for care or work anymore. SS provides a basic level of care for you, even paying for a nursing home if that's what you need.


Ponzi schemes are unsustainable because you need an ever-growing number of investors tp pay off current investors. That isn't the case with SS. Here is the CBO's 75 year estimate of SS funding requirements :

No ever-growing number of investors needed, see?

No hidden accounts like every other ponzi scheme. Can you name a single Ponzi scheme that makes its accounts public, hmmm?

 

[Raoul_Duke]

Insurance is paying someone to assume the risk, SS is not.

Are you saying that if I ran a Ponzi game that actually told people that I was not investing money the government would not have me up on charges of running a Ponzi scheme? If so, I have some ocean front property I need to sell.

As has subsequently and I'm sure previously pointed out to you, that is indeed the case. You pay the SS fund money and that insures you against, for instance, disability leaving you in chronic poverty. And it also provides you with retirement income. And it operates much like any insurance scheme. You pay premiums and the insurance company pays out claims with the premiums and keeps some as profit. Except SS doesn't take a profit so there's an actual difference between SS social insurance and standard insurance.

What I'm saying is quite clear. A thonzi scheme operates by defrauding investors. It claims that the money it's paying out is from profits it made investing investors' money, but this is obviously not the case. SS never makes such claims. And every penny in and out is publically accounted for by insurance actuaries in public reports every year. So SS (public, transparent) and Ponzi schemes (private, fradulent information and claims only issued) are two entirely different things. What part of this don't you understand?

It is my understanding that for about the last year, many wage earners have not paid in one cent to FICA. It is also my understanding that a bill to allow the employers to quit paying their share of FICA is being considered.

My question is, at age 67 will the benefits for these employees be reduced in proportion for the year(s) they didn't pay? My second question is, since they are not paying the insurance premium, are they eligible for disability benefit?

In the real world, if you don't pay the premium, the policy is cancelled.

No, they won't be reduced and they'll still be eligible. The payroll tax isbeing cut to boost the economy as a whole rather than anything to do with SS and so it's hard to make an analogy to private insurance companies. All I would say is that SS is in far better financial health than a large number of America's public and private pension funds.

 

[Raoul_Duke]

SS is taking in less money than paying out due to a massive payroll tax cut and a massive recession. And the trust fund contains a couple of trillion dollars of US bonds, which as recent events have showed are the safest investment on the planet......

Cue retarded comments about S&P's downgrade......

Cue a graph showing the yield curve on the ten year note for the few weeks before and after the downgrade. Mr. Market believes in US bonds more than any other investment.

Also, too. The bonds in the trust fund are actually preferred bonds. They have senior debt status compared to regular bonds and have to be paid by the government before any other bond-related debt is paid.

 

[Raoul_Duke]

You can start by looking at CBO figures and see in 2037 the light go out on SS. Then check the assumptions made to make it last that long and see we will not do that well.

The light does not go out in 2037. The worst that happens is that SS can only pay 75% of projected benefits. And because SS is indexed to wages, and because wages go up faster than prices, 75% of 2037 benefits will afford 2037 retirees a higher standard of living than 2011 benefits give 2011 retirees.

And all we have to do to fix SS for the next 75 year long term projection is raise another 0.6% of GDP. This can be done with small phased in payment increases and benefit cuts over the next 20 years, or removing the payroll tax cap, or a whole bunch of other measures.

How many retirees are going to make it on 75% of their check genius.

Read what i wrote again. 75% of 2037 benefits will give 2037 retirees a higher standarsd of living than todays retirees have from 2011 benefit levels.

 

[Raoul_Duke]

Raoul_Duke:

What I'm saying is quite clear. A Ponzi scheme operates by defrauding investors. It claims that the money it's paying out is from profits it made investing investors' money, but this is obviously not the case. SS never makes such claims. And every penny in and out is publically accounted for by insurance actuaries in public reports every year. So SS (public, transparent) and Ponzi schemes (private, fradulent information and claims only issued) are two entirely different things. What part of this don't you understand?

You need to be MUCH more careful about your assertions if you want to get credibility and traction in this debate. That bolded line above is hysterically naive and WOULD be funny if it wasn't so wrong..

Here's what the SS people themselves havt to say about how SS works :

n contrast to a Ponzi scheme, dependent upon an unsustainable progression, a common financial arrangement is the so-called "pay-as-you-go" system. Some private pension systems, as well as Social Security, have used this design. A pay-as-you-go system can be visualized as a pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.

There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends.

So we could image that at any given time there might be, say, 40 million people receiving benefits at the back end of the pipeline; and as long as we had 40 million people paying taxes in the front end of the pipe, the program could be sustained forever. It does not require a doubling of participants every time a payment is made to a current beneficiary, or a geometric increase in the number of participants. (There does not have to be precisely the same number of workers and beneficiaries at a given time--there just needs to be a fairly stable relationship between the two.) As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme.

In this context, it would be most accurate to describe Social Security as a transfer payment--transferring income from the generation of workers to the generation of retirees--with the promise that when current workers retire, there will be another generation of workers behind them who will be the source of their Social Security retirement payments. So you could say that Social Security is a transfer payment, but it is not a pyramid scheme. There is a huge difference between the two, and only a superficial similarity.

If the demographics of the population were stable, then a pay-as-you-go system would not have demographically-driven financing ups and downs and no thoughtful person would be tempted to compare it to a Ponzi arrangement. However, since population demographics tend to rise and fall, the balance in pay-as-you-go systems tends to rise and fall as well. During periods when more new participants are entering the system than are receiving benefits there tends to be a surplus in funding (as in the early years of Social Security). During periods when beneficiaries are growing faster than new entrants (as will happen when the baby boomers retire), there tends to be a deficit. This vulnerability to demographic ups and downs is one of the problems with pay-as-you-go financing. But this problem has nothing to do with Ponzi schemes, or any other fraudulent form of financing, it is simply the nature of pay-as-you-go systems.


Social Security Online - HISTORY, Ponzi Schemes vs. Social Security

 

[Quantum Windbag]

I quoted a section with a lot fewer amendments, and did so knowing that the law is no longer applicable.

Well then you were wrong, because the link you provided has the Federal Reserve Act AS AMENDED - that means the amendments to the act are included in the wording you moron. You can't understand basic English. HERE is the text of the original Federal Reserve Act of 1913, shit for brains.

You fell into the trap of not actually reading my link. That is not my problem.

Great. You want to tell me which one of the two links doesn't support my position?

Neither of them support your position. Your position is that Federal Reserve Notes are backed by gold, they aren't.

My position, on the other hand, is that the dollar is backed by the US government. It turns out I am right.

Federal Reserve notes are not redeemable in gold, silver, or any other commodity. Federal Reserve notes have not been redeemable in gold since January 30, 1934, when the Congress amended Section 16 of the Federal Reserve Act to read: "The said [Federal Reserve] notes shall be obligations of the United States….They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank." Federal Reserve notes have not been redeemable in silver since the 1960s.
The Congress has specified that Federal Reserve Banks must hold collateral equal in value to the Federal Reserve notes that the Federal Reserve Bank puts in to circulation. This collateral is chiefly held in the form of U.S. Treasury, federal agency, and government-sponsored enterprise securities.

FRB: Is U.S. currency still backed by gold?

 

[Quantum Windbag]

As has subsequently and I'm sure previously pointed out to you, that is indeed the case. You pay the SS fund money and that insures you against, for instance, disability leaving you in chronic poverty. And it also provides you with retirement income. And it operates much like any insurance scheme. You pay premiums and the insurance company pays out claims with the premiums and keeps some as profit. Except SS doesn't take a profit so there's an actual difference between SS social insurance and standard insurance.

Insurance is a transfer of risk. SS is currently a retirement program, not an insurance program.

What I'm saying is quite clear. A Ponzi scheme operates by defrauding investors. It claims that the money it's paying out is from profits it made investing investors' money, but this is obviously not the case. SS never makes such claims. And every penny in and out is publically accounted for by insurance actuaries in public reports every year. So SS (public, transparent) and Ponzi schemes (private, fradulent information and claims only issued) are two entirely different things. What part of this don't you understand?

What I am saying is very clear. SS security works like a Ponzi game in that it takes money from workers and uses it to pay retirees. I can provide links to multiple economists, two of whom have one Nobel Prizes, multitudes of politicians from both parties, and the current sitting president of the US, all of whom agree with me. All you can do is try to parse language and insist that, because SS is honest about being a Ponzi game, and is run by the government, that proves that it is not one.

Please, keep arguing, it is fun.

It's social insurance. Let's say you're 23. You have a car accident that's not your fault and you're disabled and unable to pay for care or work anymore. SS provides a basic level of care for you, even paying for a nursing home if that's what you need.


Ponzi schemes are unsustainable because you need an ever-growing number of investors tp pay off current investors. That isn't the case with SS. Here is the CBO's 75 year estimate of SS funding requirements :

No ever-growing number of investors needed, see?

No hidden accounts like every other ponzi scheme. Can you name a single Ponzi scheme that makes its accounts public, hmmm?

Funny how many economists, and even the SS actuaries, disagree. They are saying that SS is unsustainable the way it works now. Tweaking it the way some people here keep saying will delay the inevitable, but eventually someone is going to have to deal with the outright collapse of the system.

Yet, for some reason I am unable to fathom, people want to focus on semantics rather than admit there is a problem and fix it.

 

[editec]

Oh NOW you move on outright lies. Your collateralized money drivel is the best joke of the day from you.

I quoted the federal reserve act.

The last three words are supposed to be capitalized grammer nazi.

...and just what does the government have to collateralize our currency? Certainly not tax dollars or tangible products. Full faith and CREDIT?

The fact that it can tax the people?

You know exactly the same as every other government in the world?

Kid you GOTTA go read a book.

Seriously, you so don't get it.

 

[OohPooPahDoo]

I quoted a section with a lot fewer amendments, and did so knowing that the law is no longer applicable.

Well then you were wrong, because the link you provided has the Federal Reserve Act AS AMENDED - that means the amendments to the act are included in the wording you moron. You can't understand basic English. HERE is the text of the original Federal Reserve Act of 1913, shit for brains.

Great. You want to tell me which one of the two links doesn't support my position?

Neither of them support your position. Your position is that Federal Reserve Notes are backed by gold, they aren't.

You're a fucking moron. I said the notes are PARTIALLY backed by gold, and I've shown you not only does the law allow for it, but that the Fed has it.

2. Application for Notes by Federal Reserve Banks
Any Federal Reserve bank may make application to the local Federal Reserve agent for such amount of the Federal Reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under section 10A, 10B, 13, or 13A of this Act, or bills of exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of section 14 of this Act, or bankers' acceptances purchased under the provisions of said section 14, or gold certificates, or Special Drawing Right certificates, or any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof, or assets that Federal Reserve banks may purchase or hold under section 14 of this Act or any other asset of a Federal reserve bank. In no event shall such collateral security be less than the amount of Federal Reserve notes applied for. The Federal Reserve agent shall each day notify the Board of Governors of the Federal Reserve System of all issues and withdrawals of Federal Reserve notes to and by the Federal Reserve bank to which he is accredited. The said Board of Governors of the Federal Reserve System may at any time call upon a Federal Reserve bank for additional security to protect the Federal Reserve notes issued to it. Collateral shall not be required for Federal Reserve notes which are held in the vaults of, or are otherwise held by or on behalf of, Federal Reserve banks.

1. Factors Affecting Reserve Balances of Depository Institutions
Millions of dollars
Reserve Bank credit, related items, and Averages of daily figures Wednesday
reserve balances of depository institutions at Week ended Change from week ended Sep 7, 2011
Federal Reserve Banks Sep 7, 2011 Aug 31, 2011 Sep 8, 2010

Reserve Bank credit 2,840,822 + 4,998 + 554,199 2,841,477
Securities held outright (1) 2,649,298 + 4,791 + 602,056 2,650,320
U.S. Treasury securities 1,654,577 + 4,791 + 867,005 1,655,599
Bills (2) 18,423 0 0 18,423
Notes and bonds, nominal (2) 1,559,908 + 4,388 + 837,848 1,560,925
Notes and bonds, inflation-indexed (2) 66,754 + 377 + 25,094 66,754
Inflation compensation (3) 9,492 + 25 + 4,063 9,497
Federal agency debt securities (2) 109,776 0 - 46,726 109,776
Mortgage-backed securities (4) 884,945 0 - 218,223 884,945
Repurchase agreements (5) 0 0 0 0
Loans 11,672 - 26 - 41,857 11,661
Primary credit 2 - 5 - 27 13
Secondary credit 0 0 0 0
Seasonal credit 78 - 17 - 4 64
Credit extended to American International
Group, Inc., net (6) 0 0 - 20,008 0
Term Asset-Backed Securities Loan Facility (7) 11,592 - 3 - 21,818 11,584
Other credit extensions 0 0 0 0
Net portfolio holdings of Maiden Lane LLC (8) 18,234 + 28 - 10,816 18,257
Net portfolio holdings of Maiden Lane II LLC (9) 9,977 - 100 - 5,990 9,956
Net portfolio holdings of Maiden Lane III LLC (10) 21,339 + 18 - 1,882 21,406
Net portfolio holdings of TALF LLC (11) 775 0 + 200 775
Preferred interests in AIA Aurora LLC and ALICO
Holdings LLC (6) 0 0 - 25,733 0
Float -1,104 - 176 + 785 -1,867
Central bank liquidity swaps (12) 0 0 - 64 0
Other Federal Reserve assets (13) 130,630 + 462 + 37,500 130,967
Gold stock 11,041 0 0 11,041
Special drawing rights certificate account 5,200 0 0 5,200
Treasury currency outstanding (14) 44,106 + 14 + 722 44,106

Total factors supplying reserve funds 2,901,168 + 5,011 + 554,921 2,901,823

Note: Components may not sum to totals because of rounding. Footnotes appear at the end of the table.


1. Factors Affecting Reserve Balances of Depository Institutions (continued)
Millions of dollars
Reserve Bank credit, related items, and Averages of daily figures Wednesday
reserve balances of depository institutions at Week ended Change from week ended Sep 7, 2011
Federal Reserve Banks Sep 7, 2011 Aug 31, 2011 Sep 8, 2010

Currency in circulation (14) 1,041,915 + 7,821 + 88,050 1,043,331
Reverse repurchase agreements (15) 103,428 + 880 + 45,470 102,756
Foreign official and international accounts 103,428 + 880 + 45,470 102,756
Others 0 0 0 0
Treasury cash holdings 123 - 7 - 123 109
Deposits with F.R. Banks, other than reserve balances 68,639 - 7,784 - 161,814 77,422
Term deposits held by depository institutions 0 0 - 2,119 0
U.S. Treasury, General Account 20,192 - 128 - 2,870 22,841
U.S. Treasury, Supplementary Financing Account 0 0 - 199,957 0
Foreign official 4,436 + 333 + 1,954 3,242
Service-related 2,474 - 1 + 40 2,474
Required clearing balances 2,474 - 1 + 40 2,474
Adjustments to compensate for float 0 0 0 0
Other 41,537 - 7,989 + 41,138 48,865
Funds from American International Group, Inc. asset
dispositions, held as agent (6) 0 0 0 0
Other liabilities and capital (16) 71,176 - 160 - 1,239 70,480

Total factors, other than reserve balances,
absorbing reserve funds 1,285,281 + 750 - 29,656 1,294,098

Reserve balances with Federal Reserve Banks 1,615,887 + 4,261 + 584,577 1,607,725

FRB: H.4.1 Release--Factors Affecting Reserve Balances--September 8, 2011

I am really sorry you don't know what WORDS mean!

My position, on the other hand, is that the dollar is backed by the US government. It turns out I am right.

Federal Reserve notes are not redeemable in gold, silver, or any other commodity. Federal Reserve notes have not been redeemable in gold since January 30, 1934, when the Congress amended Section 16 of the Federal Reserve Act to read: "The said [Federal Reserve] notes shall be obligations of the United States….They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank." Federal Reserve notes have not been redeemable in silver since the 1960s.
The Congress has specified that Federal Reserve Banks must hold collateral equal in value to the Federal Reserve notes that the Federal Reserve Bank puts in to circulation. This collateral is chiefly held in the form of U.S. Treasury, federal agency, and government-sponsored enterprise securities.

FRB: Is U.S. currency still backed by gold?

[/quote]

Redeemability and backing are two different things moron. My mortgage is backed by my house but its not redeemable in my house - the bank can't just say "hey buddy, I know you've been making your payments on time, but we'd like to redeem our mortgage on you for the house, so move out!"

Here's the rest of your link -

The Congress has specified that Federal Reserve Banks must hold collateral equal in value to the Federal Reserve notes that the Federal Reserve Bank puts in to circulation. This collateral is chiefly held in the form of U.S. Treasury, federal agency, and government-sponsored enterprise securities.

Although the collateral is mostly in non-gold, as shown on the balance sheet above, the Fed still maintains part of its collateral in gold.

 

[OohPooPahDoo]

Insurance is a transfer of risk. SS is currently a retirement program, not an insurance program.



What I am saying is very clear. SS security works like a Ponzi game in that it takes money from workers and uses it to pay retirees. I can provide links to multiple economists, two of whom have one Nobel Prizes, multitudes of politicians from both parties, and the current sitting president of the US, all of whom agree with me. All you can do is try to parse language and insist that, because SS is honest about being a Ponzi game, and is run by the government, that proves that it is not one.

Please, keep arguing, it is fun.

It's social insurance. Let's say you're 23. You have a car accident that's not your fault and you're disabled and unable to pay for care or work anymore. SS provides a basic level of care for you, even paying for a nursing home if that's what you need.


Ponzi schemes are unsustainable because you need an ever-growing number of investors tp pay off current investors. That isn't the case with SS. Here is the CBO's 75 year estimate of SS funding requirements :

No ever-growing number of investors needed, see?

No hidden accounts like every other ponzi scheme. Can you name a single Ponzi scheme that makes its accounts public, hmmm?

Funny how many economists, and even the SS actuaries, disagree. They are saying that SS is unsustainable the way it works now. Tweaking it the way some people here keep saying will delay the inevitable, but eventually someone is going to have to deal with the outright collapse of the system.

Yet, for some reason I am unable to fathom, people want to focus on semantics rather than admit there is a problem and fix it.

And do "they" have names?

 

[saveliberty]

I quoted the federal reserve act.

The last three words are supposed to be capitalized grammer nazi.

...and just what does the government have to collateralize our currency? Certainly not tax dollars or tangible products. Full faith and CREDIT?

The fact that it can tax the people?

You know exactly the same as every other government in the world?

Kid you GOTTA go read a book.

Seriously, you so don't get it.

Collateralize requires something of value to back the note. Gold WAS a standard in the past. Sometimes its real property in some loans. Credit has no business being collateral, particualrly for an over extended country like the US.