Social Security is Not a Ponzi Scheme, Mr. Perry

[NYcarbineer]

[No you and OOPYDOO are ignoring the statement from the SSA that nothing of value exists in the Trust Fund.. IF existing bonds had been purchased on the OPEN MARKET with FICA excess, it would have actually stimulated the T-Bond market by reducing supply.

More nonsense. If Social Security bought existing bonds, that would not put money into the Treasury, therefore the Treasury would have to issue MORE new bonds to finance the government.

 

[OohPooPahDoo]

The fed does not back the dollar, the government does. How does that make me an idiot?

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

There are no terms other than the legal requirement that each federal reserve bank have enough assets on hand to cover the amount of money it requests from the central bank.

That's a substantial requirement there.

By the way, they have never been audited, are not required to meet any but internal accounting standards, and are generally exempt from all the regulations that apply to other banks.

What other banks?

that is why Ron Paul, among others, has been calling for them to be audited for years, no one knows exactly what assets they hold, or how good they are.

We do know what assets they hold. I've shown you the balance sheet more than once.

Good try, but that is not actually what happens. Read this and then come back

It is exactly what happens and your link doesn't say anything different.

. I would post an excerpt, but no excerpt actually covers it well enough to refute your post.

LOL! There's a reason for that!!!

To make it so simple it is actually insulting, from the POV of the investor (taxpayer) the government (Treasury) is pays interest to itself (the Fed). The Fed takes out expenses, which are growing because of the interest the Fed is paying on the excess reserves (profit.) The remainder goes back to the Treasury. This makes the expense of the government buying an asset a revenue for the government.

The government saves money because if any investor other than the Fed had bought that treasury, they'd have to pay full interest on it.

Try this in the real world any you will end up in jail.

The Federal Reserve is in the real world.

 

[OohPooPahDoo]

IF the debts we owe to the AMERICAN WORKERS aren't PREFERRED DEBTS?


One wonders why they are not.

Do we care more about those debts we owe to other nation than to our own people?

Apparently we do.

Now seriously....who do our masters really work for?

The American people, or somebody else?

The Constitution does not allow this.

Amendment XIV Section 4
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Phrased as such to emphasize that war debts would be paid - but applying in general to ANY debt of the U.S. - "not to be questioned" certainly would seem to suggest we can't question the validity of U.S. debt legally owned by ANYONE - including foreigners.

Not to mention the practical ramifications - if we default to foreigners - U.S. citizens who have invested in Treasuries will dump their holdings, causing the price of Treasuries to drop like a rock, forcing the interest rates we have to pay for new debt to skyrocket - resulting eventually in total default or currency devaluation.

Funny thing, the Constitution also would have prevented us devaluing the dollar and dropping the gold standard.

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

SCOTUS basically ruled that Congress can define money any way it likes, which allowed them to pay back the holders of gold backed certificates with dollars that were worth a fraction of what the previous dollars were. this set a precedent that would allow Congress to suddenly declare the Peso as our currency and pay all previous debts in Pesos at a 1 to 1 exchange rate, even though Pesos are worth the cents.

Congress could Constitutionally do a lot of things that are real stupid. so what? The Founders wrote the Constitution as a foundation of government for reasonable people - not as a safety bubble for morons.

 

[OohPooPahDoo]

It's not what I say -- it what it says in the 2009 SSA report. If a Wall Street HappyTimes bond fund spent 10 pages spinning a fiction about how much money they were "making" for their clients and then put in a zinger like.. (and I paraphrase)

Neither the redemption of trust fund bonds, nor
interest paid on those bonds, provides any new net income to the [HappyTimes Bond Fund], which must finance redemptions and interest payments through
some combination of increased [premiums], reductions in other [HappyTimes]
spending, or additional borrowing from [issuing New HappyTimes Bonds on the public market]....

.... the SEC would be on them like stink on bear.. It's blantant fiction.. And Wall Street would be rightfully mocked and punished..

As for why the checks are still going out. Don't know.. Certainly there's a promise to continue to pay. But EVERYONE knows those benefits are NOT yours and NOT guaranteed. So while the FEds are willing to issue NEW debt NOW to cover those obligated, we are already discussing RAISING premiums, lowering benefits, and perhaps even means testing as "solutions" to that problem.

I'm tired of repeating all this for brainwashed automatons who will INSIST that Soc Sec was always sound, never abused and making TONS of money for the American taxpayers. So why don't the 3 or 4 of you remaining stooges go start your own thread about HOW MUCH MONEY the American people have made by "investing" in Soc Sec????

That would be NYCarb with the irritating insistence that Soc Sec is still running a surplus in spite of facts and Obama's theft of premiums. Flopper with his denial that taxpayers are paying TWICE for the same FICA benefit. And YOU Raoul with your inability to read a financial perspectus with the level of sophistication REQUIRED of any "investor"..

The social security trust funds represent real obligations of the treasury to the trust fund, resulting in real income. Don't be stupid.

In Flemming v Nestor the Supreme Court ruled that SS is a tax, and that it imposes no contractual obligation on the government to pay benefits. I guess that makes you wrong, again.

Social Security Online History Pages

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.

 

[flacaltenn]

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?

 

[flacaltenn]

Are you nuts? A regular T-bill/bond has to be paid back with taxpayer funds, or rolled over and refinanced by selling another bond.

The Fed issues NEW bills/bonds every day/week/month.

You think that if Social Security only bought 'existing' bonds it would somehow be better? Do you realize that then for every bond SS bought, that would be one more bond the federal government would have to sell to someone else.

You're not making any sense.

No you and OOPYDOO are ignoring the statement from the SSA that nothing of value exists in the Trust Fund.. IF existing bonds had been purchased on the OPEN MARKET with FICA excess, it would have actually stimulated the T-Bond market by reducing supply. In addition, the TF could then actually sell back on the market (after pocketing the interest) without actually creating any new debt or taxpayer burden. If they held to maturity, than the taxpayers paid back the principle and interest ONCE. Something of IMMEDIATE VALUE was always in the Trust Fund.. That would be "an investment".

However---

If Congress STEALS the FICA funds, issues an note to "PROMISE" to issue future debt -- you have the cost to taxpayer of the STOLEN FUNDS + Fictional Interest on the IOU + Principle of the NEW BOND + The interest on the NEW BOND. That is the diff. Nothing of IMMEDIATE VALUE was ever in the Trust Fund. The General Fund never transferred ANY further funds in the TF, because Soc Sec was not in deficit until 2010. It was ignored except for an accounting entry.

You've lost the excess FICA, You've paid fictional interest on the IOU, and then you've REFINANCED the whole deal with NEW DEBT and NEW INTEREST when it's time to redeem. You've paid TWICE PLUS for each dollar stolen.. ADD IT UP and weep NYC.

You think that if Social Security only bought 'existing' bonds it would somehow be better? Do you realize that then for every bond SS bought, that would be one more bond the federal government would have to sell to someone else.

YES. It's the difference between investing in EXISTING DEBT that is in the marketplace when the EXCESS FICA was available to buy it, and allowing the govt to promise to issue NEW DEBT in the future. (the future being NOW when SS books are goin negative). Just the act of buying EXISTING DEBT on the market DOES NOT force the govt to issue a replacement or another bond. Now if Congress hadn't EMBEZZLED that money (Harry Reid's words - not mine) -- perhaps they would have had to issue new debt to cover their spending.. But when CLINTON and GINGRICH had their victory laps about balancing the budget back in the mid 90's --- you guys weren't concerned at all that the balancing was only achieved by IGNORING the Trust Fund surpluses that these creeps were stealing were you? You considered it "balanced" didn't you? That's condoning the theft. You are an accessory to the crime..

Not the same life cycle as for every other Treasury debt product.. Only folks who believe that Congress can spend without regard for income, could possibly ever fall for the fairy tale.

I COULD do this at the Sesame Street level with Count Count and Big Bird helping. But if it has to go to that level -- it's hopeless.. You guys just snap your heels 3 times and repeat.

There's no fund like the Trust Fund..
There's no fund like the Trust Fund..
There's no fund like the Trust Fund..

Your ignorance is beginning to frustrate me.

Wouldn't EVER want to frustrate you NYC. Let's just forget my flight of fantasy of what SHOULD have happened and let you straighten out all my ignorance.

If in 1998 (for example) there was a $58BILL FICA surplus (im not gonna look up the actual amount) and you support the fiction that all that money went "to buy a bond" that's for all purposes identical to publically traded T-Bond ---

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?

That's what's happening and how it's quoted in the 2009 SSA statement I posted above.

Who pays for the interest and principle of that NEW DEBT?

Does that NEW DEBT also cover the "interest" on the note that placed in the drawer in 1998?

How many taxpayers that bought the "bond" in 1998 will also be paying for the NEW BONDS that the Treasury has to issue to cover the "interest and shortfall"?

Which is it? Did we buy a bond in 1998? Or are we just now AGAIN authorizing taxpayer debt to pay that $58BILL a second time?

Then maybe we can get back to what SHOULD have happened.

I've reached a similiar conclusion to Quantum Windbag here. I originally thought it wasn't accurate to calling Soc Sec a Ponzi scheme. BUt on further review -- I've decided it's not that SS is a Ponzi scheme. Soc Sec afterall is just a promise and a tax. But the fiction of the Trust Fund is one of the most noxious criminals scams in the history of economics..

 

[Toddsterpatriot]

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.

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.

 

[Quantum Windbag]

The fed does not back the dollar, the government does. How does that make me an idiot?

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.

There are no terms other than the legal requirement that each federal reserve bank have enough assets on hand to cover the amount of money it requests from the central bank.

That's a substantial requirement there.

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

Still think it is a substantial requirement?

What other banks?
We do know what assets they hold. I've shown you the balance sheet more than once.

No, we know what assets they say they have. There can be a substantial difference between a balance sheet and actual assets, just ask the people who invested in Enron.

It is exactly what happens and your link doesn't say anything different.
LOL! There's a reason for that!!!

To make it so simple it is actually insulting, from the POV of the investor (taxpayer) the government (Treasury) is pays interest to itself (the Fed). The Fed takes out expenses, which are growing because of the interest the Fed is paying on the excess reserves (profit.) The remainder goes back to the Treasury. This makes the expense of the government buying an asset a revenue for the government.

The government saves money because if any investor other than the Fed had bought that treasury, they'd have to pay full interest on it.

What makes you think the government doesn't have to pay full interest on the intra governmental loans?

Try this in the real world any you will end up in jail.

The Federal Reserve is in the real world.

The Federal Reserve is the government.

 

[Toddsterpatriot]

Only the Treasury can issue Treasury securities. If a bank issued them it would be fraud or counterfeiting. Do you seriously want to take that position?

I DIDN'T take that position. CAN YOU FUCKING READ ENGLISH? Under the National Bank system, banks would ISSUE NOTES in EXCHANGE for TREASURY SECURITIES bough on the open market. Please - use a dictionary or ask if you can't comprehend that simply English sentence.

I missed that, sorry.



The fed does not back the dollar, the government does. How does that make me an idiot?



Do you know what technically means?

The treasury never takes back the loan, nor does it charge any interest on said loan. There are no terms other than the legal requirement that each federal reserve bank have enough assets on hand to cover the amount of money it requests from the central bank.

By the way, they have never been audited, are not required to meet any but internal accounting standards, and are generally exempt from all the regulations that apply to other banks. that is why Ron Paul, among others, has been calling for them to be audited for years, no one knows exactly what assets they hold, or how good they are.

Do you know how banking works at all?

We are not talking about banking, we are talking about fed.

A brief overview of how the Fed creates the monetary base - two basic means to do it

1) Open market operations - In Open Market Operations - the Federal Reserve purchases assets off the market in exchange for newly created money. This money can be in the form of currency - or in the form of a deposit with the Fed. The asset it is exchanged for can in theory - be anything - though it is most useful for the Fed to buy liquid assets, such as Treasury securities, SDR's, gold, and now - mortgage backed securities. When the Fed buys assets, the money supply increases, when they sell assets (or as those assets expire into cash, like treasuries), it decreases.

2) Discount window - through the discount window, the Fed can make loans directly to banks. The bank must have sufficient collateral to pledge for these loans. This collateral could be any of the things mentioned above as well as loans the bank has made. The Fed makes the loan by creating new money - the bank receives notes or an increase in its reserve balance. When the loan is paid back, the money is "destroyed".

In both cases, the Federal Reserve Notes or reserve deposits that the Federal Reserve pays out in exchange for assets shows up as a liability on their balance sheet, while the things they buy with that money show up as assets. So for example, if I sell a $1000 T-Bill to the Federal Reserve, they will give me $1000 in Federal Reserve Notes, and I give them they T-Bill. The T-Bill is their asset, but the notes they issued to me are their liability - so the sum balance is zero.


Now - what happens when the Fed's assets are greater than their liabilities? This can happen when the assets they buy appreciate in value. If the Fed buys a 1 year T-Bill for $999 that pays $1000, they will give the seller $999 in Federal Reserve Notes. At the end of the year, the T-Bill will be a $1000 asset, while the FRN will still be a $999 liability - so the Fed has made $1. They may need $0.02 or so out of that $1 to pay for expenses, and in the end, they have 98 cents in profit. The Fed is not allowed to post a profit, however, so this gets sent to the general fund, I believe on an annual basis - restoring the Fed's balance sheet to zero. In effect then, the Fed essentially is paid no interest on the Treasury securities it has.

Good try, but that is not actually what happens. Read this and then come back. I would post an excerpt, but no excerpt actually covers it well enough to refute your post. To make it so simple it is actually insulting, from the POV of the investor (taxpayer) the government (Treasury) is pays interest to itself (the Fed). The Fed takes out expenses, which are growing because of the interest the Fed is paying on the excess reserves (profit.) The remainder goes back to the Treasury. This makes the expense of the government buying an asset a revenue for the government. Try this in the real world any you will end up in jail.

Cumberland Advisors - Market Commentary

"From the Fed’s perspective, this transfer of funds may look like a remittance of “profits,” but when one looks at the government’s consolidated balance sheet and income statement, these are not profits from the taxpayer’s perspective"

If the remittance reduces net interest payments from the Treasury, that is equivalent to profit, from the taxpayer's perspective.

 

[Quantum Windbag]

The Constitution does not allow this.
Phrased as such to emphasize that war debts would be paid - but applying in general to ANY debt of the U.S. - "not to be questioned" certainly would seem to suggest we can't question the validity of U.S. debt legally owned by ANYONE - including foreigners.

Not to mention the practical ramifications - if we default to foreigners - U.S. citizens who have invested in Treasuries will dump their holdings, causing the price of Treasuries to drop like a rock, forcing the interest rates we have to pay for new debt to skyrocket - resulting eventually in total default or currency devaluation.

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.

SCOTUS basically ruled that Congress can define money any way it likes, which allowed them to pay back the holders of gold backed certificates with dollars that were worth a fraction of what the previous dollars were. this set a precedent that would allow Congress to suddenly declare the Peso as our currency and pay all previous debts in Pesos at a 1 to 1 exchange rate, even though Pesos are worth the cents.

Congress could Constitutionally do a lot of things that are real stupid. so what? The Founders wrote the Constitution as a foundation of government for reasonable people - not as a safety bubble for morons.

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?

 

[Quantum Windbag]

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.

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.

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

 

[Quantum Windbag]

I DIDN'T take that position. CAN YOU FUCKING READ ENGLISH? Under the National Bank system, banks would ISSUE NOTES in EXCHANGE for TREASURY SECURITIES bough on the open market. Please - use a dictionary or ask if you can't comprehend that simply English sentence.

I missed that, sorry.



The fed does not back the dollar, the government does. How does that make me an idiot?



Do you know what technically means?

The treasury never takes back the loan, nor does it charge any interest on said loan. There are no terms other than the legal requirement that each federal reserve bank have enough assets on hand to cover the amount of money it requests from the central bank.

By the way, they have never been audited, are not required to meet any but internal accounting standards, and are generally exempt from all the regulations that apply to other banks. that is why Ron Paul, among others, has been calling for them to be audited for years, no one knows exactly what assets they hold, or how good they are.



We are not talking about banking, we are talking about fed.

A brief overview of how the Fed creates the monetary base - two basic means to do it

1) Open market operations - In Open Market Operations - the Federal Reserve purchases assets off the market in exchange for newly created money. This money can be in the form of currency - or in the form of a deposit with the Fed. The asset it is exchanged for can in theory - be anything - though it is most useful for the Fed to buy liquid assets, such as Treasury securities, SDR's, gold, and now - mortgage backed securities. When the Fed buys assets, the money supply increases, when they sell assets (or as those assets expire into cash, like treasuries), it decreases.

2) Discount window - through the discount window, the Fed can make loans directly to banks. The bank must have sufficient collateral to pledge for these loans. This collateral could be any of the things mentioned above as well as loans the bank has made. The Fed makes the loan by creating new money - the bank receives notes or an increase in its reserve balance. When the loan is paid back, the money is "destroyed".

In both cases, the Federal Reserve Notes or reserve deposits that the Federal Reserve pays out in exchange for assets shows up as a liability on their balance sheet, while the things they buy with that money show up as assets. So for example, if I sell a $1000 T-Bill to the Federal Reserve, they will give me $1000 in Federal Reserve Notes, and I give them they T-Bill. The T-Bill is their asset, but the notes they issued to me are their liability - so the sum balance is zero.


Now - what happens when the Fed's assets are greater than their liabilities? This can happen when the assets they buy appreciate in value. If the Fed buys a 1 year T-Bill for $999 that pays $1000, they will give the seller $999 in Federal Reserve Notes. At the end of the year, the T-Bill will be a $1000 asset, while the FRN will still be a $999 liability - so the Fed has made $1. They may need $0.02 or so out of that $1 to pay for expenses, and in the end, they have 98 cents in profit. The Fed is not allowed to post a profit, however, so this gets sent to the general fund, I believe on an annual basis - restoring the Fed's balance sheet to zero. In effect then, the Fed essentially is paid no interest on the Treasury securities it has.

Good try, but that is not actually what happens. Read this and then come back. I would post an excerpt, but no excerpt actually covers it well enough to refute your post. To make it so simple it is actually insulting, from the POV of the investor (taxpayer) the government (Treasury) is pays interest to itself (the Fed). The Fed takes out expenses, which are growing because of the interest the Fed is paying on the excess reserves (profit.) The remainder goes back to the Treasury. This makes the expense of the government buying an asset a revenue for the government. Try this in the real world any you will end up in jail.

Cumberland Advisors - Market Commentary

"From the Fed’s perspective, this transfer of funds may look like a remittance of “profits,” but when one looks at the government’s consolidated balance sheet and income statement, these are not profits from the taxpayer’s perspective"

If the remittance reduces net interest payments from the Treasury, that is equivalent to profit, from the taxpayer's perspective.

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

 

[Toddsterpatriot]

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.

 

[Toddsterpatriot]

I missed that, sorry.



The fed does not back the dollar, the government does. How does that make me an idiot?



Do you know what technically means?

The treasury never takes back the loan, nor does it charge any interest on said loan. There are no terms other than the legal requirement that each federal reserve bank have enough assets on hand to cover the amount of money it requests from the central bank.

By the way, they have never been audited, are not required to meet any but internal accounting standards, and are generally exempt from all the regulations that apply to other banks. that is why Ron Paul, among others, has been calling for them to be audited for years, no one knows exactly what assets they hold, or how good they are.



We are not talking about banking, we are talking about fed.



Good try, but that is not actually what happens. Read this and then come back. I would post an excerpt, but no excerpt actually covers it well enough to refute your post. To make it so simple it is actually insulting, from the POV of the investor (taxpayer) the government (Treasury) is pays interest to itself (the Fed). The Fed takes out expenses, which are growing because of the interest the Fed is paying on the excess reserves (profit.) The remainder goes back to the Treasury. This makes the expense of the government buying an asset a revenue for the government. Try this in the real world any you will end up in jail.

Cumberland Advisors - Market Commentary

"From the Fed’s perspective, this transfer of funds may look like a remittance of “profits,” but when one looks at the government’s consolidated balance sheet and income statement, these are not profits from the taxpayer’s perspective"

If the remittance reduces net interest payments from the Treasury, that is equivalent to profit, from the taxpayer's perspective.

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?

 

[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.

 

[OohPooPahDoo]

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.

 

[OohPooPahDoo]

The fed does not back the dollar, the government does. How does that make me an idiot?

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?

 

[Toddsterpatriot]

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.

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.

 

[Quantum Windbag]

"From the Fed’s perspective, this transfer of funds may look like a remittance of “profits,” but when one looks at the government’s consolidated balance sheet and income statement, these are not profits from the taxpayer’s perspective"

If the remittance reduces net interest payments from the Treasury, that is equivalent to profit, from the taxpayer's perspective.

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

 

[OohPooPahDoo]

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.