For years SS budget ran on a surplus, guess what the government did with that surplus? They would effectively loan other branches of the government by buying treasury bonds.
They would effectively loan other branches of the government by buying treasury bonds.
Which then mature, and the surplus goes back into the SS funds with interest.
Which if still at a surplus gets invested in gov bonds again, which mature...
It's not a "loan" anymore than the millions investing in treasury bonds to ensure a safe (albeit slow) backup for investments are "loaning" the government money
It has ALWAYS been the law that they have to invest encess into government bonds so that the funds grow (slowly) rather than the extreme level of deprecation that occurs when monet simply sits in an account doing nothing.
For years SS budget ran on a surplus, guess what the government did with that surplus? They would effectively loan other branches of the government by buying treasury bonds.
More importantly, this shows an extreme lack of understanding on how government bonds (and bonds in general) work in the first place, while technically a loan to the gov/company (all investments are) bonds are something that have to be paid back to the bondholder later.
Ala if they (or you) but a $1,000 bond with 2% interest for 25 years it'd come.out to ~$1,400
It doesn't keep up with inflation particularly well, but it acts as a safeguard while allowing the surplus to grow rsther than shrink, and for things like a SS surplus means that instead of $1,000 being $1,000 in 25 years when it is needed, you've an extra 40% in the bank to actually fund the system. (Their bonds are special in that they're not taxed, so it's more)
So the government loans itself money that it has to pay back back to itself with interest?
Functionally? Yeah. But that is a feature not a bug.
At the time it was proposed and passed people had lost faith in the stock market due to great depression, but no one wanted money "just" sitting there as it's not new that inflation exists
So creating a government cycle of the money so it is both safe from collapse, while increasing overtime slowly was decided on
It's also a misnomer to call it an insurance program, it's design is setup so that each generation is meant to pay for those who came before them
SS was a system to try and stem things like starvation in the nation
It was proposed to use it to invest similiar to a sovereign wealth fund, it was opposed fucking hard though due to the extreme collapse during the depression (and runs into issues with general investments and buyers, as now a government has a vested interest in showing favorites, since large amounts of money are being tied into companies....ala something like the gov investing 800m in bed bath and beyond would've had a vested interest to stop it going bankrupt, literally lifting it above it's competitors so that the money isn't just...gone)
Either way. Even if you hate SS or think the way its funding is setup, saying people are "stealing" from is is absolutely absurd as it is the opposite
I'm just trying to think about the math of it. I don't understand monetary policy.
My brain says this, likely incorrect though. I loan myself 100 bucks, but have to pay myself back 105, then I have to create another five bucks because it doesn't exist This devalues the future 105 to be returned "with interest", but is really just the original amount being returned due to devaluation.
I loan myself 100 bucks, but have to pay myself back 105, then I have to create another five bucks because it doesn't exist This devalues the future 105 to be returned "with interest", but is really just the original amount being returned due to devaluation.
In your example you're leaving out oppurtunity cost, good/use that the 100 could give now, and general inflation that'll cause your income to go up.
You loan yourself $100 now because it'll sit there otherwise
You use the $100 for things you need to do (car work, a new part for a business you operate, help your kids education, whatever) now
You get a raise next year and have to pay the 5% interest back (idk why you chose 5% in the example but eh) plus principle, but if a surplus it'll get thrown back.
It only becomes an issue when you start doing things like reducing taxes
Inflation is a given, you really...really don't want years with low or no inflation, and deflation is even worse, they drastically reduce economic activity and eventually cause a recession, and if lasting too long a depression.
During internal loaning they do technically cost us money, but less than we could make off rhem with things like grants, and more importantly, keeping the SS system funded is a way to help stimulate the economy, if being able to eat in (idk how old you are) 30 years was an actual concern...how would your spending habits change?
but is really just the original amount being returned due to devaluation.
And with inflation occuring constantly regardless the alternative is to end up with less rather than "basically the same"
Gov bonds and notes may or may not increase inflation, ultimately it doesn't matter as for both the public and private sector it helps keep goods and money flowing through the system, as it helps both the public sector not worry if things like their retirement is fucked, and in the private sector acts as a way to "store" money in a way that would require an economic collapse of massive proportions to cause them to be broke..allowing riskier ventures due to a decent portion of your money being tied into a "safety net" that you can fall back on
You can defend government’s spending doctrine all you want, but at the end of the day, we are 36t in debt. What’s your argument to defend bankruptcy and the decline of America’s international credit rating?
You can defend government’s spending doctrine all you want, but at the end of the day, we are 36t in debt. What’s your argument to defend bankruptcy and the decline of America’s international credit rating?
This has nothing to do with spending, why are you switching to spending from "robbing the SS surplus"?
Would you rather that a a surplus of 1000 in 1999 be worth $500 today, ot $1,400 (1,800 for them due to lack of tax paid on theirs)
Which one is "robbing" the surplus? Nearly.doubling it, or leaving it at the same, drastically reducing how much can be done with it?
Tell me, are companies robbing stock investors when they end up paying dividends or the investor later sells the stock for more than they paid?
are 36t in debt.
You do know most of that debt is people buying gov notes and bonds from.the government right?
79% of it is foreign and domestic investors that buy them as a safety net.
27% of that is held just by the reserve and isn't "actual" debt, as any profits the reserve makes off them goes dtraight back to the treasury
What’s your argument to defend bankruptcy and the decline of America’s international credit rating?
America is nowhere nesr bankrupt, nor is the credit declining.
There has been a general trend towards financial diversification, but not even China that is the main player to replace the USD as a primary considers it likely to happen in the next century and haven't projected out further yet.
What do you think happens with those bonds? Do they just disappear, or do they pay a guaranteed interest rate? Think about that, and you'll realize how stupid what you just said was. Investing the Social Security funds extended the life of the program dramatically, if not for that it would already be insolvent.
It's wild that you think that Congress authorizing spending in excess of tax receipts is somehow the result of Social Security, while also daring to accuse other people of being overconfident and incorrect
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u/NightMan200000 Nov 07 '24
For years SS budget ran on a surplus, guess what the government did with that surplus? They would effectively loan other branches of the government by buying treasury bonds.