Just ran across this tidbit while surfing ......................

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The Social Security Administration is legally required to take all its surpluses and buy U.S. Government securities, and the U.S. Government readily sells those securities--which automatically and immediately becomes intragovernmental holdings. The economy was doing well due to the dot-com bubble and people were earning a lot of money and paying a lot into Social Security. Since Social Security had more money coming in than it had to pay in benefits to retired persons, all that extra money was immediately used to buy U.S. Government securities. The government was still running deficits, but since there was so much money coming from excess Social Security contributions there was no need to borrow more money directly from the public. As such, the public debt went down while intragovernmental holdings continued to skyrocket.

So, if you are wondering why Social Security is broke (the government claims otherwise, because SS holds a large amount in T Bills and earns interest on those T Bills.  ;) ), you don't have to look very far.

Great information, surfer.  Now multiply this example of "government math" by about 1,000, and that explains why we can't trust ANYTHING the federal government tells us.

BTW, this is also true of other pension funds that the government "manages".

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Year 2000 Trust Fund Surpluses
Social Security   $152.3 billion
Civil Service Retirement Fund   $30.9 billion
Federal supplementary medical insurance Trust fund   $18.5 billion
Federal Hospital Insurance Trust Fund   $15.0 billion
Unemployment Trust Fund   $9.0 billion
Military Retirement Fund   $8.2 billion
Transportation Trust Funds   $3.8 billion
Employee life insurance & retirement   $1.8 billion
Other   $7.0 billion
TOTAL   $246.5 billion

This one year of trust fund surpluses 246.5 Billion buys T Bonds. The T Bonds are federal promisory notes used to "borrow" the surplus cash from the trusts. The bond purchases are reported as revenue in the federal budget. In actuality, the 246.5 Billion is is owed to the trust funds and is truly a debt.

The government, by creative bookkeeping, is using a debt as an offset to the federal expenditures, allowing them to report that they have reduced the annual debt. At the same time they are increasing the National debt.

Exactly, SS. The Social Security "trust fund" is empty, and has actually never contained a single dollar in real, everyday terms. It's the trashiest sort of accounting gimmick designed to keep folks from rebelling against the federal government. Yeah, I know that sounds a bit extreme, but in this case, I think it's not.

The "trust fund" has always been empty. The money came in as working Americans payed their payroll taxes, and the money was instantly removed and replaced with federal paper, mainly worthless treasury bonds. The real money was spent by Congress to help offset the never-ending deficits. As the T-bills in the "trust fund" expired, they were paid off with... new T-bills.

This year -- four years sooner than expected, thanks to the Great Recession -- Social Security payroll taxes failed to match Social Security outlays, meaning that now the federal government has to start printing inflated currency to buy the extra new T-bills it needs to pay off the maturing T-bills AND keep paying out benefits.

It's a very ugly business. :'(

Keep in mind the fact that the high unemployment rate has reduced the SS revenue to Washington. There is no more surplus to support their wasteful spending. Did you notice the other trust funds they have been "borrowing" from? It won't be long before the entire mess collapses on them and us.
Another problem that will be exposed is the depletion of union pension funds. That is another story.

What's the difference between paper bonds and paper money?  Not a damn thing.  With both, the federal government says they are worth something.  Ultimately, they are just pieces of paper and ink.

Quote from: AmericanFlyer on November 27, 2010, 10:40:36 AM
What's the difference between paper bonds and paper money?  Not a damn thing.  With both, the federal government says they are worth something.  Ultimately, they are just pieces of paper and ink.

Big difference, Flyer. Paper money, the stuff we use at WalMart, is effectively backed by the US economy and the wealth of Americans. The bonds are backed by the government, NOT the economy. The difference is difficult to see, but it's there.

The bonds that sit in the Social Security "trust fund" have never had a value beyond their ability to be replaced by more bonds. They represent wealth that does not exist, and never did. The actual wealth -- represented by currency -- that was confiscated from us for Social Security has been removed by Congress every year and spent on other things.

Clear as mud?

Quote from: tbone0106 on November 27, 2010, 01:59:10 PM
Big difference, Flyer. Paper money, the stuff we use at WalMart, is effectively backed by the US economy and the wealth of Americans. The bonds are backed by the government, NOT the economy. The difference is difficult to see, but it's there.

The bonds that sit in the Social Security "trust fund" have never had a value beyond their ability to be replaced by more bonds. They represent wealth that does not exist, and never did. The actual wealth -- represented by currency -- that was confiscated from us for Social Security has been removed by Congress every year and spent on other things.

Clear as mud?

Paper money has value only because the U.S. government SAYS it has value.  That whole "full faith and credit of the U.S. government" thing. 

Wealth is not measured in paper and ink, as the U.S. government would like all of us to believe.  That is the MYTH that began when the Federal Reserve System was signed into law by Woody Wilson, and when FDR forced all Americans to trade in their gold for paper and ink in 1933, and when LBJ decided that our coins shouldn't contain 90% silver after 1964. 

Wealth is, and has always been, measured in the amount of TANGIBLE assets you own.  Things like land and buildings and houses and machinery and motor vehicles and precious metals, and in it's simplest forms..............cows and pigs and chickens and other food, as well as water and medicines and firearms and ammo and fuel and the list goes on and on.

There is no Social Security "trust fund" or "lock box" or whatever the latest phrase is.  Another MYTH that is perpetuated by the politicians.  There is only the sad fact that it is our government that decides how much paper and ink we are allowed to possess, and what the "value" of that paper and ink is, in terms of the amount of goods and services they decide the paper and ink can be exchanged for.

Clinton was so full of crap his eyes were brown.

What happened with the budget surplus (YOUR MONEY)???????


Did you get a tax rebate like the REPUBLICAN CONGRESS OPTED for?

NO, slick Willy found new ways to spend it or give it away to the Palestinians or some country like Egypt where I think one of the 9/11 hijackers was from.

Billy

AF, you can also scratch land, homes and other buildings. Don't pay your real estate taxes, and you will find out who really owns them. The real estate tax is the rent you pay for those items. The same can be said about motor vehicles, the government permits you to drive them for a fee as long as you meet government requirements for their operation.

As far as SS is concerned, the value in the trust fund are nothing more than ledger entries. The value of those ledger entries are not backed by any tangible asset such as gold or diamonds.

SS, Tbone, and AF. You're all mostly spot on.

I would simply ask what a Federal Reserve Note is but a promissory note of debt.

In the by and by, a person could redeem a one dollar silver certificate for a dollar of silver, a tangible asset. A Fed Reserve Note is only redeemable for a Fed Reserve Note. Paper for paper. What is the intrinsic value of paper?

When the Gubmint defaults what will any of it be worth?

Good discussion, all!!! 8)

A point that gets past many people is not just that our paper currency is just that -- paper, but that it was once tied to the values of precious metals, and was decoupled by FDR from gold and silver for a reason -- so the printing presses could run and run and run.

FDR simply could not do what he wanted to do with the metals-based supply of dollars on hand, at least not without unthinkably high taxes. By decoupling the dollar from its precious metal base, he could "create" the money he needed out of thin air.

So many people think that inflation is rising prices. Not so. Inflation refers to the inflation of the supply of money, and only the federal government can do that. Prices do rise as a result, but inflation is a direct, willful act of the federal government, designed to "pay" for the government's own expenses. It is the most insidious sort of back-door taxation.

Quote from: tbone0106 on November 28, 2010, 08:33:49 AM
Good discussion, all!!! 8)

A point that gets past many people is not just that our paper currency is just that -- paper, but that it was once tied to the values of precious metals, and was decoupled by FDR from gold and silver for a reason -- so the printing presses could run and run and run.

FDR simply could not do what he wanted to do with the metals-based supply of dollars on hand, at least not without unthinkably high taxes. By decoupling the dollar from its precious metal base, he could "create" the money he needed out of thin air.

So many people think that inflation is rising prices. Not so. Inflation refers to the inflation of the supply of money, and only the federal government can do that. Prices do rise as a result, but inflation is a direct, willful act of the federal government, designed to "pay" for the government's own expenses. It is the most insidious sort of back-door taxation.

I already posted all that stuff about paper money being tied to gold and silver until FDR and LBJ messed with that whole thing.

It looks as though we are all pretty much on the same page.  Paper and ink is only worth what the federal government decides it is worth. 

Surfer, your point about property taxes and all the other "tentacles" that governmental intervention creates, is an excellent one.  NONE of us are totally FREE.

This situation with gold and silver vs paper money is so obvious.
We already have silver in circulation and up until 1964 you could own silver.

Now here is the kicker, we could easily get back on a semblance of the gold standard as we have the monitary system already in place and to some degree in circulation. Those old silver dimes and quarters that you may have hoarded or collected over the years ARE STILL LEGAL TENDER and in the eyes of our Govt are legal coinage and have the monetary value.

In other words a silver dollar is still worth a dollar, likewise a 50, quarter and dime. 

Yeah it is worth more than their monetary value due to silver (90% silver) but the point is we could start using it again. Those coins were minted in the millions and probably billions, only a relatively small portion of them were melted.

Think about it, what if we, grass roots common man, started using this sytem as a type of barter, IF IT WERE WIDESPREAD ENOUGH, it might be able to force the Govt to go with silver coinage  backing Obamaobucks.

Just a thought.


Billy

Billy, there are many, many "ma and pa" stores around the country who accept silver coins as payment for goods, and honor whatever the spot price for gold or silver is that particular day.

The chief reason why this country ceased making "common" 90% silver coins in 1965 (except for the 40% silver Kennedy silver half dollar from 1965-70) is that the U.S. Mint was having a difficult time procuring enough silver to mint the coins. 

Also, there are not anywhere close to "billions" of silver coins floating around out there.  Quite a bit has gotten melted down over the years, especially since the industrial demand for silver has skyrocketed since the 1960s.

The chief difficulty with the United States returning to a gold standard is that there is presently not enough gold inventory available in the ENTIRE WORLD to support it.  As it is now, The U.S. Mint is having a very difficult time fulfilling their gold coin minting requirements and orders due to the shortage of gold blanks.

The U.S. Mint still produces .999% silver dollars, 90% silver commemoratives, and 90% silver half-dollars, quarters, and dimes (as part of yearly proof sets).  And once again, the U.S. Mint has been having problems with supply, this time with silver blanks.

A hybrid gold/silver standard is possible, but it would be difficult.