Prometheus has the larger issue right. Trefoil, our disagreement was over your false statement that "Soc. Security is the largest owner of U.S. Treasuries." You can see your statement in this thread. My response was to question your source for that assertion. In your response you admitted that there were no Treasury Securities owned (that is the admission that your original assertion was false), but there there was a book entry in the general government ledger. You went on to assert that it didn't matter. I responded that it did matter becuase there was really nothing in the Soc. Sec. Trust fund, that there was no real asset in the sense that we understand assets and liabilities and that there was no real liability with the treasury in the same way. After that you focused on the issue of Treasury liability as if that was the point of our disagreement. Actualy that is tangential, an issue I used to argue that there were no real Treasury Securities in any Soc. Sec. account.
I appreciate that you took the time to cite some basis for your thought and assertions. What you post shows clearly that there are no Treasury Securities in the sense that we understand 'securities.' Instead there is an accounting fiction, an "intergovernment transfer", deceptively called, "Government account series securities." These are not real securities...they are merely accounting notations that the revenue of one account has been spent to the benefit of other accounts. There are no real Securities in either the Social Security or Medicare "Trust Funds." There are not really any "Trusts" in the way we usually mean "Trust." As your link makes clear and as you can find better explanation at the CBO web site here:
"http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixD.shtml",
all the public source revenue contributions to these accounts are absorbed into the general government fund and all distributions for Social Security and Medicare are paid out of general funds...any surplus that is not spent is simply called a "government account series security"...it is simply an account in the general ledger of the government, there is no real legal security created in that sense that there is an asset in one account and a liability in another account ...its all intergovernmental...it is really all in the same "unified" account. Stated differently, it is the same as moving money from one pocket to another, or writing your self an IOU...I owe money to myself. You don't create assets and liabilities with your self when you do this...you can call it that but then the words assets and liabilities lose all useful common meaning.
The truth is that the govenment takes in these "insurance" funds and then spends all the money on its general obligations, mostly consumption as Prometheus notes...and makes a book keeping note to itself of what it spent on the obligations of Social Security and Medicare...and a note of what it spent of the surplus contribution from Soc. Sec. and Medicare (there is no Medicare surplus). In this process it creates no assets, it spends all the money. In a macro economic sense the degree that there are surpluses acts to reduce the sale of real treasury securities needed to fund general obligations of the Government. In the future the process will act to increase the sale of real treasuries by the Governement to fund obligations. So, the idea of Soc. Sec. Trust fund with anything in it is just a deception of phony language used by the government. Certainly there are no legal U.S. Treasury securities in that account. I suppose most congressmen are ignorant about this reality but those on the relavent committee must understand the deception. Just becuase you can call it a security it doesn't make it so.
I hope this puts to bed the false assertion that Social Security is the largest holder of U.S. Treasury Securities...I think that title properly belongs to Japan...with China and the Fed competing for second place.
I appreciate that you took the time to cite some basis for your thought and assertions. What you post shows clearly that there are no Treasury Securities in the sense that we understand 'securities.' Instead there is an accounting fiction, an "intergovernment transfer", deceptively called, "Government account series securities." These are not real securities...they are merely accounting notations that the revenue of one account has been spent to the benefit of other accounts. There are no real Securities in either the Social Security or Medicare "Trust Funds." There are not really any "Trusts" in the way we usually mean "Trust." As your link makes clear and as you can find better explanation at the CBO web site here:
"http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixD.shtml",
all the public source revenue contributions to these accounts are absorbed into the general government fund and all distributions for Social Security and Medicare are paid out of general funds...any surplus that is not spent is simply called a "government account series security"...it is simply an account in the general ledger of the government, there is no real legal security created in that sense that there is an asset in one account and a liability in another account ...its all intergovernmental...it is really all in the same "unified" account. Stated differently, it is the same as moving money from one pocket to another, or writing your self an IOU...I owe money to myself. You don't create assets and liabilities with your self when you do this...you can call it that but then the words assets and liabilities lose all useful common meaning.
The truth is that the govenment takes in these "insurance" funds and then spends all the money on its general obligations, mostly consumption as Prometheus notes...and makes a book keeping note to itself of what it spent on the obligations of Social Security and Medicare...and a note of what it spent of the surplus contribution from Soc. Sec. and Medicare (there is no Medicare surplus). In this process it creates no assets, it spends all the money. In a macro economic sense the degree that there are surpluses acts to reduce the sale of real treasury securities needed to fund general obligations of the Government. In the future the process will act to increase the sale of real treasuries by the Governement to fund obligations. So, the idea of Soc. Sec. Trust fund with anything in it is just a deception of phony language used by the government. Certainly there are no legal U.S. Treasury securities in that account. I suppose most congressmen are ignorant about this reality but those on the relavent committee must understand the deception. Just becuase you can call it a security it doesn't make it so.
I hope this puts to bed the false assertion that Social Security is the largest holder of U.S. Treasury Securities...I think that title properly belongs to Japan...with China and the Fed competing for second place.