Ron Paul: "The U.S. Government Must Admit It Is Bankrupt"

Is USA bankrupt?

  • Yes

    Votes: 93 66.9%

  • No

    Votes: 46 33.1%
  • Total voters
    139
Quote from nooby_mcnoob:

I am of the opinion that this was the goal all along.
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I'm of the opinion that the money was effectively STOLEN from SS... with the Government saying, "We're TAKING the money, and here is our nonfungible note in exchange." That's not quite the same as "SS LENDING the money to US Government".. SS reserves were originally NEVER TO BE USE AS GENERAL REVENUE FUNDS...

:mad: :mad:
 
Piezoe, the issue of contention with Tefoil did not hinge on whether there was debt owed...the issue from the very beginning was whether there the debt was in the form of a Treasury Security or not and whether there is any difference. Perhaps the legal distinction is lost on everyone but it is important. A treasury security is a thing, it is a legal reality in itself...it can be sold, it has a market value, there is a clear legal path in the event of a default of the terms of the Treasury Security as a discrete instrument. In contrast the book entry that Treasury spent the revenue flowing in as Soc. Sec. payments is not a security in the common meaning of a security. It is not marketable, it does not have a market value, it cannot in itself be the basis of a cause of action, it is a constant roll over that is performed so long as the government continues to make soc. sec. entitlement payments. A cause of action may arise when the government fails to make entitlement payments some timie in the future, but of course that cause of action will be based on the soc. security law which is a political creation and can be changed before any default will occur...the age of retirement can be raised, a means test can be imposed, or a law can be passed to force all IRA funds to be deposited into social security accounts...these are not actions based on a discrete security that is issued by the Treasury and that is subject to the law of contracts and secured transactions...there is no asset to value or trade beyond the good faith, non callable, open ended IOU ledger entry that money is owed...the terms and conditions are at the pleasure of the debtor, it is entirely political.

I hardly think that your uncited quote of something that Alan Greenspan purportedly said at some hearing, some time ago, with no context, is a serious refutation of the distinction between A Treasury Security and an accounting ledger IOU entry in a unified account. You have to realize that Soc. Sec., Medicare, the Treasury, the IRS, the Fed, are not true counter parties, they are different rooms in the same house...they don't sue each other. If they exchange real Securities as when the Fed prints money to buy Treasury Securities...the Fed actually possesses the marketable securites that the Treasury actually delivers, in exchange for the money, digital credit, to its account general funds. These real securities have a legal existence apart from the Fed or the Treasury...they are creatures of law, not mere accounting. The Fed can swap these securites, use them in term auctions with banks, lend them to others, use them as collateral or it can sell them for reasons of administrating monetary policy. The Soc. Sec. has none of these rights of ownership...the Soc. Sec revenues went directly into the general account of the Treasury...the Treasury did not create or deliver any securities...the Treasury noted that it received the money and spent the money and accounts for the funds it has taken...The Treasury then goes on to fund the entitlement disbursements of Soc. Security out of the same general fund that received the revenues...and the Treasury adjusts the IOU ledger account according to its receipts and disbursements...Soc. Security receives no discrete marketable securities as we understand the meaning of Treasury Securities. I hope you can see the difference and understand that the distinction is different than whether or not a debt is actually owed...of course a debt is owed either way. It only matters when the default is imminent.
 
Quote from Scataphagos:

I'm of the opinion that the money was effectively STOLEN from SS... with the Government saying, "We're TAKING the money, and here is our nonfungible note in exchange." That's not quite the same as "SS LENDING the money to US Government".. SS reserves were originally NEVER TO BE USE AS GENERAL REVENUE FUNDS...

:mad: :mad:
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I am of the opinion that it was sold as such but intended as what actually happened. Do you really believe that the USG or any government on the face of the earth has, for a series of generations, ever had the best interests of the citizens at heart?

Come off it. You have no legitimate right to be mad.
 
Quote from Scataphagos:

How so? And why are you not mad as Hell?
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If the assumption is that government does not operate in the citizen's best interest, then you can't be mad when it doesn't. Just do your best to keep your assets away. But even then, if they don't like you, they will just sieze them.

Believe me, I was mad as hell. But I realized that there is no going back. The state will not give up power without a military coup. And then you're just trading one set of assholes for another set of assholes.

Better to just join them if you can.
 
Quote from Scataphagos:

I'm of the opinion that the money was effectively STOLEN from SS... with the Government saying, "We're TAKING the money, and here is our nonfungible note in exchange." That's not quite the same as "SS LENDING the money to US Government".. SS reserves were originally NEVER TO BE USE AS GENERAL REVENUE FUNDS...

:mad: :mad:
More...

Well there are at least a few points we can all agree on. One is that as you say: "SS reserves were ... never to be used as general revenue funds..."

In fact I found this in Wikipedia:

"The trust funds are "off-budget" and treated separately in certain ways from other Federal spending, and other trust funds of the Federal Government. From the U.S. Code:

EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104Stat. 1388-623, provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of - (1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.

The trust funds run surpluses in that the amount paid in by current workers is more than the amount paid out to current beneficiaries. These surpluses are invested in special U.S. government securities, which are deposited into the trust funds. If the trust funds begin running deficits, meaning more in benefits are paid out than contributions paid in, the Social Security Administration is empowered to redeem the securities and use those funds to cover the deficit. "

We can also agree that the securities held by the trust fund are non-negotiable. They can't go out and sell them on the open bond market. That was one of Breen's points I believe.

I think we can also agree that whether the securities are represented by physical certificates or bookkeeping entries on the Treasury's books is immaterial.

Something we might not agree on though is what effect a default on these securities would have. I maintain that the government can no more default on the money owed to SS than it can to any non-government holder of Treasury bonds.
However it would be possible, though politically untenable, for the Congress to reduce SS benefits to the point that the income from the 2 Trillion plus trust fund (about %5.5) would make up any SS revenue short fall without the fund having to redeem any of its holdings. In this way, Congress could avoid even the question of default. I have an uneasy feeling that this is what's going to happen.

Obviously there are some who are philosophically opposed to the very idea of social security and will not hesitate to sneak in the back door to kill it, and still others who want to kill SS for selfish personal gain, i.e., Wall Street. This, in my opinion, is why so much false information gets reported. I think these folks who want to Kill SS are the source. Certainly borrowing from the fund and then running up huge deficits so that there is no way for the government to pay on its obligation without still further borrowing and inflation will be seen as a means to affect a "slow kill".
 
Quote from bearice:

Where is Ron Paul? He has a habit of starting fires and disappear. No new information from Ron Paul regarding USA bankruptcy. I think Ron Paul cannot stand the heat when the fire gets big.

But I like fires. I grew up with fire.
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I did not start the Fire. The Fire has been burning always since the world has been turning.
 
My Indian friend sent me this message.

Shirdi wale sai baba. Aaya hai tere dar pe kabaadi. Lab pe duwaye, aako me aasoo, phir bhi jhooli hai khali.

Sai baba was a God man.

Aaya hai tere dar pe means somebody has come to your doorsteps.

Kabaadi means rag picker/dealer.

Lab pe duwaye means good words on the lips.

aako me aasoo means tears in the eyes.

phir bhi jhooli hai khali means but the wallet is empty.
 
Piezoe, I appreciate that you took the time to review the issue of securities and ledger entry accounts and actually looked as part of the statute. I see that in the process you understand much of what I have been saying.

But, there is that last area of disagreement. You suggest that that the U.S. Government can no more default on its Treasury Securities that it can on its Special Government 'Security' ledger entry notations of obligation. This idea you have assumes that the ledger entry is a thing, that it is an asset of a fund that can be defaulted on. That is simply not the case. The government obligation is to fund social security entitlements from the general fund when due. It adjusts its book keeping when it does so, but it does create or extinguish any asset. You cannot think about this general obligation of the Government as a security. As you note a real security can be traded. It can be hedged. It has a market value. It can be used as collateral. In the event of a default, it is a default under the express terms of the security.

The Security has express terms of when it matures, how much interest it pays, when it pays interest, and whether it is callable. These terms of the real Security cannot be arbitrarily changed by the debtor without the creditor's consent to modify the agreement. The default occurs under the terms of the agreement and the agreement itself, the Security, is enforceable at law. When a Treasury Security matures the government cannot say...we chose to extend the maturity another ten years and we will pay at a reduced interest rate. If you hold the real Security, you can say, "NO!, pay me now." ...and if the Government refuses you can initiate a claim in Federal Court based on the Security Contract itself. The Federal Judge will have no choice but to issue a judgement requiring the U.S. Treasury to pay you under the terms of the Security.

If you compare this to the ledger entry, 'faux security, that you say is in some kind of fund, you cannot do any of these things. The statute that allows the Treasury to deal with these Soc. Sec. revenues as general funds accounted by ledger entry provides that the terms can be changed at the pleasure of a debtor. In the law of contract which requires a least two parties to contract, the right of one party to change the terms of the contract 'arbitrarily' (i.e., without some contingent event or and some guidline define the adjustments allowed), will of itself void the 'contract' as a legal agreement. If one side can arbitrarily change the terms at its will, it is not a contract. If it is not a contract it is not a Security. It is not a legal thing. You cannot enforce it court. You cannot trade it. You cannot use if for collateral. It has no current value. This does not mean that the government does not have a promise to pay you an entitlement and that it owes money in the future to make good on that promise. It simply means that the promise is not based on a legal contract. It is a political promise...and you know how to value that. As you note in your supposing, the government can arbitratily change the interest rate it accounts for these 'faux' securities...That means they can lower the rate or raise the rate for any purpose and without any legislative discussion or approval. They can do this for any reason they see fit. A cause of action that arises in the matter of these accounting ledger recorded general promises to administer the Soc. Sec. obligations cannot arise on any change of the terms of interest or maturity of these supposed 'Securities'. The cause of action can only arise when the government fails to make a payment required under the Soc. Sec. law itself,...there is no Security that can default. This is already so wonky, that I will not get into the 'standing' problem that will now face anyone who does not get a payment, and they will not be able to bring a contract claim...they will not have a contract claim on the value of any assets. These ledger entry amounts do not qualify as 'Security Claims.'

If you understand this difference it is no great leap to see that in the case of these amounts owed to social security, these political ledger entry promises of general obligation,...there terms will be changed so that they do not default. The changes can happen at first administratively without any legislative discussion and then more materially, after legislative action...but without consent of those entitled. The law will be changed. You can't do this with a real Security. That is the difference... a Security can actually default while an IOU to yourself will never practically default...becuae you will modify the agreement with yourself to keep that from happening...change how much is owed, change when it is paid, change who gets paid, change the qualifications for payment, increase the revenues by converting private pensions to public pensions....all these things have been done in the context of government social security in other countries...Study what happened in Argentia for a case of how this can proceed. You can't do that with a real Security. That is an important difference.

A Security is a promise defined by contract that is cognizable at law. A ledger entry is the accounting of a promise that is not based on contract and is not cognizable at law.

Once you begin to understand this then we can talk about the differnce this makes to...say, the operation of Monetary Policy or the accuracy and transparancy of fiscal policy, the budget. One way to look at the difference is to consider that Soc. Sec. is a 15% tax on all labor income up to, what, $160,000.00 per year? Something like that. The tax is based on a promise of a future pension but the funds are not invested to fund that pension. Imagine that you invested 15% of your life long labor in some broad mutual fund of diversified bond Securities and equity Securities. Whenever, during your life you filed out a financial statemetn you would enter the value of your 15% life long labor investment. It would have a value. I would be an asset. When was the last time you put your interest in the Soc. Sec. Trust Fund, down on a financial statement as an 'other asset?' If you did, do you think it would be a positive asset or do you think it would be a contingent liabilty? You may be a lot less wealthy than you think....especially if you think there is a positive Soc. Sec. fund that can be borrowed from.
 
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