Quote from Ed Breen:
Gastro...I never worry about being justified, these posts are my thoughts, they exist outside any concept of justification. They make sense or they don't, they are right or they are wrong, they are never justified. I am flattered, humbled, howerver that you remembered my comment and offered independent comment that agrees whith what I asserted. Thank you.
On the issue of what I said about the special government securities that back up the U.S. obligaton to fund Social Security and Medicare, I have not gone back and reviewed my statements for quotes, and I appreciate your gist of what I said...but I don't think the issue revolved on the idea of a promise. My sense of it is that U.S. Treasury obligations are contracts with the public, ofter foreigners, that can be defaulted in the market sense of a breach of debt contract. In contrast I tried to make the point that our SS and Medicare obligations were intergovernmental accounting entries that did not have the same force of legal contract. IOU's to your self are not the same as contracts to pay real counter parties under terms and conditions. I don't want to restimulate that argument as I believe I already made the case. It is important to understand that the concept of 'promise' in legal sense is different when the supposed promise has no legal enforceability...I would suggest that there is difference between a legal promise and a supperficial non binding promise. The issue really goes to the basis of the theory of contract...and our supposed 'promise' with regard to SS and other entitlement obligations does not rise to the level of promise as a legal contract; it remains a political 'promise' with no force of law. That was the point I was making way back then.
I would remind that that I suggested way back then that Treasury could manipulate the SS 'promises' in order to avoid the debt ceiling...I explained that this is what the Clinton Treasury did during the Gingrich shut down. So, now it has apparently come to pass, again.
Contrast the lack of comment on the performance of SS special government securities with the comment on the restructuring of Greek debt going forward and you will begin to appreciate the difference between government obligations with outside investors and government 'obligations' with itself.
