tag:blogger.com,1999:blog-6329595.post7969560042718654561..comments2024-03-18T21:25:32.235-05:00Comments on Althouse: Why does the government want us to worry about who is doing the speaking?Ann Althousehttp://www.blogger.com/profile/01630636239933008807noreply@blogger.comBlogger243125tag:blogger.com,1999:blog-6329595.post-4457545713700658982010-10-19T12:52:41.858-05:002010-10-19T12:52:41.858-05:00If garage is wrong the only explanation I can see ...<i>If garage is wrong the only explanation I can see is that Reagan raised Social Security taxes to make up for the revenues lost from his tax cuts for the rich.</i><br /><br />We already knew you were deeply stupid, FLS. But thank for confirming that.Revenanthttps://www.blogger.com/profile/11374515200055384226noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-61626581579516769232010-10-19T08:54:07.081-05:002010-10-19T08:54:07.081-05:00If garage is wrong the only explanation I can see ...If garage is wrong the only explanation I can see is that Reagan raised Social Security taxes to make up for the revenues lost from his tax cuts for the rich. This implies Ronnie knew all along that supply side economics was bullshit.<br /><br />thanks dbq, blue, gmay, rev, et al, for confirming my belief that Reagan did more to ruin the country than did the Rosenburgs.<br /><br />At least he can't spend his tax cuts in hell.former law studenthttps://www.blogger.com/profile/15196697206046544350noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-19394237813974281462010-10-19T02:32:24.490-05:002010-10-19T02:32:24.490-05:00It may be spam, but long's post comes closer t...It may be spam, but long's post comes closer to justifying a claim of Social Security solvency than anything garage has ever written here.Revenanthttps://www.blogger.com/profile/11374515200055384226noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-86173236363534512362010-10-19T00:14:44.902-05:002010-10-19T00:14:44.902-05:00The bond auctions are always consistently over pre...<i>The bond auctions are always consistently over prescribed. When they aren't, you let us know.</i><br /><br />October 14, 2010:<br />Treasurys Fall On Tepid Bond Sale; 30-Year Tumbles<br />http://online.wsj.com/article/BT-CO-20101014-712198.html<br /><br /><br />You know, never say never about American insolvency. Our debt to GDP ratio is already close to 100%. With little hope of growing our way out of it anytime soon, and this massive explosion of government spending that will continue for decades, we will soon be at insolvency's door. At some point our debt will loom so large that auctions start failing consistently. Once that happens, watch for the snowball effect.Blue@9https://www.blogger.com/profile/16371286571496793710noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-31453665113625084812010-10-18T23:27:54.993-05:002010-10-18T23:27:54.993-05:00That note is the closest thing to cash there is. I...<i>That note is the closest thing to cash there is. It is so secure than banks back their lending with it. The fed mandates that banks keep a certain ratio of t-bills to the amount of money they lend. This is to prevent overextension and bank collapses. the Fed has a bunch of these t-bills, there’s a n exchange between the two and it’s the way in which the fed exerts control over the money supply. When the Fed buys t-bills from the banks, it is releasing money out into the economy and taking t-bills in, thereby increasing the money supply, then it sells t-bills, it is releasing those t-bills out into the economy and taking the money in</i>.<br /><br />Actually, no. The notes that the U.S. government gives the SS trust fund are NOT the t-bills that you are talking about. As repeatedly pointed out above, they are specifically non-negotiable and non-transferable. And, they have nothing to do with the money supply as a result.<br /><br />But, good try.Bruce Haydenhttps://www.blogger.com/profile/10815293023158025662noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-50766480453334111622010-10-18T23:13:51.845-05:002010-10-18T23:13:51.845-05:00garage said: "That note is the closest thing ...garage said: <i><b>"That note is the closest thing to cash there is. It is so secure than banks back their lending with it."</b></i> <br /><br />Ugh. <br /><br />No, it's not the closest thing to cash there is. Treasuries are non-negotiable. Banks back their lending with it because that's all most of them have (or the government allows depending on how you look at it). Those bills/bonds/notes are IOUs from the government that are a promise to pay in cash. <br /><br />They are only backed by the taxing power of the government. Federal tax revenues have taken a severe hit since the economic collapse. To shore up the gap, the Treasury can only create more securities to pay. These securities are then backed by the government printing more money. <br /><br />So you have China, Japan, the UK, and the Fed who are the main purchasers of Treasuries. There are two problems with this scheme, 1) it assumes there will always be a market for Treasuries (other foreign powers are already looking elsewhere), and 2) because of #1, The Fed (wow, <i>another</i> U.S. government entity, is now the leading purchaser of U.S. government debt.<br /><br />Apply that to your newfound knowledge you displayed at 10:57pm. Are you starting to grasp the insanity of the situation?GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-86706294122521717212010-10-18T23:11:53.307-05:002010-10-18T23:11:53.307-05:00The fact that money is borrowed out of the fund by...<i>The fact that money is borrowed out of the fund by the federal government, or a "promise to repaid" is irrelevant</i><br /><br />The fact that SSA lent all their money to people who can't pay it back is irrelevant to the question of whether SSA has money. Well said, garage.Revenanthttps://www.blogger.com/profile/11374515200055384226noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-1846271791515227002010-10-18T23:01:12.349-05:002010-10-18T23:01:12.349-05:00Garage mahal, having the government "secure&q...Garage mahal, having the government "secure" debt with treasuries is exactly like you writing checks to yourself and then saying you're good for it.<br /><br />Yes, we all know the government has promised to pay SS forever. The "trust fund" is a promise to keep the promise--it's not money.<br /><br />If the government can't collect enough taxes in a given year to meet the obligation, it has to cut benefits or borrow. Just as though the "trust fund" weren't there.<br /><br />If you believe the government will keep its promises, fine--but those promises are made in the form of future taxes or future borrowing. It has no pile of accumulated money with which to pay.Gabriel Hannahttps://www.blogger.com/profile/12356186353979140904noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-23131848740631551862010-10-18T23:00:03.887-05:002010-10-18T23:00:03.887-05:00GMay said: "Do you actually know how, other t...GMay said: <i><b>"Do you actually know how, other than taxes, the government borrows money?"</b></i><br /><br />A little clarification on my part - I don't mean to suggest that the government borrows money by taxing. <br /><br />I should have just asked: "Do you know how the government borrows money?"GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-58878285044153149692010-10-18T22:57:09.705-05:002010-10-18T22:57:09.705-05:00Social Security, for years, took in more taxes tha...<i>Social Security, for years, took in more taxes than it paid out, and those taxes were spent. The "trust fund" is a note the government wrote itself.</i><br /><br />That note is the closest thing to cash there is. It is so secure than banks back their lending with it. The fed mandates that banks keep a certain ratio of t-bills to the amount of money they lend. This is to prevent overextension and bank collapses. the Fed has a bunch of these t-bills, there’s a n exchange between the two and it’s the way in which the fed exerts control over the money supply. When the Fed buys t-bills from the banks, it is releasing money out into the economy and taking t-bills in, thereby increasing the money supply, then it sells t-bills, it is releasing those t-bills out into the economy and taking the money in.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-81297846455164124892010-10-18T22:52:47.875-05:002010-10-18T22:52:47.875-05:00garagemahal, don't take it from me:
http://en...garagemahal, don't take it from me:<br /><br />http://en.wikipedia.org/wiki/Social_Security_Trust_Fund<br /><br /><i>It is instructive to note that the $2.5 Trillion Social Security Trust Fund has value, not as a tangible economic asset, but because it is a claim on behalf of beneficiaries on the goods and services produced by the working population. This claim will be enforced by the United States Government although the precise monetary mechanism of enforcement is yet to be determined. In order to repay the Trust Fund, the United States government has three options, which may all be pursued to varying degrees.<br /><br />(1) The government may issue debt by selling treasuries, which would further raise the deficit. This scenario would likely increase the tax burden on future generations, as annual interest payments on the national debt would increase. If government revenues do not increase sufficiently either through taxes of economic growth, the government would be forced to cut spending on other programs (such as Defense, Education, Research) or else default on all or part of the debt.<br /><br />(2) The government may raise taxes. Ironically, by reducing take home pay for workers, the government would make it harder for the younger, working generations to invest and save for retirement.<br /><br />(3) The government may monetize trust fund obligations by transferring the treasuries held by the Trust Fund onto the Federal Reserve balance sheet. In such a transaction, the bonds would become "assets" on the Fed's balance sheet, and the Fed would create money "out of thin air" to purchase the bonds from the government. Under such a scenario, the bonds are converted into cash, which would then be used by the government to cover social security payments. This scenario would likely lead to increased inflation, as it would inflate the money supply without directly increasing the amount of goods and services produced by the economy as a whole.</i>Gabriel Hannahttps://www.blogger.com/profile/12356186353979140904noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-72687743931861999602010-10-18T22:42:57.642-05:002010-10-18T22:42:57.642-05:00Oh, garage mahal.
Suppose that you have a paychec...Oh, garage mahal.<br /><br />Suppose that you have a paycheck and a savings account. You have saved (let's say) two thousand dollars toward your retirement.<br /><br />Now you decide to take that two thousand out and make a down payment on a Porsche. You write yourself a note that says "I promise to put $2000 in my savings account".<br /><br />Can you spend that note? No. You can only spend your paycheck. The note is just an accounting device. If you showed that note to a bank, saying that this note proves you can pay them two thousand dollars for something else when you've already spent the money that backed the note, you'd be laughed out.<br /><br />Social Security, for years, took in more taxes than it paid out, and those taxes were spent. The "trust fund" is a note the government wrote itself.<br /><br />Now, Social Security is about to take in less than it pays out. The government has already spent the money. To meet its SS obligations it has to raise taxes, cut benefits, or borrow the money. Just as though the "trust fund" didn't exist.<br /><br />Remember in "Dumb and Dumber" when the two characters were giving each other other IOUs for millions of dollars, and so thought they were rich? Well, you're the chump, in this case.<br /><br />The government can probably afford to pay SS for a long time, but the "trust fund" isn't an asset. It's a second order promise--a promise to keep the promises of SS.Gabriel Hannahttps://www.blogger.com/profile/12356186353979140904noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-3881285074191586962010-10-18T22:42:34.088-05:002010-10-18T22:42:34.088-05:00Was that an answer to any of the questions asked o...Was that an answer to any of the questions asked of you?GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-5083152818137161032010-10-18T22:40:03.167-05:002010-10-18T22:40:03.167-05:00The bond auctions are always consistently over pre...The bond auctions are always consistently over prescribed. When they aren't, you let us know.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-45964723118780841492010-10-18T22:38:23.831-05:002010-10-18T22:38:23.831-05:00This comment has been removed by the author.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-43543038242911246672010-10-18T22:36:56.907-05:002010-10-18T22:36:56.907-05:00garage said: "Things would have to go so cata...garage said: <i><b>"Things would have to go so cataclysmic wrong, something you or I couldn't imagine happening."</b></i> <br /><br />Were you living under a rock for the entirety of 2008 or something?GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-14881070866346117862010-10-18T22:35:30.370-05:002010-10-18T22:35:30.370-05:00garage said: "So the gov doesn't borrow f...garage said: <i><b>"So the gov doesn't borrow from the trust fund, or the gov doesn't pay it back. Which is it."</b></i><br /><br />It. Does. Not. Matter.<br /><br />It borrows from itself and pays itself. As Maguro pointed out upthread, it's just an accounting scheme. <br /><br />Do you actually know how, other than taxes, the government borrows money?GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-13772677043813572432010-10-18T22:32:56.804-05:002010-10-18T22:32:56.804-05:00Things would have to go so cataclysmic wrong, some...<i>Things would have to go so cataclysmic wrong, something you or I couldn't imagine happening</i><br /><br />Wanna bet?Dust Bunny Queenhttps://www.blogger.com/profile/13341429444562280127noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-19063295160773955832010-10-18T22:32:06.830-05:002010-10-18T22:32:06.830-05:00Speak for yourself dude. We're in it up to ou...Speak for yourself dude. We're in it up to our eyeballs. I imagine it every day.Rialbyhttps://www.blogger.com/profile/17776533305191250327noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-5383677695023319482010-10-18T22:24:05.130-05:002010-10-18T22:24:05.130-05:00So the government is infallible and/or has a botto...<i>So the government is infallible and/or has a bottomless moneypit?</i><br /><br />Things would have to go so cataclysmic wrong, something you or I couldn't imagine happening. We are the sole issuers of our currency. We aren't on the gold standard anymore.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-54538495597411429972010-10-18T22:15:52.918-05:002010-10-18T22:15:52.918-05:00garage: "The government has always repaid its...garage: <i><b>"The government has always repaid its debts. It has never bounced a check."</b></i> <br /><br />So the government is infallible and/or has a bottomless moneypit?<br /><br /><i><b>"SS won't become insolvent in 2037, it will still be able to pay 75% of benefits for decades, if congress did nothing."</b></i><br /><br />Again, waaaaaay optimistic. But let's go with that. You just appealed to emotion upthread about old people not being able to do whatever, but seem fine with a 25% reduction in benefits. What gives?GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-20711337369594725272010-10-18T22:13:00.341-05:002010-10-18T22:13:00.341-05:00Gaaaaah!!! Such monumental stupidity.
So the gov ...<i>Gaaaaah!!! Such monumental stupidity.</i><br /><br />So the gov doesn't borrow from the trust fund, or the gov doesn't pay it back. Which is it.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-74144229906953405172010-10-18T22:09:09.292-05:002010-10-18T22:09:09.292-05:00garage said: "As I said, it would have just b...garage said: <i><b>"As I said, it would have just borrowed it from somewhere else."</b></i><br /><br />From where? And why would it have to borrow it?<br /><br />(I know you have no intention of answering these questions, but I'll keep tossing them out there)GMayhttps://www.blogger.com/profile/12231225580249665221noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-50932952588471282732010-10-18T22:08:55.427-05:002010-10-18T22:08:55.427-05:00The government borrows from the trust fund, and pa...<i>The government borrows from the trust fund, and pays it back, with interest. I never understood this as an argument even worth having.</i><br /> <br />Says Garage.<br /><br />Gaaaaah!!! Such monumental stupidity.Dust Bunny Queenhttps://www.blogger.com/profile/13341429444562280127noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-27107602176071712762010-10-18T22:08:00.813-05:002010-10-18T22:08:00.813-05:00Not even the most ardent supporters of the SS trus...<i>Not even the most ardent supporters of the SS trust fund buy into the absolutely insane and ignorant idea that the government will "always pay it back". The best case scenarios take you out to 2037 and these are wildly optimistic. That's when it's supposed to become insolvent. Do you know what that means garage? Do you understand the consequences?</i><br /><br />The government has always repaid its debts. It has never bounced a check. Well, it doesn't write checks but you know what I mean. SS won't become insolvent in 2037, it will still be able to pay 75% of benefits for decades, if congress did nothing.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.com