“When the gov’t borrows money it does so by selling bonds, which as we know are backed by the US gov’t, exactly like money is.”
Yes and No. Yes, bonds are simply dollar bills with interest. However, in redemption of those bonds, the Mint has to print money to pay the holder, the problem comes in if you print too much money, you spark a currency devaluation like post WWI Germany.
No, the issue isn’t that SS Trust fund money were “invested” in bonds to get interest, the issue is pension fund money is supposed to be properly invested by diversification between stocks and bonds (of various kinds) to ensure a rate of return to meet the expected payout each year into the future (Autuarily sound management). It is estimated by the Heritage Foundation I believe the rate of return currently is in the neighborhood of 2% on the money we all paid into the SS Trust fund. Now would you invest your pension fund money in an investment that only gives a 2% rate of return? Would you be able to retire by putting in money over 30 years on a 2% rate of return? NOT! LBJ and the Dem Congress in 1968, perpetrated a financial fraud by spending pension fund money on the annual operating budget. This is what Enron did with it’s 401k pension fund by issuing overvalued worthless stock, so guess who learned from whom?
We spend some $500 billion annually on social programs and subsidies other than SS and Medicare, now a choice has to be made between seniors versus slackers living on hand outs. I vote we cut off the slackers, the seniors have paid their dues, the slackers haven’t. It is criminal even to contemplate cutting benefits to those who paid into the system over their lifetimes because of the financial malfeasance of politicians. Why not just rub the seniors faces in crap? What’s truly criminal is the fact if the 12.4% of everyone’s wages were to have been properly invested like any pension fund, after 30 years everyone could retire with over a $1 million in an account and never run out of money. This is the truly criminally malfeasant crux of the matter. Every politician who voted for earmarks and social programs should be put in jail and the keys tossed.
Any so called solution that penalizes the seniors who had their part of their wages put into the SS trust fund is a non starter. Cutting benefits is basically saying: “We stole your pension fund money, had a great party for 40 years and now we are going jack up the taxes on your kids and cut your income to pay off the balance of our party.” You think Daniel Rostenkoski was car sick when the seniors started bouncing his car??? You try cutting benefits and see what happens, third rail doesn’t even begin to describe the hewn outrage of all of us who put money in this system.
