General Discussion
In reply to the discussion: Social Security on Facebook [View all]Yo_Mama
(8,303 posts)What's in the SS trust fund, and also in the federal government retiree trust fund, are "special obligations". These obligations are both bought and sold by different branches of the US government.
Thus they do not add to the total of federal debt held by the public (actual borrowed debt), although they are constrained by the debt limit.
The Fed is telling Congress to default - to modify entitlement programs so as not to actually float that debt.
Our creditors very much do not want that debt to be converted to marketable securities, because then it competes with them for their right to federal government revenues for repayment. If all the special-obligation securities in government trust funds were converted into US Treasury marketable obligations, our current federal debt held by the public would be more than 100% of GDP, which is a level at which private investors get scared about risk.