General Discussion
In reply to the discussion: The Social Security Trust Fund has not been 'looted'. [View all]customerserviceguy
(25,183 posts)instead of regular Treasury bills and notes, which are instantly redeemable on world securities markets?
If I sold someone my home for $250K, and took back a mortgage from them for 90% of it ($225K), and now the home is worth only $100,000, would you lend me $225K (or anything near it) for that security? Of course not. My mortgage is worth only what the borrower will be completely willing to pay me back. If he decides to walk away from the house and mail me the keys, I've got squat.
Congress was only too happy to borrow excess FICA tax contributions, giving back pieces of paper that they had no intention of redeeming, leaving that to future generations to sort out among themselves. Sorry if that looks like looting to me.
Oh, and that two or three trillion that is the nominal "value" of the securities -- well, Social Security has an obligation (which they do not call a liability - that implies a contract) of over fifteen trillion dollars, according to their own study released in 2009:
http://www.ssa.gov/OACT/NOTES/ran1/an2008-1.pdf
We are going to have to make changes to deal with the economic and demographic changes that are only now starting to crumble the pyramid.