Market Ticker: Revoke Krugman's PhD and Then Let's Talk Social Security...
I second this motion, anyone else with me?
Karl Denninger via Market Ticker:
Seriously. This tripe is so bereft of logic and actual mental acuity that it is unworthy of graduation from elementary school:
About that math: Legally, Social Security has its own, dedicated funding, via the payroll tax (“FICA” on your pay statement). But it’s also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.
Baloney. This is called fraud in the private-sector. First, there is no dedicated funding. Second, all the money taken in over the years was not "invested", it was spent.
Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund.That so-called "trust fund" is a fraud. It does not exist.
For the 50,000th time: Krugman is a certified idiot. How confused is he by this issue? Yes, FICA exists to feed Social Security BUT for years the pot was looted for things like tanks and bombs and good stuff like that and is now stuffed with $2 trillion in worthless Treasurys (have YOU seen $2 trillion lying around the Treasury so they can cash those in?). It's not complicated. Of course it seems to be to Paul Krugman but walking is confusing to pigeons ifyoufeelmeonthat.
We knew the day of reckoning was coming... well most of us knew, except Krugman, who has his head shoved so far up his ass he wouldn't know the four horsemen of the apocalypse unless he swallowed them himself.
Here's what actually happens (and Krugman knows this, which makes him a damned liar besides):
*Your tax dollars go to Treasury.
*Treasury keeps them and issues "special" Treasury bonds to the Social Security "trust fund."
*Treasury counts these tax receipts against the federal deficit, making it look (much, until the last year) smaller than it really is.
Note the slight-of-hand here. Social Security gets an alleged "bond" but they can't sell it to anyone but the Treasury. That is, legally it is an IOU, not a bond. A bond can be marketed in the open market to anyone who is willing to buy, for whatever they're willing to pay. These are unmarketable (intentionally) and thus can only be redeemed in one place - at Treasury.
A liar AND an idiot? Ouch, that's got to hurt.
Extend and pretend and hope all those Baby Boomers die off before we actually have to cash in those IOUs (let's be real, that is what they are). In order to do so, we'll have to hope that there's a greater fool out there with $2 trillion (plus interest, since we'll have to create fresh bonds to pay back the IOUs we're trying to cash in for real money) to waste on real Treasurys that are actually worth something in the open market. That would imply that there is a market to begin with but hey, as long as Bernanke keeps the cheap money flowing we'll always have the banks to fall back on.
If this isn't money laundering, I'm not sure what is. I thought the "security" in Social Security stood for security as in a safety net in old age but obviously the security stands for a financial obligation that isn't exactly money. If that's the case, mission accomplished?