This is good

On Thu, 30 Oct 2008 20:09:58 -0700, "Bob Weinberger"
wrote:


wrote in message
.. .
I wouldn't go so far as to say "disparaging" it, but it is incorrect.
There is money out there earning interest and the size is very relevant.
The money via "SS tax" is flowing in all the time, but (essentially) it
immediately flows back out, "loaned" to other budget items/agencies/etc.
as an "investment," therefore, the size is VERY relevant. Some actually
flows back in when some new bureaucrat actually pays attention to this
kind of everyday business stuff and pays down "short-term non-capital
badcompany debt," but it is immediately "loaned" back out again.

Richard, you make a distinction without substance. The size of the Trust
Fund is only relevant in bookeeping terms, i.e. which *government account*
the money is tied to.

Er, no. As the tax receipts' input and "investment" occurs constantly,
and the "bonds"/IOUs are at a variety of interest rates and maturity
dates, the size and, generally, scope does matter. Moreover, the money
is out there and earning interest. You may be confusing the money
(principal) _earning_ interest with the interest earned actually being
paid - the interest is being earned daily and bonds are maturing and
interest is being paid to the SSA constantly. The problem is that they
continually lend it back out again to the same and only borrower. Look
at it like this - let's say you own a bank and Bill Gates and Warren
Buffett, your only customers, each deposit 1 million US with your bank.
They then come in and say, "Banker Bob, loan us each a mil at 6%." Sure,
you say. You know they are good for a measly mil so you loan them the
money. And sure enough, in a year they come in and pay you back with
interest. However, they immediately say, "Bob, now loan us 1,060,000 at
6%," and you say, "Um, well, how about letting me keep my interest, but
I'll happily loan you another mil?" "Sorry, nope, we want the
1,060,000," they say and you reluctantly agree, thinking the next year
will be your year. The next year, they pay right on time and clean you
right back out. So, you say, OK, I'll just sell this paper to another
investor, but the guys tell you to read the contracts - you can't
because the IOUs you accepted are "special" and can't be sold, bartered,
or otherwise negotiated.

OK, at what point do you begin to say, "hey, wait a damned minute,
here..." They are still, as of this point, "performing loans," earning
interest and all, but Bob's Bank has jack **** to show for it all.

And then, it really gets good - they come in after several years and
say, "Bob, we've always paid our debts and now, we'd like to borrow 100
mil, but don't worry, we know it's a bigger loan, so we're prepared to
make it worth your while - we'll pay 7%..." And then, it gets even
better. One day, they come in and say, "You know, Bob, we're going to
die eventually, and we'd sure hate to see you stuck, so we're going to
pay you off in full and we're not going to borrow another dime..."
Halle-****in-lu-yahoo, you think! "We've set up 'Trust Funds' and
they'll do all the borrowing, just like us, but better - they'll borrow
5 time as much as we ever did personally" WHAT!?! "Oh, don't worry,
they'll NEVER die - they'll go on being good little borrowers long after
we're all dead...you, too, Bob...and Bob, you really ought to go see our
tailor - it won't do for a prosperous banker like you to be in that same
shiny suit day after day...Bob...you seem to be crying, Bob...why are
you crying, Bob...?"

It still represents a government obligation no matter
which pocket it comes out of. As the current SS obligations grow, there is
less money for Congress to "borrow" to spend on other things.

Er, again, not exactly - it's worse than that, because the borrowing is
in fact earning interest and so, again, the size does matter a great
deal.

They really
worry about the time when there is no SS surplus and they not only have none
to "borrow",

Um, that's not when anyone needs to start worrying...

but are obligated to pay money owed to the fund in order to
meet current obligations.

AHA! _THAT'S_ when the poo is gonna hit the whirler...

That money will need to come from somewhere - e.g.
either reduce SS benefits, increase SS or other (e.g.income) taxes, reduce
other government programs, or increase debt.

Lessee here...**** off AARP and a passel of old folks, **** off welfare
recipients, **** off any number of Government tit-for-tat titsucklers,
or start yelling about taxing "Big Business" and "the rich"...what will
they do, what will they do....I wonder...I wonder...

HTH,
R

Bob Weinberger

* As a side note: During tours at the Pentagon in the Navy Budget Office, I
was constantly amused and appalled at how much time was spent ensuring that
funds were spent from the "proper" accounts relative to the time spent
ensuring that the funds were productively spent on worthwhile projects.


** Posted from http://www.teranews.com **

wrote in message
...
Er, no. As the tax receipts' input and "investment" occurs constantly,
and the "bonds"/IOUs are at a variety of interest rates and maturity
dates, the size and, generally, scope does matter. Moreover, the money
is out there and earning interest. You may be confusing the money
(principal) _earning_ interest with the interest earned actually being
paid - the interest is being earned daily and bonds are maturing and
interest is being paid to the SSA constantly. The problem is that they
continually lend it back out again to the same and only borrower. Look
at it like this - let's say you own a bank and Bill Gates and Warren
Buffett, your only customers, each deposit 1 million US with your bank.
They then come in and say, "Banker Bob, loan us each a mil at 6%." Sure,
you say. You know they are good for a measly mil so you loan them the
money. And sure enough, in a year they come in and pay you back with
interest. However, they immediately say, "Bob, now loan us 1,060,000 at
6%," and you say, "Um, well, how about letting me keep my interest, but
I'll happily loan you another mil?" "Sorry, nope, we want the
1,060,000," they say and you reluctantly agree, thinking the next year
will be your year. The next year, they pay right on time and clean you
right back out. So, you say, OK, I'll just sell this paper to another
investor, but the guys tell you to read the contracts - you can't
because the IOUs you accepted are "special" and can't be sold, bartered,
or otherwise negotiated.

OK, at what point do you begin to say, "hey, wait a damned minute,
here..." They are still, as of this point, "performing loans," earning
interest and all, but Bob's Bank has jack **** to show for it all.

And then, it really gets good - they come in after several years and
say, "Bob, we've always paid our debts and now, we'd like to borrow 100
mil, but don't worry, we know it's a bigger loan, so we're prepared to
make it worth your while - we'll pay 7%..." And then, it gets even
better. One day, they come in and say, "You know, Bob, we're going to
die eventually, and we'd sure hate to see you stuck, so we're going to
pay you off in full and we're not going to borrow another dime..."
Halle-****in-lu-yahoo, you think! "We've set up 'Trust Funds' and
they'll do all the borrowing, just like us, but better - they'll borrow
5 time as much as we ever did personally" WHAT!?! "Oh, don't worry,
they'll NEVER die - they'll go on being good little borrowers long after
we're all dead...you, too, Bob...and Bob, you really ought to go see our
tailor - it won't do for a prosperous banker like you to be in that same
shiny suit day after day...Bob...you seem to be crying, Bob...why are
you crying, Bob...?"

Your analogy has two fatal flaws.

1. Gates' and Buffet's sources of money come from a different source than my
bank's funds, while SS and the rest of government get their income primarily
from one source - the american taxpayer.

2. Gates and Buffet didn't sign a contract with my deposters that obligates
the bank (and in a sense would also obligate Gates and Buffet) to pay some
of the bank's depositers amounts that are mandated by Gates and Buffet (and
over which I have no real independant control), regardless of whether or not
I have enough new depositers to cover the mandated payouts.

Bob Weinberger


** Posted from http://www.teranews.com **

On Thu, 30 Oct 2008 23:21:47 -0700, "Bob Weinberger"
wrote:


wrote in message
.. .
Er, no. As the tax receipts' input and "investment" occurs constantly,
and the "bonds"/IOUs are at a variety of interest rates and maturity
dates, the size and, generally, scope does matter. Moreover, the money
is out there and earning interest. You may be confusing the money
(principal) _earning_ interest with the interest earned actually being
paid - the interest is being earned daily and bonds are maturing and
interest is being paid to the SSA constantly. The problem is that they
continually lend it back out again to the same and only borrower. Look
at it like this - let's say you own a bank and Bill Gates and Warren
Buffett, your only customers, each deposit 1 million US with your bank.
They then come in and say, "Banker Bob, loan us each a mil at 6%." Sure,
you say. You know they are good for a measly mil so you loan them the
money. And sure enough, in a year they come in and pay you back with
interest. However, they immediately say, "Bob, now loan us 1,060,000 at
6%," and you say, "Um, well, how about letting me keep my interest, but
I'll happily loan you another mil?" "Sorry, nope, we want the
1,060,000," they say and you reluctantly agree, thinking the next year
will be your year. The next year, they pay right on time and clean you
right back out. So, you say, OK, I'll just sell this paper to another
investor, but the guys tell you to read the contracts - you can't
because the IOUs you accepted are "special" and can't be sold, bartered,
or otherwise negotiated.

OK, at what point do you begin to say, "hey, wait a damned minute,
here..." They are still, as of this point, "performing loans," earning
interest and all, but Bob's Bank has jack **** to show for it all.

And then, it really gets good - they come in after several years and
say, "Bob, we've always paid our debts and now, we'd like to borrow 100
mil, but don't worry, we know it's a bigger loan, so we're prepared to
make it worth your while - we'll pay 7%..." And then, it gets even
better. One day, they come in and say, "You know, Bob, we're going to
die eventually, and we'd sure hate to see you stuck, so we're going to
pay you off in full and we're not going to borrow another dime..."
Halle-****in-lu-yahoo, you think! "We've set up 'Trust Funds' and
they'll do all the borrowing, just like us, but better - they'll borrow
5 time as much as we ever did personally" WHAT!?! "Oh, don't worry,
they'll NEVER die - they'll go on being good little borrowers long after
we're all dead...you, too, Bob...and Bob, you really ought to go see our
tailor - it won't do for a prosperous banker like you to be in that same
shiny suit day after day...Bob...you seem to be crying, Bob...why are
you crying, Bob...?"

Your analogy has two fatal flaws.

Sorry, no.

1. Gates' and Buffet's sources of money come from a different source than my
bank's funds, while SS and the rest of government get their income primarily
from one source - the american taxpayer.

Nope. I didn't state where their money came from, so you can't state
that it is a different source, but it doesn't matter anyway, but the
biggie is that you didn't read very closely: your bank has no other
funds. They are your only customers, hence the use of the phrase, "your
only customers." And while "the american taxpayer" is the primary
source of the revenue in the general fund, he is not the primary source
of the SSA's funds - remember that employers pay the same rate in FICA,
etc., plus there is income from the Trust Fund workings, etc. (and that
which is paid by individuals as SE Tax doesn't "tip the scales" for a
variety of reasons).

2. Gates and Buffet didn't sign a contract with my deposters that obligates
the bank (and in a sense would also obligate Gates and Buffet) to pay some
of the bank's depositers amounts that are mandated by Gates and Buffet (and
over which I have no real independant control), regardless of whether or not
I have enough new depositers to cover the mandated payouts.

No, they didn't sign your example contract, but it non sequitur because
you have no other depositors to whom you must or in fact could pay
anything, and you do not have "new depositors" - again, see above
your only customers. And while I think you are alluding to an implied
contract with the current and future recipients of contributory "Social
Security," you might wish to refer to your copy of that contract. Don't
have a copy? Well, shoot, that's OK, it really isn't all that much of a
contract...well, unless you're the, um, party of the first part...

And since it was merely an example, I'll let you in on something - if
you wanna be technically correct, it has one REALLY big fatal flaw - you
don't own a bank with Warren and Bill as its only customers...

HTH,
R

Bob Weinberger


** Posted from http://www.teranews.com **

wrote in message
...
On Thu, 30 Oct 2008 23:21:47 -0700, "Bob Weinberger"
wrote:

Your analogy has two fatal flaws.

Sorry, no.

1. Gates' and Buffet's sources of money come from a different source than
my
bank's funds, while SS and the rest of government get their income
primarily
from one source - the american taxpayer.

Nope. I didn't state where their money came from, so you can't state
that it is a different source, but it doesn't matter anyway, but the
biggie is that you didn't read very closely: your bank has no other
funds. They are your only customers, hence the use of the phrase, "your
only customers." And while "the american taxpayer" is the primary
source of the revenue in the general fund, he is not the primary source
of the SSA's funds - remember that employers pay the same rate in FICA,
etc., plus there is income from the Trust Fund workings, etc. (and that
which is paid by individuals as SE Tax doesn't "tip the scales" for a
variety of reasons).

2. Gates and Buffet didn't sign a contract with my deposters that
obligates
the bank (and in a sense would also obligate Gates and Buffet) to pay some
of the bank's depositers amounts that are mandated by Gates and Buffet
(and
over which I have no real independant control), regardless of whether or
not
I have enough new depositers to cover the mandated payouts.

No, they didn't sign your example contract, but it non sequitur because
you have no other depositors to whom you must or in fact could pay
anything, and you do not have "new depositors" - again, see above
your only customers. And while I think you are alluding to an implied
contract with the current and future recipients of contributory "Social
Security," you might wish to refer to your copy of that contract. Don't
have a copy? Well, shoot, that's OK, it really isn't all that much of a
contract...well, unless you're the, um, party of the first part...

And since it was merely an example, I'll let you in on something - if
you wanna be technically correct, it has one REALLY big fatal flaw - you
don't own a bank with Warren and Bill as its only customers...

HTH,
R

Bob Weinberger

Yes I was wrong. Your anagogy doesn't have just two fatal flaws, it has at
least five that make it a very poor analogy of the SS system. Thank you for
doing such a good job of pointing out the other flaws.

Your analogy is only good for pointing out the bookeeping aspects of the
system. The monies we are talking about are all government funds that all
come primarily from the same source (via different mechanisms and vehicles,
but from basically the same source). I was trying to make a point (that you
obviously missed) in my side note in a previous post - when you become
almost solely focused on the accounting/bookeeping of a project/program such
that that aspect becomes the driver of decisions, actual productive
management and decision making of the program/project suffer greatly.

And BTW speaking of not reading carefully, I wrote "the american taxpayer"
not "individual american taxpayers". Any american entity - individuals,
corporations, sole proprietorships, LLC's, etc.- that pays income or social
security taxes, or other taxes disguised as fees or assessments is an
"american taxpayer".

Bob Weinberger


** Posted from http://www.teranews.com **