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Actually the state funds do hold real assets but the federal system does not, there's no $3 trillion dollars to invest, the Social Security Trust Fund is just a
by ckinnan 10y ago
Actually the state funds do hold real assets but the federal system does not, there's no $3 trillion dollars to invest, the Social Security Trust Fund is just a non-marketable claim on the U.S. Treasury. It is an accounting placeholder-- a promise if you will-- there are no assets of any kind backing it. When the IOUs come due the Treasury will have to cut spending, raise taxes, or borrow new funds.
- dogma1138 10y agoThis isn't exactly the case, "real assets" is a tricky term. There is a difference between the SSA and the Social Security Fund, the SSA is funded through the budget "independently" of the fund, in some years the SSA have been funded at a deficit. Yes you can say that the fund is an "accounting placeholder" just like many other economic tools, when you take a loan from a bank it doesn't give you money, it effectively gives you a tradeable IOU against yours even tho you treat it as currency. To put in in a simpler terms the year to year budgetary deficit of the SSA against the payout claims should be treated as a separate thing to the actual Social Security Fund, if the US government or any other institution with sufficient means and credit would make a commitment to pour 3bln dollars into a bucket, said bucket is now worth 3bln dollars even if it is empty.