I think you're focusing too much on accounting labels, and need to step back and look at the bigger picture. From the point of view of the economy as a whole,

I think you're focusing too much on accounting labels, and need to step back and look at the bigger picture. From the point of view of the economy as a whole, the baby boomer generation retiring is extremely expensive. In general, societies need to budget around extremely expensive events like that, eg, deferring other expenses, making sacrifices, saving up in preparation. You seem to be arguing that, uniquely, the US doesn't need to do this; they can just promise whatever, then borrow all the money cheaply from foreigners. Perhaps so! And I really, really hope you're right (and all the textbooks, financial models, and experts are wrong). > they don't have a guaranteed source of income and can actually run out of money. That income is finite, therefore, the US can most certainly "run out of money", hence why the budget is a nasty political fight every single year. Now, it is highly likely that the politics of social security will make it a priority come what may, and thus I'm confident that money can be found for it, but only at the expense of other things. Hopefully none of them end up being important. But the reality of social security is that the national savings rate when the baby boomers were at their most productive was extremely low. (Even right now, the US savings rate is almost half that of the EU-15.) In a different universe, the US would have saved more during the long post-war boom, and would be in a much better shape to, eg, pay for the boomers retirement and replace our aging infrastructure. > It happens all the time. Look up open market operations The Federal Reserve does not (and cannot) retire or forgive the US debt it holds.