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> Governments regularly use accounting methods that would land any private company in jail, for example. Genuinely curious, could you give examples of these? M

> Governments regularly use accounting methods that would land any private company in jail, for example. Genuinely curious, could you give examples of these? Maybe it's time to start a country for tax reasons :)

WalterBright 9y ago
The social security trust fund was spent. The government replaced the funds with an IOU, and treats it as an asset. No company could get away with that.
- toomuchtodo 9y ago
  The IOUs are backed by US treasuries, the safest, most reliable investment product in the world. Of course a company can’t get away with that, it has no ability to tax a populace, which guarantees the revenue stream. Now of course there’s the argument that the US government borrows too much: totally true. Someone has to jump on the grenade and cut military spending (the greatest discretionary income spend) and raise taxes (they’re at the lowest levels in US history, and must go up), but that’s a bitter pill to swallow.
  - WalterBright 9y ago
    The IOUs are "invested" in a special type of bond only issued to and redeemable by the SSA. It's clear by accounting laws that calling a debt an "asset" is illegal. There is no money in the SSA trust fund. As for reliability, consider the gold bonds the government used to issue. They guaranteed repayment in gold, and hence sold at a premium. In the 1930s, Roosevelt repudiated them, paid them off in dollars, and pocketed the difference. The government can, and has, simply printed money and forced people to accept that as payment of debt.
    - millstone 9y ago
      Of course the SSA's bonds are assets. If you lend yourself money, you create an asset and a debt (else where does the money go?) The debt is on the Treasury's books already; the Treasury bonds held by the SSA are the other half required to balance the books, and reflect actual payroll taxes. If we called those treasuries debts, we would be double - actually triple - counting debt. This is an extremely mild accounting practice compared to what private companies routinely engage in. Not all of Google's IP actually originates from an Irish-owned company headquartered in Bermuda. "Reliable" gold with its 30% annual price swings - well, enough said on that. > The government can, and has, simply printed money and forced people to accept that as payment of debt. Forced who - investors who willingly buy Treasuries, understanding full well how the dollar works? Or did you mean 1930s investors who got fiat instead of gold-backed dollars? There were rather more significant victims of the Depression.
      - WalterBright 9y ago
        > Of course the SSA's bonds are assets. If you lend yourself money, you create an asset and a debt (else where does the money go?) And when you spend the money (the asset), you're left with just debt. > This is an extremely mild accounting practice Spending trillions, and then still calling it an asset? > Forced who - investors who willingly buy Treasuries, understanding full well how the dollar works? The US government gold bonds promised to pay in gold. That's why they sold at a premium. Are you arguing that the bondholders shouldn't have trusted the government to keep its word? > There were rather more significant victims of the Depression. The topic is how government bonds are "the safest, most reliable investment product in the world", not who is the bigger victim.
        Terr_ 9y ago
        Regarding SS funds, this "it's all one big government" view muddles more than it clarifies. Instead, consider a 3-node chain, where the US government discretionary budget has debts coming due to the SS budget, and the SS budget has obligations to the public. When demagogues claim the SS fund is empty, they are actually trying to trick the public into writing off that debt, instead of going after the upstream debtors... Which is basically Congress. After all, every dollar that isn't being spent servicing the debt to SS is a dollar that can be used in tax cuts for the wealthy...
  - WalterBright 9y ago
    > they’re at the lowest levels in US history There wasn't even an income tax until 1913. http://blog.jparsons.net/2009/03/us-government-spending-as-percentage-of.html http://blog.jparsons.net/2009/03/us-government-spending-as-p...
- ChrisLomont 9y ago
  For decades SSA took in more money than was spent, which makes sense, since there was/is a demographic bubble nearing retirement that will need funds. This led to a surplus on order of $4T. Holding this in dollars, which deflates around 2% a year, would lose $80B annually in value. To prevent this, law requires investing the money in a safe place, which is non-marketable securities. Nothing else has this level of backing. For 2016, this earned 1.8% for the fund [1], which would be $72B on 4T, a benefit of $152B. Every month hundreds of B mature, get sold, any excess reinvested. All this can be tracked easily publically [2] and elsewhere. The current holdings are 2.8T with an avg interest rate of 2.9% [2]. I find the current system far better than simply putting dollars into a bag. How would you design such a system with the same risk profile while not losing ~$150B a year that the current system maintains? [1] https://www.ssa.gov/oact/progdata/fundFAQ.html https://www.ssa.gov/oact/progdata/fundFAQ.html [2] https://www.ssa.gov/oact/progdata/investheld.html https://www.ssa.gov/oact/progdata/investheld.html

WalterBright 9y ago

The social security trust fund was spent. The government replaced the funds with an IOU, and treats it as an asset. No company could get away with that.

toomuchtodo 9y ago
The IOUs are backed by US treasuries, the safest, most reliable investment product in the world. Of course a company can’t get away with that, it has no ability to tax a populace, which guarantees the revenue stream. Now of course there’s the argument that the US government borrows too much: totally true. Someone has to jump on the grenade and cut military spending (the greatest discretionary income spend) and raise taxes (they’re at the lowest levels in US history, and must go up), but that’s a bitter pill to swallow.
- WalterBright 9y ago
  The IOUs are "invested" in a special type of bond only issued to and redeemable by the SSA. It's clear by accounting laws that calling a debt an "asset" is illegal. There is no money in the SSA trust fund. As for reliability, consider the gold bonds the government used to issue. They guaranteed repayment in gold, and hence sold at a premium. In the 1930s, Roosevelt repudiated them, paid them off in dollars, and pocketed the difference. The government can, and has, simply printed money and forced people to accept that as payment of debt.
  - millstone 9y ago
    Of course the SSA's bonds are assets. If you lend yourself money, you create an asset and a debt (else where does the money go?) The debt is on the Treasury's books already; the Treasury bonds held by the SSA are the other half required to balance the books, and reflect actual payroll taxes. If we called those treasuries debts, we would be double - actually triple - counting debt. This is an extremely mild accounting practice compared to what private companies routinely engage in. Not all of Google's IP actually originates from an Irish-owned company headquartered in Bermuda. "Reliable" gold with its 30% annual price swings - well, enough said on that. > The government can, and has, simply printed money and forced people to accept that as payment of debt. Forced who - investors who willingly buy Treasuries, understanding full well how the dollar works? Or did you mean 1930s investors who got fiat instead of gold-backed dollars? There were rather more significant victims of the Depression.
    - WalterBright 9y ago
      > Of course the SSA's bonds are assets. If you lend yourself money, you create an asset and a debt (else where does the money go?) And when you spend the money (the asset), you're left with just debt. > This is an extremely mild accounting practice Spending trillions, and then still calling it an asset? > Forced who - investors who willingly buy Treasuries, understanding full well how the dollar works? The US government gold bonds promised to pay in gold. That's why they sold at a premium. Are you arguing that the bondholders shouldn't have trusted the government to keep its word? > There were rather more significant victims of the Depression. The topic is how government bonds are "the safest, most reliable investment product in the world", not who is the bigger victim.
      - Terr_ 9y ago
        Regarding SS funds, this "it's all one big government" view muddles more than it clarifies. Instead, consider a 3-node chain, where the US government discretionary budget has debts coming due to the SS budget, and the SS budget has obligations to the public. When demagogues claim the SS fund is empty, they are actually trying to trick the public into writing off that debt, instead of going after the upstream debtors... Which is basically Congress. After all, every dollar that isn't being spent servicing the debt to SS is a dollar that can be used in tax cuts for the wealthy...
- WalterBright 9y ago
  > they’re at the lowest levels in US history There wasn't even an income tax until 1913. http://blog.jparsons.net/2009/03/us-government-spending-as-percentage-of.html http://blog.jparsons.net/2009/03/us-government-spending-as-p...
ChrisLomont 9y ago
For decades SSA took in more money than was spent, which makes sense, since there was/is a demographic bubble nearing retirement that will need funds. This led to a surplus on order of $4T. Holding this in dollars, which deflates around 2% a year, would lose $80B annually in value. To prevent this, law requires investing the money in a safe place, which is non-marketable securities. Nothing else has this level of backing. For 2016, this earned 1.8% for the fund [1], which would be $72B on 4T, a benefit of $152B. Every month hundreds of B mature, get sold, any excess reinvested. All this can be tracked easily publically [2] and elsewhere. The current holdings are 2.8T with an avg interest rate of 2.9% [2]. I find the current system far better than simply putting dollars into a bag. How would you design such a system with the same risk profile while not losing ~$150B a year that the current system maintains? [1] https://www.ssa.gov/oact/progdata/fundFAQ.html https://www.ssa.gov/oact/progdata/fundFAQ.html [2] https://www.ssa.gov/oact/progdata/investheld.html https://www.ssa.gov/oact/progdata/investheld.html