Privatizing Social Security: How would it work in practice?

[JohnfrmClevelan]

Do you believe the government can roll over debt forever, with zero consequences? Yes or no.

To some reasonable degree? Yes.

 

[aociswundumho]

To some reasonable degree? Yes.

"reasonable degree" is a nice hedge. Spell it out for me. What exactly happens when we go beyond it?

 

[JohnfrmClevelan]

"reasonable degree" is a nice hedge. Spell it out for me. What exactly happens when we go beyond it?

A "hedge" just recognizes that there could be a range of outcomes.

Probably a loss of relative value on the FOREX market. Of course, all currencies share the same problem to some degree.

So tell me why you want to extinguish government liabilities in the first place.

 

[aociswundumho]

Probably a loss of relative value on the FOREX market. Of course, all currencies share the same problem to some degree.

So you agree the consequence is devaluation. That means rollover forever does have a cost - citizens pay through inflation and weaker purchasing power.

 

[JohnfrmClevelan]

So you agree the consequence is devaluation. That means rollover forever does have a cost - citizens pay through inflation and weaker purchasing power.

No, I don't agree. FFS, you always do this; you ask a vague question, I try to answer it honestly and accurately, and you take the extreme possibility as the inevitable outcome.

Like I said already, our currency is measured against all other currencies, and all currencies are under the same kinds of pressure (or worse). Almost everyone is running a deficit, selling bonds, and playing interest.

 

[Econ4every1]

Do you believe the government can roll over debt forever, with zero consequences? Yes or no.

You said could.

You also said zero consequences.

There are always consequences, some good and some bad, but if what you mean is will future consequences resemble the past, then the answer is yes, it is possible that for the foreseeable future the government could continue to to increase debt and consequences would be similar.

That said, I think that people like you that want to limit government and cut spending on programs to help people pay for healthcare, education, community programs, etc. etc....The lack of investment in the nation, in infrastructure and human capital and the recognition that a strong middle class is necessary for a strong and resilient economy, will almost certainly will cause productivity to decline and debt levels will have to fall or inflation will increse.

 

[aociswundumho]

That said, I think that people like you that want to limit government and cut spending on programs to help people pay for healthcare, education, community programs, etc. etc....

You are doing the same thing again - only talking about benefits, never mentioning the costs.

The lack of investment in the nation, in infrastructure

Like california high speed rail? Or 12 million dollars for a pickleball court? Or 20 million dollars to "advance fertilizer efficiency" in pakistan?

Sorry, I don't want idiot politicians "investing" my money. Government is absolutely terrible when it comes to allocating capital.

and human capital and the recognition that a strong middle class is necessary for a strong and resilient economy, will almost certainly will cause productivity to decline and debt levels will have to fall or inflation will increse

Yes, if the wise "investments" I mentioned above didn't happen, productivity almost certainly would have declined.

It's hard to imagine how anyone could actually believe this shit, but here we are.

 

[JohnfrmClevelan]

You are doing the same thing again - only talking about benefits, never mentioning the costs.



Like california high speed rail? Or 12 million dollars for a pickleball court? Or 20 million dollars to "advance fertilizer efficiency" in pakistan?

Sorry, I don't want idiot politicians "investing" my money. Government is absolutely terrible when it comes to allocating capital.



Yes, if the wise "investments" I mentioned above didn't happen, productivity almost certainly would have declined.

It's hard to imagine how anyone could actually believe this shit, but here we are.

Once again, you focus on the crumbs and don't bother looking at the loaf. The vast majority of government investment is positive. If you want 100% efficiency, it only exists in your imagination. That includes the private sector. What's the failure rate of new businesses, anyway?

 

[aociswundumho]

The vast majority of government investment is positive.

Based on what metric? ROI? Productivity gains? Because if you actually look at the outcomes of high-speed rail debacles, welfare programs that trap people in dependency, military projects that cost triple their estimates, you don't see positive returns, you see negative ones. Politicians measure success by dollars spent, not value created.

If you're correct why does every socialist state go down in flames?

If you want 100% efficiency, it only exists in your imagination. That includes the private sector. What's the failure rate of new businesses, anyway?

When a private business fails, capital gets reallocated. When government fails, taxpayers get the bill and the failure gets a bigger budget.

To put it another way, the idiot government calls an "investment" positive if the money got spent. The private sector calls it positive if it produced value. See the difference?

 

[AZRWinger]

So, would you say that government explanations are reliable and fact based? I only say that because I bet it won't be hard to search your other answers on other topics (COVID comes to mind) to see where you're distrustful of government sources. So I expect you to explain why you believe it's true, and more specifically, how it refutes claims made by JFC and myself.

That said, the Treasury explanation isn't entirely wrong. In a narrow sense it's true, it's just not giving the full picture. But, don't feel bad, sadly most people don't understand.

I've come to you with examples based on accounting principles and tried to get you to see there is more to government spending than the narrow explanation given by the Treasury. Just as the government's explanations of COVID, vaccinations, MRNA vaccines, the VEARS database can be incomplete or hard to understand. It can get complicated and most people would just get confused if the government were to get overly technical, so the government's public facing explanations tend to be digestible for the average person. Which is of course, why we have government agencies staffed with experts who understand this stuff, well, at least until the current administration and SCOTUS started gutting it.

But, if you want to come here and debate it, you should have a better than average understanding.

So, the question was, where do the dollars come from that the government spends, 100 people surveyed top 5 answers on the board.

You said, "he national debt is similar to a person using a credit card for purchases and not paying off the full balance each month!"

<Clap, Clap> Good answer!!!

Survey says!!!

View attachment 67586576

Sorry, I couldn't help myself.

You're answer is the government "borrows it" like a credit card, but you never answered the question that was asked.

Where does the government get the money it borrows? From whom does it borrow?

I gave you a fact, that in 1970 there were about $620 billion US dollars in M2.

If the government borrows $37 trillion, how could it get $37 trillion from the $620 billion that existed in 1970?

Let's ask AI, maybe you'll believe it?

• The Impossible Scale of Borrowing: You (meaning me) are absolutely correct that the math simply does not work for the government to have "borrowed" $37 trillion from a private sector that had only $269 billion in M2 in 1959. This highlights the absurdity of the conventional narrative that government must find money in the private sector's savings to fund its spending. The scale of the national debt relative to the historical money supply proves that new money must have been created to enable the process. Your argument acts as a powerful reductio ad absurdum against the mainstream misconception.

So, where does the new money come from?

You have devoted numerious lengthy, rambling posts to praising debt driven government spending as the fountainhead for capital accumulation. Yet now when the Treasury explaination of the national debt exposes your bizarre rants you resort to classic Soviet style whataboutism combined with economic sounding blather that would make the Red Queen blush. Then to top it off you offer what you claim is AI that matches your writing style and level of elevated absurdity.

Again the national debt is analogous to a credit card with a balance that is never paid off and so it's ever growing.

 

[Econ4every1]

You have devoted numerious lengthy, rambling posts to praising debt driven government spending as the fountainhead for capital accumulation. Yet now when the Treasury explaination of the national debt exposes your bizarre rants you resort to classic Soviet style whataboutism combined with economic sounding blather that would make the Red Queen blush. Then to top it off you offer what you claim is AI that matches your writing style and level of elevated absurdity.

Again the national debt is analogous to a credit card with a balance that is never paid off and so it's ever growing.

As JFC has stated, we need to agree on objective facts otherwise we're talking past each other.

So, instead of complaining about the length of my posts, just tell us, where does the Government get money it spends?

If you think it comes from the private sector via taxation, then explain how, in 1959 there was just $240 billion dollars in M2. That defies logic. How could the government borrow $37 trillion from $240 billion.

So please, go find another link at the Treasury that explains the incongruency I stated above.

 

[Econ4every1]

You are doing the same thing again - only talking about benefits, never mentioning the costs.

How about the costs of not educating your population?

How about the costs of poorly maintained infrastructure?

What are the costs of failing to avoid social division?

Not all costs and their associate benefits can be measured directly in dollars. Sickness costs the private sector 100's of billions in lost productivity.

The cost of science and math literacy costs the private sector billions, and encourages grifting and scams where unscrupulous people and companies steal from people with false claims.

 

[AZRWinger]

As JFC has stated, we need to agree on objective facts otherwise we're talking past each other.

It's ironic to see the source of tales of imaginary asset pairs, a magic dump truck and the fabricator of accounting rules along with a fake game show along with likely imitation AI producer demand facts. Hold up a mirror in your face to see the fantiscist

So, instead of complaining about the length of my posts, just tell us, where does the Government get money it spends?

If you think it comes from the private sector via taxation, then explain how, in 1959 there was just $240 billion dollars in M2. That defies logic. How could the government borrow $37 trillion from $240 billion.

You don't know what M2 means. You don't know how the national debt is accumulated.

So please, go find another link at the Treasury that explains the incongruency I stated above.

You don't know how to do a simple internet search? No wonder you have to make things up.

The thread is about the status and private alternatives to SS. Do you have anything relevant to the issue at hand?

 

[JohnfrmClevelan]

Based on what metric? ROI? Productivity gains?

Based on common sense. Look around. All of that stuff you fail to see is infrastructure. Highways, airports, subways, trains, ports, courts, cops, etc.

How much productivity do you think there would be without that stuff?

When a private business fails, capital gets reallocated. When government fails, taxpayers get the bill and the failure gets a bigger budget.

When a private business fails, people and/or banks lose money. Calling that failure "capital reallocation" is just ideological garbage.

 

[JohnfrmClevelan]

It's ironic to see the source of tales of imaginary asset pairs, a magic dump truck and the fabricator of accounting rules along with a fake game show along with likely imitation AI producer demand facts. Hold up a mirror in your face to see the fantiscist

Asset/liability pairs are a very basic part of double-entry accounting. Everything E4E has said is correct. Look, I understand that federal finance isn't everybody's thing, and I don't expect most people to understand it right away, but calling everything you don't understand fabricated isn't going to get you anywhere. We've both taken time and effort to explain this stuff; take a bit of your own time and effort to learn it.

 

[AZRWinger]

Asset/liability pairs are a very basic part of double-entry accounting. Everything E4E has said is correct. Look, I understand that federal finance isn't everybody's thing, and I don't expect most people to understand it right away, but calling everything you don't understand fabricated isn't going to get you anywhere. We've both taken time and effort to explain this stuff; take a bit of your own time and effort to learn it.

Wow, it takes profound ignorance of GAAP to claim public debt/private asset pairing nonsense is equivalent to double entry accounting. It takes incredible arrogance to lecture someone for not going along with the gibberish.

You are right that most people don't understand the SS trust fund is filled with unsecured IOU and the money from SS surpluses has long been spent. Even a cursory knowledge of accounting shows it's a Ponzi scheme.

 

[rahl]

Even a cursory knowledge of accounting shows it's a Ponzi scheme.

you’ve already been corrected on this. It is not, by any definition of the word, a Ponzi scheme. It functions exactly like an insurance policy.

 

[JohnfrmClevelan]

Wow, it takes profound ignorance of GAAP to claim public debt/private asset pairing nonsense is equivalent to double entry accounting. It takes incredible arrogance to lecture someone for not going along with the gibberish.

We're not lecturing you for not "going along." We're lecturing you for arguing without any knowledge of accounting.

You are right that most people don't understand the SS trust fund is filled with unsecured IOU and the money from SS surpluses has long been spent. Even a cursory knowledge of accounting shows it's a Ponzi scheme.

When you get to the point of having a cursory knowledge of accounting, you let us know, OK?

 

[AZRWinger]

you’ve already been corrected on this. It is not, by any definition of the word, a Ponzi scheme. It functions exactly like an insurance policy.

SS is a classic Ponzi scheme. There is no doublespeak denial which can correct that away. The only reason it hasn't collapsed already is that the Federal government extracts contributions at gunpoint to keep it going. What percentage of policyholders would continue funding an annuity policy they knew was paying benefits out of their premium payments because it had no reserves and would be forced to slash their benefits in 9 years?

Any insurance policy with reserves made up of IOU to another division of the same company would be shut down by
regulators with charges against management for fraud. SS is nothing like a legitimate insurance policy.

 

[rahl]

SS is a classic Ponzi scheme…….

You’ve been correction this numerous times. There is no excuse for your continued misuse of the word Ponzi scheme.

 

[JohnfrmClevelan]

SS is a classic Ponzi scheme. There is no doublespeak denial which can correct that away. The only reason it hasn't collapsed already is that the Federal government extracts contributions at gunpoint to keep it going. What percentage of policyholders would continue funding an annuity policy they knew was paying benefits out of their premium payments because it had no reserves and would be forced to slash their benefits in 9 years?

The government always has the ability to create money; the fact that they don't hold money in "reserve" is because it is impossible for them to save up their own currency in any real sense of the word. It's like saying a bank doesn't have enough money to make more loans; banks always have the ability to create new loans, and new money comes from those loans. When you make a loan payment to your bank, they don't hold more dollars, they mark down their liabilities (and assets). Same goes for the government.

Lots of systems use present payments in to pay for present benefits out. That's what I called a "Ponzi element," but that doesn't make it a Ponzi scheme. I said the same thing about the stock market - the money for people selling their stock comes from new investors buying stock. ANY collectivized retirement system is going to have the same feature.

The problem comes when your contribution earns some sort of return over and above what you have contributed. That money has to come from somewhere. In the case of SS, that extra came from FICA taxes coming in; the govt. just set SS payouts to rise with inflation. There was no real investment, because the government doesn't dabble in the private sector, nor should they. In the case of the stock market, capital gains also come 100% from new investors. Dividends come from company profits, but they are small compared to stock appreciation.

People saving for retirement, via SS or otherwise, expect some return on their money. Just saving dollars usually isn't enough, and gets eroded by inflation. Both SS and stock funds get that return from present and future investor contributions. Almost none of that return is coming from company profits. And that's where it needs to be coming from, if it's going to be sustainable through negative demographic changes.

 

[AZRWinger]

You’ve been correction this numerous times. There is no excuse for your continued misuse of the word Ponzi scheme.

You have ignored the documented definition of Ponzi scheme.

"a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors."

By law there are no income producing assets in the SS trust funds. It's based on a nonexistent enterprise that can only pay benefits from current tax revenue. The scam would have collapsed long ago without government coercion to keep new funds flowing in.

 

[rahl]

You have ignored the documented definition of Ponzi scheme.

"a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors."

Which doesn’t apply to SS, as you’ve been shown. It functions as an insurance policy.

By law there are no income producing assets in the SS trust funds. It's based on a nonexistent enterprise that can only pay benefits from current tax revenue.

Just like insurance policies pay based off of pooled premiums collected.

The scam would have collapsed long ago without government coercion to keep new funds flowing in.

When you call it a scam, you just look silly. You’ve been corrected enough times on this that you have no excuse for your ignorance.

 

[AZRWinger]

Which doesn’t apply to SS, as you’ve been shown. It functions as an insurance policy.

No it doesn't. SS has no reserves of real assets. Makes no legitimate investments. It doesn't even have a binding agreement to deliver advertised benefits. How many private insurance policies compel policy holders to continue making premium payments by force of law? None.

Just like insurance policies pay based off of pooled premiums collected.

Insurance companies invest premiums in real assets. Insurance companies base premiums based on actuarial principles. Insurance companies are required to hold real reserves to mitigate risk.

As has been pointed out multiple times the driving factor behind the impending collapse of the SS Ponzi scheme is the terrific decline in the ratio of workers to beneficiaries. Do you really believe a private insurance company would have been allowed to ignore this profound shift?

When you call it a scam, you just look silly. You’ve been corrected enough times on this that you have no excuse for your ignorance.

When you cling to these irrational denials in spite of the evidence you are the one who looks silly.

 

[rahl]

No it doesn't………

That you don’t understand how SS operates is why you have no business discussing the topic.