“the extra is used to invest/purchase special non negotiable Treasuries, it does not go into the general fund.”
So the money goes to purchase special Treasuries, and THAT money goes to the general fund. It’s how the government launders money. It goes to the general fund. Yes, there is a “special Treasury not” generated too, but that’s irrelevant.
“When the payouts are more than the receipts, the shortage does not come from the general fund ; The Treasuries are “cashed” which brings down the Debt.”
No it doesn’t bring down the debt. The “special treasuries” are cashed by the government issuing other treasuries (which these days are purchased by the Fed mostly)
So the whole “Special Treasuries” idea was just a tool used to spend surplus SS money money when it was receied, to be paid back by our children and grandchildren if they don’t have the good sense to default on it.
The “Special Treasuries” are simply replaced with other debt - and if we can’t borrow the money, we’ll just effectively print it (laundered through the Fed.)
No the money used to purchase the special treasuries do not go to the general fund, it goes to the Federal Reserve Bank, where it is held as a “due to” account balance-in this case, due to the USA Government.
Call it Money laundering if you wish, as Beranke contiues to print money hand over fist, but this printing means the checks will keep coming-it just may take a whole check to purchase one loaf of bread at some point.
Cashing the security does reduce the debt. The fact that the Fed sells other securities later and increases the debt again and probably to even higher levels does nothing to change that.
Consider for example, if you had 2 credit cards, and made a payment on the first one with no additional charges-that would reduce your debt on that card.
The fact that you charged money on another card in sufficient enough amount to increase your overall debt does not negate the impact on the first card, and your overall debt is still better off than if you had skipped the payment.
Like I said it’s just a technicality. However, Social Security payments can keep coming legally as long as the Trust Fund has a balance, because Bernake can just keep printing whatever money he needs for payoffs.
If he keeps going, it may take the whole check just to buy a loaf of bread, but there you have it. USA citizen taxpayers get the shaft no matter how you slice and dice it.
IIRC, the Debt owed to ourselves is around 60% including all the various programs. When the USA defaults, I expect it will be a default to the citizens, not the other countries, but we’ll see where it goes.
Last time the country faced bankruptcy J.P. Morgan bailed them out. I bet that all the rich people in the whole country couldn’t bail us out today even if they chipped in their last dime. In fact, I doubt that many woulld even consider it let alone do it.