Comment Re:Huh? [Re:Is that all?] (Score 1) 629
These bonds don't need to be honored and the behavior of Social Security doesn't change if they're done away with. The general fund would just be tapped to cover Social Security deficits.
Why wouldn't these bonds need to be honored? I understand what you're saying from an accounting perspective: we could wipe out these bonds, we no longer 'owe' social security this money, and we'll just payout the yearly social security benefits from the general fund. I get that, I'm not saying I agree with that approach, but I see what you're saying. What I'm talking about though, is how you could legally not honor these bonds. What makes them any different than the bonds you or I could buy from the Treasury? Let's say I bought a Treasury bond that paid me interest, could the government just decide that my bond was now erased and that my former interest payments would now be paid via the general fund? No investor would trust the government if they tried to pull a stunt like that. Their credit rating would tank and no one would buy these bonds any more.
Furthermore, you don't address the one question in my post, which is "How do these bonds represent an accounting fiction?" Is my mortgage an accounting fiction? Do I really not owe Wells Fargo any money? Maybe I'll call them up and inform them that the debt they invested in was fictional and I'll just be paying them out of my 'general fund' now. But of course the disbursements from this fund are at the discretion of my house budget sub-committee (which consists of my cat and dog both of whom want to increase spending on treats instead).