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Originally Posted by Guest
Yes, you are correct. The "Trust Fund" is an IOU from the Treasury Department to the Social Security Administration. The IOU represents Social Security tax collected in excess of benefits paid plus interest on the excess. The excess was spent as the Government can only invest in itself via Treasury Bills. As such, there are no actual dollars in the fund - it is just a promise from Treasury to provide money to pay benefits and this money may come from borrowing on the global markets. This may, of course, require raising the debt ceiling. The reason for all of this is that the Government can't "invest" money like you and I can, say in ownership of a company via stock. The Government is it's own bank and lends itself money when it is convenient to do so, which is what the Trust Fund is.
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Ever see the movie "Dumb and Dumber"?
The government is the two guys, the SS "trust fund" is the briefcase, the "government" realizing that it was full of money, "borrowed" it, leaving "good as gold IOUs", used the actual money ONLY for necessities. Now it's all gone and they borrow (part of the $20 trillion) to pay SS recipients.
The Fed creates "money" as credit to the banks/government. It's nothing more than a computer entry. Nothing physically backs it up. No gold, no silver, no assets. It's called "fiat currency" and it's literally nothing but a computer entry or piece of paper with no value other than the faith that everyone else will accept it has value.