[Copernicus]

Lets try one more time, TC, since (as opposed to Natedogg) you are actually thinking about these things instead of spouting rhetoric, we just arent communicating. The disconnect seems to be your aggregation of the actions of different branches of the government, so lets expand the personal analogy.

You have $50,000 in the bank earning $250 interest a month, you have $200,000 in your 401(k) plan which you are no longer contributing to and its bond investments are earning 5% a year because youre an extremely conservative investor, and you have utility bonds worth $25k that are throwing off coupon payments of $250 a month...and you are married to a non-working wife who keeps the house clean, helps the kids with homework, and has (ahem) other benefits. She has a funny name too...Congress (pun intended regarding her other benefits).

Unfortunately youve gotten into a position where your salary plus all of your investments exactly equal your monthly expenses, no room for additional savings or investments or 401(k) contributions.

You get the end of the month statement from your bank, and WTF, the 50,000 is gone, and you realize Congress has fallen off the wagon and snorted the 50k. But her Uncle is your boss, and theres no way you can rock that boat, you are dependent on him for paying your salary.

(So far nothing has happened except Congress has spent 50k on blow, and your family net worth has dropped from 275k to 225k).

But you realize that since she paid her dealer at the end of the month that while youre okay this month, next month you are going to be $250 short on your bills.

What to do? Well, heres one solution. Borrow $50k from your 401(k) plan, that you have to repay at $250 per month, amoritizing that loan at 5% interest. Use that $50k to buy more of the same utilities, which will throw off $500 per month. Youve restored the net cash flow you needed.

Your liquid net worth is unchanged from these transactions, but your family has tapped the 401(k) plan to meet its cash flow needs (needs it wouldnt have if wifey didnt have a drug problem).

Whats happened from the point of view of your 401(k) plan? All it knows is that its invested $50,000 in a different asset...ZOMG a different IOU...its net worth is unchanged. That IOU happens to have TC's name on it instead of XYZ company, but its an extremely safe investment. Why? Because if you default on a 401(k) loan you are going to face all kinds of early withdrawal penalties and income taxes, and you arent about to let that happen. Your 401(k) plan doesnt give a damn that your wife had a helluva ride for a month. Its earning 5% in an extremely safe asset. YES, that IOU is an asset, it doesnt matter to your 401(k) plan that the IOU is coming from "within the family".

Whats happened to your liquid finances since you decided to make this transaction? Youve restored the blown 50k in assets, but incurred an equal amount of debt, so "nothing has happened" except you are now able to make your monthly nut because that other part of your family finances had some surplus assets.

Net sum? Congress spent 50k too much money, money you would have to find somewhere. You happened to find it in your personal little Social Security system, and you gave it an IOU. You could have given a 3rd party an IOU, but that effects your credit rating and you wont be able to finance other transactions as cheaply in the future.

Your own personal little Social Security system is in the exact same position it was before this all happened.

There are no "accounting shenanigans", no worth has been created out of thin air, there is no "scam" and your own personal SS system has an IOU for an asset...a very real asset.

I'll respond to issues of substance and accounting for these transactions, not minutiae like interest rate differentials, the length of time it takes to pay back your SS system etc.