[Copernicus]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
....

[/ QUOTE ]

Its the same thing as if I loan my money to my friend who will repay me with interest. If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY.

I am not surprised by Copernicus's direct concealment of the program, but I am pretty surprised you fail to understand the difference.

[/ QUOTE ]

And Im not surprised that you let your polictical agenda cloud your reasoning or justify your lying about what you do understand.

"If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY."

This is obviously true, and has nothing whatsover to do with the prudence of doing just that. If your savings account yields 5% and you have an investment opporunity "guaranteed" to yield 8%, then "borrowing from yourself" makes perfect sense, even though your net worth is unchanged at the moment of the transaction.

If you're an investing savant and your investments are earning 10% (but have exhausted those opportunities), but you can borrow at 6%, then go out and finance the purchase of your guaranteed 8% investment..even though at the moment of your transactions your net worth is unchanged. Its not that hard to understand on a personal level.

When you escalate it to the government level the transaction is fundamentally the same as the first transaction, although the decisions carry fiscal/monetary/risk and intergenerational consequences that in fact make it MORE appropriate for the Government to "borrow from itself".

If a thread starts on deficit spending many of the issues overlap, and of course, there are situations where deficit spending is appropriate and others where it isn't. The conflation of spending and funding discussions only serve to obfuscate the issues, which are totally independent, but are a common tactic in these attempts to disseminate myths about Social Security, so keeping spending out of this discussion can only improve it.

[/ QUOTE ]

This makes sense if you consider the payments that the government makes as "investment". For example, if spending $x today meant an increase of revenues in the future by $2x, you could argue that this is an investment. Is this your position, Copernicus? That when the federal government spends money, its actually resulting in an asset? What assets do we have to show for the $1T spent in Iraq?

The key difference in our debate (and with natedogg) is that we think when the government spends money its like buying hookers and blow (or other things that are not assets), and investing in a company that will appreciate in value. Have I understood your position correctly? I don't think we disagree one bit about the accounting being done.

[/ QUOTE ]

I haven't stated a position on spending, other than that it doesnt belong in this discussion, because (other than the policy decision to have a national retirement system and that spending) spending has nothing to do with Social Security.

On the parenthetical I disagree that spending on a national retirement system is analagous to "hookers and blow", any more than your IRA or 401(k) plan is. (And if youre still spending your money on hookers and blow in retirement age, more power to you!)

With regard to the Government investing, I don't think the Federal Government should have any net financial assets other than short term cash flow needs. Introduction of financial assets to the government of a capitalist country creates a myriad of issues with regard to how to allocate those investments so it doesnt distort the markets, issues with regard to risky assets and the inter-generational transfer of risk, fiscal and monetary issues that overlap with the Federal Reserve policy decisions and may in fact be in conflict with good fiscal and monetary policy etc.

Of course once you believe that the Government should have no net financial assets, the only way to deal with a cash flow surplus such as Social Security generates is to have Social Security invest in Treasury issues (ie have the government "borrow from itself"). Of course the alternative of making Social Security completely pay as you go, and have no surplus whatsoever would eliminate the investment problems. However that violates basic accounting principles in that you are deferring the entire cost of current worker's benefits to future generations, that are not directly benefiting from those workers' efforts. And of course the cries of "scam, Pyramid scheme, Ponzi scheme" would be even louder, to compensate for the rhetoric of "there is no Social Security Trust Fund".