Eliezer S. Yudkowsky <email@example.com> wrote:
> The "Social Security trust fund" is bullshit. The government is
> required by law to invest the money in Treasury bonds. In other words,
> the government loans Social Security income to itself and spends it.
> There ain't nothing in the trust fund but a little note reading "I.O.U.
> $30 trillion - the Feds".
Well, the trust fund is "bullshit" from a libertarian perspective because the I.O.U.'s will eventually have to be paid off by taxation and most people , according to the CATO Institute, will end up with a negative net return from Social Security. Also, participation is compulsory, as you know.
However, if you hold a government bond and try or cash it, I assure you it will not be considered "bullshit" by a bank and is, as a practical matter, as good as cash. The government's I.O.U.'s are backed by its taxing power and vast assets.
Government bonds have the effect of shifting income from one group of people (the taxpayers at large) to another group (the bondholders).
However, using your argument all bonds would be "bullshit" because the company you loan the money to just spends the money and gives you an I.O.U. And bank accounts are "bullshit" because there really is not enough cash in the vault to cover all deposits.
Of course, unlike the government, private companies cannot loan money to themselves and consider the loans assets. That's a neat little accounting trick.