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  • From: Clansgian AT wmconnect.com
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Photo op to bash Social Security
  • Date: Thu, 7 Apr 2005 23:02:50 EDT

In a message dated 4/7/2005 9:29:11 PM Eastern Standard Time,
mmcharry AT dtnspeed.net writes:


> Every debt is just an IOU,

No. And if Bush is finally saying this out loud and often enough, maybe it
will eventually sink in on enough people. Every debt is NOT just an IOU.
Your
mortgage is not just an IOU. If you default on it, the creditor can
foreclose and take the property. That is, it is secured by a REAL asset.
Likewise
most loans and by far most loans of any consequence. Even loans, such as
most
credit card debt, which are not secured by real assets are done with the
understanding that there will be a definate repayment schedule. Contrast
this to
giving a friend or relative a sum of money in exchange for an IOU that will
be
paid back some unspecified time in some unspecified manner. You carry the
IOU
around in your pocket hoping someday when you need the money, the friend will
be able AND willing to cough up the money. THAT's what the treasury notes
that back up the SS system resemble. No plan, no schedule, no understanding
as
to what is to happen when (in 2017 or sooner or much sooner) SS is no longer
taking in as much is it is obligated to disburse, only those notes that say
in
some vague way the US is responsible for coughing up that much extra money.

What happens when you really need the money back and you track down your
erstwhile friend and demand payment, yet you find him going through hard
times
himself and unable to pay? All the grabbing him by the ankles and trying to
shake the money out of him would be to no avail. Likewise when the SS needs
to
cash in some of those treasury notes to pay its obligations, the US
government
must go one of the only two sources it has for revenue: shake it out of the
taxpayer or borrow more money. What happens if at that time the taxpayers
are
having their own hard time and nobody wants to buy any more US debt (since
they already have a closet full of it)?? That's why it's just and IOU and
not
like a regular debt of any kind - it is not secured (not backed by any
assets)
and there is no agreement, plan, or schedule as to how the money is to be
paid
back.



James




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