Your SS and 401K is needed to prop up the monetary system....

[galileoreloaded]

because it represents earned value, something that all the Quantitative Easing (or money printing) in the world can't do.

Remember, the "money" that is in the SS trust funds, and your Roth/SEP/Money Market, doesn't exist other than in our collective ability to agree that it has value. The money in these accounts though, HAS been created through earned value (although now critically diluted via printing) and further reinforces the bond between the IDEA that these dollars have value, and our collective labor.

Privatizing SS, and "reallocating" private 401K accounts into the monetary system serves to invest every one of us both emotionally and financially into the "system".

It's a brilliant strategy really, and while I would resist it with my life, you can't blame them for trying. When GWB tried to privatize SS, he was trying to avoid what happened in 07, which everyone knew would happen eventually, by vesting everyone in our common success and re-blowing the bubble via equities, and concurrently bonds.

Unfortunately, as dollars continue to be stripped from the system, it becomes more and more likely that our austerity looks more like a ill advised poker hand where you go "all in" with a pair of 2's.

[NoNothing]

1. One slight problem with that theory:

There is no money at all in the trust funds. The money was immediately used to buy Treasury bonds, and the money earned by the Treasury in the bond sale was spent. Thus, as they stand right now, they do not represent earned value at all. They basically have been doing what you are suggesting all along.

[notesdev]

2. In other words

they already stole what they could from SS

now that they've run out, they're going to steal what they can from 401(k) and other retirement plans.

Situation normal.

[NoNothing]

3. I don't think it's fair to use words like "stealing"

Because it was exactly what was required by law. Maybe it would have been better to do something else, but it's not as though this can be blamed on nefarious evildoers.

[rfranklin]

4. The money is owed to us by the Treasury...

They will just have to cut down on unnecessary spending, i.e. wars and tax cuts. so they can honor their debt. If they default on their Social Security obligations, then they should default on their obligations to China and Japan and other foreign holders of Treasuries as well.

[BeFree]

5. Sorry

Ronald Reagan was a nefarious evildoer. I do blame him and his minions.

[Bitwit1234]

7. HE started the runs on STEALING money from social security

and I say that because he authorized they take it to balance the budget. It was not legal to take money from this fund. He stole it pure and simple.

[MousePlayingDaffodil]

8. I'm sorry, while I hate Reagan as much as the next person . . .

. . . this just isn't true. From the inception of the Social Security program, the revenues attributable specifically to the payroll tax have been paid into the U.S. Treasury Department's general "account," as it were. To the Treasury Department, a dollar is a dollar is a dollar, whether it is a dollar brought in via the payroll tax, the federal income tax, an import tariff, the fee one pays to enter a national park, etc.

Thus, any time the federal government ran a budget "deficit" in a given year, Social Security "funds" were being "spent." Monies generated by the payroll tax have never been segregated from any other federal revenues.

[rfranklin]

12. There is a debt obligation there according to Alan Greenspan...

From Wikipedia


Other public officials have argued that the trust funds do have financial and/or moral value. "If one believes that the trust fund assets are worthless," argued former Representative Bill Archer, then similar reasoning implies that “Americans who have bought EE savings bonds should go home and burn them because they’re worthless because the money has already been spent.”<5> At a Senate hearing in July 2001, Federal Reserve Chairman Alan Greenspan was asked whether the trust fund investments are “real” or merely an accounting device. He responded, “The crucial question: Are they ultimate claims on real resources? And the answer is yes.” <6>

From the point of view of the Social Security trust funds, the holdings of "special" government bonds are an investment that returned 5.5% to the trust funds in 2005. , pp 4-5 The trust funds cannot resell these "special" government bonds on the secondary bond market, although the interest rate is determined based on market interest rates. Instead, the "specials" can be sold back to the government at face value, which is an advantage when interest rates are rising.

To escape paying either principal or interest on the "special" bonds held by the trust funds, the government would have to default on these obligations. This cannot be done by executive order. The Congress would have to pass legislation to repudiate these particular government bonds. This action by Congress could involve some political risk and, because it involves the financial security of older Americans, seems unlikely.

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

[Hawkowl]

6. It would represetn "loan forgiveness"

Essentially the government would renege on its promise to pay benefits, and the public would "forgive" the debt. Not bloody likely.

[eShirl]

9. The rich will simply have to get used to paying their fair share of tax once again.

They've become spoiled by all the irresponsible tax cutting in their favor.

[galileoreloaded]

11. Tax isn't the problem, dollar destruction is. n/t

[galileoreloaded]

10. It's not really a theory, more of an eventuality.....

To address several points, yes money is fungible, especially when it hits the Treasury. But even worse, is the MULT which at less than 1.0 denotes that the more we print or create (via Fed balance sheet expansion) it gets sucked out by the crushing deflation of asset price correction.

They can print trillions, diluting your savings, and the net result is still the same. Money still being sucked out until the bad debt overhang is cleared.

Also, it IS a very likely scenario, as we are starting to head down the same road that neo-liberals like Carlos Menem imparted on the Argentinians that led to the 2001 riots and violence. This isn't a new thing, and has been floating for years.

http://www.atimes.com/atimes/Japan/JK19Dh01.html

On another note, who will be buying all the mutual fund shares of boomers when they are forced to divest, many in the next two years. Not me, and not many others. That has a chilling effect on price, as supply exceeds demand, which serves to drive EVEN LOWER the living standards for a bunch of new seniors.

SS, including NEW contributions, has to flow into the market, and 401K reserves HAVE to be co-opted for our system to survive. This money HAS to go into the system, as the system is unsustainable without it.

TPTB just needed the right guy to pitch it, IMHO, and they found him.