SS benefits are set by law, there is no automatic connection with whatever is in the trust fund. I fail to see how what's in the trust fund makes cuts more or less likely. Currently the bonds are non-marketable, so in that sense less liquid and safer from disposal. They are no more or less fictitious than any other Gov bond, and arguably less fictitious than corporate bonds. The safer the investment, the less fictitious, and almost nothing is safer than US Gov securities, as far as default goes. What is subject to change due to political risk are benefits, as others note.
The interest rate earned by the bonds does in fact depend on market conditions, hence indirectly on quantitative easing. http://www.ssa.gov/oact/progdata/intrateformula.html On Mon, Mar 4, 2013 at 3:07 AM, nathan tankus <[email protected] > wrote: > ron said... "I made that comment because I had the impression that SS > payments would be > cut by denying access to the bonds in the SS trust fund. > > > The SS Trust Fund is fictitious capital not backed by any tangible assets > and > as such has a potential risk for SS recipients. In addition, > quantitative easing > has driven interest rates very low so that new bonds put into the SS Trust > Fund receive a low rate of interest. " > > quantitative easing has nothing to do with the interest on government > securities held by the SS trust fund. the bonds held by the SS trust > fund are essentially high yield checking account balances with the > treasury. quantitative easing is the purchase of outstanding long term > marketable securities. any price effect is closer to or above face > value, that has no effect whatsoever on the face value of non > marketable securities. the SS trust fund is still earning about 4 per > cent a year. > > the only risk that social security beneficiaries are taking is > political risk. the accounting fiction that is the trust fund has no > effect whatsoever on benefits getting paid out. it's whether > politicians choose to keep or break their promises to the general > public that matters. > > -- > -Nathan Tankus > > ----------------------------------------------------------------------------------------------------------------------------------------------- > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l >
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