Quote:
Originally Posted by Mmmm, Burger (C.J.)
When a given bond matures the SSTF can do one of two things. Take the cash or reinvest the cash in more bonds. Obviously the SSTF is doing this on a large scale with many bonds maturing at any given moment. So long as the SSTF has net income it will continue to invest in more tbills. Once it has net payments to make some bonds when they come due will go to SS payments.
But none of this is really relevant to anything--when the SSTF stops running a surplus, the deficit will grow even more rapidly and the government will need to finance that deficit spending by selling bonds in the market, which presumably will have whatever effects running a higher deficit will have.
In terms of government accounting, all this means is that the deficit will go up. I also imagine that we'll switch accounting so that there's a separate deficit that does not include the social security deficit and that will be the one cited by politicians.
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It HAS stopped running a surplus.
If you think the level of current deficit matters not, then I respectfully disagree. If we were talking about $0 v. the amount of SS redemption, sure, that's nothing to concern anyone. But it's $500B v. $700B (soon enough) and current account matters to *some* in the global bond market. And, it's also the stated principal concern of many of our dear political leaders to reduce the *deficit*, not the *debt*.
