Dear Terry,
Enjoyed your recent piece, thanks for outlining some history of Social Security adjustments.
My question: How long can we continue calling/considering treasury bills holding SocialSecurity funds as "assets"? They're not real estate, commodities or a productive item, they are pure IOU's. (albeit high class IOU's) But any IOU, regardless of pedigree, rests on the payer's ability & willingness to honor it. Future unfunded obligations of S.S. make our national debt look like small change! I'm not sure your piece pointed this out to a typical reader. How do we make good on this huge, almost unimaginable level of debt? Thanks! Dave

Terry Says:

Well, Dave, I’ve been warning about this for years!  And especially this year, neither of our Presidential candidates is talking about it!  This instant it’s not  aproblem, because the rest of the world has decided we are the “safest” place (ie the “least worst” place) to store their wealth.  So they are rushing to get out of other currencies and buy dollars.  And they don’t just sit there with paper currency.  They buy our IOUs — or invest the dollars in the stock market, which is a good part of the reason the stock market as at all-time highs!

One day (and likely sooner than later, since we are not making this a national priority) the world will look at our dollars and decide they’d rather hold gold, or some other commodity.  Then we will know that truly “the emperor  (read dollar) — has no clothes (read: value)!