Social Security Trust Fund Will Run Out By 2033 – What Fund?

By | April 2, 2023 | 0 Comments

Treasury reports that the Social Security Trust Fund will run out of money in 2033. Surprise! There is no “trust fund.” Social Security pays out only the money it takes in each year. The “trust fund” consists of non-negotiable government bonds.

Say you borrow $100 till payday. You write an IOU and I put it in my sock drawer. You are a reliable guy, so I count it among my assets. Now say I take $100 to spend on the weekend, and I put my own IOU in the drawer. Is it an asset the way your IOU was? No. It is merely a note that I spent the money, which is gone.

If I hold a government bond it’s an asset. I can sell it for cash. But if the government holds a non-negotiable bond, it’s like me holding my own IOU. It’s merely a reminder that I spent the money. The “trust fund” doesn’t exist – no fund, no trust. 

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