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Who will buy the bonds?

seminole97

seminole97

HR Legend
Jun 14, 2005
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Starting in 2020, there were so many retirees receiving Social Security benefits that the program barely broke even for the year.

The following year, 2021, was even worse. Social Security ran a deficit for the first time ever and had to dip into its trust fund to make ends meet.

This trend kept up in 2022 and 2023 as well. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033.

One of the many, many reasons this is so important is because Social Security will no longer be a BUYER of US government bonds. It will be a SELLER. And that’s a big deal.

For the past 90+ years, Social Security always invested its annual surplus into government bonds… which essentially gave politicians an extra pile of cash each year to spend.

But now this cash flow will reverse. Instead of Social Security sending its surplus to the Treasury, the Treasury Department now must repay the debt that it owes to Social Security.

This nearly $3 trillion repayment will happen gradually over the next ten years. And then, of course, in 2033, Social Security will be out of money and require a multi-trillion-dollar bailout.

Unfortunately, the Treasury Department doesn’t have the money to repay this $3 trillion debt, let alone another $5 to $10 trillion to bail out Social Security.

This means that, in addition to the $20 TRILLION in new debt that the CBO is projecting over the next ten years, the Treasury Department will have to borrow an ADDITIONAL $3 trillion to repay Social Security. And then even more to bail out the program

(So, this means that the government will need to find someone to buy $23++ trillion of government bonds over the next ten years… which is just an absurd amount of money.

And it will have to do this at a time when it has lost some of its biggest investors; again, Social Security can no longer afford to buy bonds. And many of America’s biggest foreign bondholders, including China and Japan, are also not buying any more bonds.

So, who is going to buy all this new debt?

The only realistic option is the Federal Reserve. And this is nothing new for the Fed.

During the pandemic, for example, the Fed magically created about $4 trillion in new money, then used that money to buy US government bonds.

Of course, their $4 trillion in new money also helped create the highest inflation in four decades.

So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create $20+ trillion to buy government bonds?

----
"We can guarantee cash payments from here on out, what we cannot guarantee is the purchasing power of that cash." -Alan Greenspan during remarks on Social Security, Feb 16, 2005
 
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If only we had a fiscally conservative party in this country that could support appropriate legislation to fix this...
 
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seminole97 said:
Starting in 2020, there were so many retirees receiving Social Security benefits that the program barely broke even for the year.

The following year, 2021, was even worse. Social Security ran a deficit for the first time ever and had to dip into its trust fund to make ends meet.

This trend kept up in 2022 and 2023 as well. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033.

One of the many, many reasons this is so important is because Social Security will no longer be a BUYER of US government bonds. It will be a SELLER. And that’s a big deal.

For the past 90+ years, Social Security always invested its annual surplus into government bonds… which essentially gave politicians an extra pile of cash each year to spend.

But now this cash flow will reverse. Instead of Social Security sending its surplus to the Treasury, the Treasury Department now must repay the debt that it owes to Social Security.

This nearly $3 trillion repayment will happen gradually over the next ten years. And then, of course, in 2033, Social Security will be out of money and require a multi-trillion-dollar bailout.

Unfortunately, the Treasury Department doesn’t have the money to repay this $3 trillion debt, let alone another $5 to $10 trillion to bail out Social Security.

This means that, in addition to the $20 TRILLION in new debt that the CBO is projecting over the next ten years, the Treasury Department will have to borrow an ADDITIONAL $3 trillion to repay Social Security. And then even more to bail out the program

(So, this means that the government will need to find someone to buy $23++ trillion of government bonds over the next ten years… which is just an absurd amount of money.

And it will have to do this at a time when it has lost some of its biggest investors; again, Social Security can no longer afford to buy bonds. And many of America’s biggest foreign bondholders, including China and Japan, are also not buying any more bonds.

So, who is going to buy all this new debt?

The only realistic option is the Federal Reserve. And this is nothing new for the Fed.

During the pandemic, for example, the Fed magically created about $4 trillion in new money, then used that money to buy US government bonds.

Of course, their $4 trillion in new money also helped create the highest inflation in four decades.

So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create $20+ trillion to buy government bonds?

----
"We can guarantee cash payments from here on out, what we cannot guarantee is the purchasing power of that cash." -Alan Greenspan during remarks on Social Security, Feb 16, 2005
Click to expand...
We need more ILLEGALS on social security and medicaid!!!!!!!!!
 
AJg9DL.gif
 
seminole97 said:
Starting in 2020, there were so many retirees receiving Social Security benefits that the program barely broke even for the year.

The following year, 2021, was even worse. Social Security ran a deficit for the first time ever and had to dip into its trust fund to make ends meet.

This trend kept up in 2022 and 2023 as well. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033.

One of the many, many reasons this is so important is because Social Security will no longer be a BUYER of US government bonds. It will be a SELLER. And that’s a big deal.

For the past 90+ years, Social Security always invested its annual surplus into government bonds… which essentially gave politicians an extra pile of cash each year to spend.

But now this cash flow will reverse. Instead of Social Security sending its surplus to the Treasury, the Treasury Department now must repay the debt that it owes to Social Security.

This nearly $3 trillion repayment will happen gradually over the next ten years. And then, of course, in 2033, Social Security will be out of money and require a multi-trillion-dollar bailout.

Unfortunately, the Treasury Department doesn’t have the money to repay this $3 trillion debt, let alone another $5 to $10 trillion to bail out Social Security.

This means that, in addition to the $20 TRILLION in new debt that the CBO is projecting over the next ten years, the Treasury Department will have to borrow an ADDITIONAL $3 trillion to repay Social Security. And then even more to bail out the program

(So, this means that the government will need to find someone to buy $23++ trillion of government bonds over the next ten years… which is just an absurd amount of money.

And it will have to do this at a time when it has lost some of its biggest investors; again, Social Security can no longer afford to buy bonds. And many of America’s biggest foreign bondholders, including China and Japan, are also not buying any more bonds.

So, who is going to buy all this new debt?

The only realistic option is the Federal Reserve. And this is nothing new for the Fed.

During the pandemic, for example, the Fed magically created about $4 trillion in new money, then used that money to buy US government bonds.

Of course, their $4 trillion in new money also helped create the highest inflation in four decades.

So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create $20+ trillion to buy government bonds?

----
"We can guarantee cash payments from here on out, what we cannot guarantee is the purchasing power of that cash." -Alan Greenspan during remarks on Social Security, Feb 16, 2005
Click to expand...
When you never have a balanced budget, there is going to be more debt. Plus existing debt matures, and you need replace it with new debt. All this new debt is getting priced at higher than normal rates, which increases the annual deficit and leads to more new debt. Its a dangerous, and absurd, situation that no one in Congress or the WH seems to care about.
 
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Hawk_4shur said:
When you never have a balanced budget, there is going to be more debt. Plus existing debt matures, and you need replace it with new debt. All this new debt is getting priced at higher than normal rates, which increases the annual deficit and leads to more new debt. Its a dangerous, and absurd, situation that no one in Congress or the WH seems to care about.
Click to expand...

  • A whopping $7.6 trillion in interest-bearing US public debt will mature within a year, Apollo's chief economist said in September.
  • That represents 31% of all outstanding US government debt, adding upward pressure on rates.

The estimate comes as federal deficits have exploded in recent years, sharply elevating the trajectory of US debt. The Treasury Department auctioned $1 trillion in bonds just within the third quarter.

The US debt coming due next year could keep rising, after the Treasury issued its latest quarterly refunding statement in early November. Against expectations, the department elected to lean more on T-bills issuance moving forward, and slow the sale of longer-dated bonds.

Meanwhile, borrowing costs have soared in the last year and a half as the Federal Reserve embarked on an aggressive tightening campaign, raising the government's debt-servicing costs. Despite coming down sharply in November, they remain well above year-ago levels.

Rates have also been under pressure from the Fed's quantitative tightening program, which removed a top buyer from the bond market. The central bank has allowed about $1 trillion of its debt holdings to run off its balance sheet.

The Treasury has hit some snags trying to find enough buyers for the surge of fresh debt. Recent auctions have been met with weak demand while others saw normal uptake.
 
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There is no “SS reserve”. SS has IOUs issued by an entity that is (wait for it)…$34 Trillion in debt.
 
markfromj said:
There is no “SS reserve”. SS has IOUs issued by an entity that is (wait for it)…$34 Trillion in debt.
Click to expand...
It's an important distinction in this regard, SS can only run deficits as long as these IOUs exist.
Under existing law SS is only funded by the payroll tax. When the IOUs are finally converted to Treasury debt, the payroll tax will fund about 77% of obligations.
 
If you had parents, they told you you better look out for yourself because you won't be able to depend on social security, even though you'll pay into it your whole life.
 
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seminole97 said:
Doesn't change the fact that SS is a dollar for dollar loser for everyone born after 1975.

People will continue to give the government money, and they will get back less later.
Click to expand...
When I say lift the cap I also don’t think they should increase the benefit for those paying over the current cap.

I would also do means testing. At a certain point some don’t need it.

If that isn’t enough, a small tax on all imports.

This isn’t rocket science. At least it shouldn’t be.

I would also have 3% taken out of everybody’s Check on top of social security and put on an index fund which is all theirs. People are too stupid with guns, credit, drugs, alcohol, and retirement planning.
 
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seminole97 said:
Doesn't change the fact that SS is a dollar for dollar loser for everyone born after 1975.

People will continue to give the government money, and they will get back less later.
Click to expand...

I’m not sure about that. Currently the problem is that, thanks to the Baby Boom, the ratio of people drawing SS to the people paying into it is very high. But in a couple decades the Boomers will largely be dead, which should improve the ratio.
 
artradley said:
I’m not sure about that. Currently the problem is that, thanks to the Baby Boom, the ratio of people drawing SS to the people paying into it is very high. But in a couple decades the Boomers will largely be dead, which should improve the ratio.
Click to expand...
Add to that the life expectancy when SS was created (1935) was 61 for men, 65 for women.

Currently the average life expectancy is 77.5

SS hasn't been adjusted sufficiently to address the change.
 
Every time anyone wants to do anything to fix it the other party says "see they want to get rid of your social security and leave grandma homeless," and it gets lapped up by the low information voter. Then no politician wants to touch it, because they're always thinking about their next election instead of figuring out what's really best for America.

We collectively have ourselves to blame.
 
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seminole97 said:
Starting in 2020, there were so many retirees receiving Social Security benefits that the program barely broke even for the year.

The following year, 2021, was even worse. Social Security ran a deficit for the first time ever and had to dip into its trust fund to make ends meet.

This trend kept up in 2022 and 2023 as well. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033.

One of the many, many reasons this is so important is because Social Security will no longer be a BUYER of US government bonds. It will be a SELLER. And that’s a big deal.

For the past 90+ years, Social Security always invested its annual surplus into government bonds… which essentially gave politicians an extra pile of cash each year to spend.

But now this cash flow will reverse. Instead of Social Security sending its surplus to the Treasury, the Treasury Department now must repay the debt that it owes to Social Security.

This nearly $3 trillion repayment will happen gradually over the next ten years. And then, of course, in 2033, Social Security will be out of money and require a multi-trillion-dollar bailout.

Unfortunately, the Treasury Department doesn’t have the money to repay this $3 trillion debt, let alone another $5 to $10 trillion to bail out Social Security.

This means that, in addition to the $20 TRILLION in new debt that the CBO is projecting over the next ten years, the Treasury Department will have to borrow an ADDITIONAL $3 trillion to repay Social Security. And then even more to bail out the program

(So, this means that the government will need to find someone to buy $23++ trillion of government bonds over the next ten years… which is just an absurd amount of money.

And it will have to do this at a time when it has lost some of its biggest investors; again, Social Security can no longer afford to buy bonds. And many of America’s biggest foreign bondholders, including China and Japan, are also not buying any more bonds.

So, who is going to buy all this new debt?

The only realistic option is the Federal Reserve. And this is nothing new for the Fed.

During the pandemic, for example, the Fed magically created about $4 trillion in new money, then used that money to buy US government bonds.

Of course, their $4 trillion in new money also helped create the highest inflation in four decades.

So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create $20+ trillion to buy government bonds?

----
"We can guarantee cash payments from here on out, what we cannot guarantee is the purchasing power of that cash." -Alan Greenspan during remarks on Social Security, Feb 16, 2005
Click to expand...
Yeah, all that excessive deficit spending since 2007 is coming back. A lot of economists warned about what would happen when Fed rates started going up from near zero. Add the inflation and it's a double hit. Government spending has to be reduced, and not just the rate of increase.

Oh... the Chinese are going to be less and less of a bond buyer as their economy treads water.
 
artradley said:
I’m not sure about that. Currently the problem is that, thanks to the Baby Boom, the ratio of people drawing SS to the people paying into it is very high. But in a couple decades the Boomers will largely be dead, which should improve the ratio.
Click to expand...
The heyday ratio in the first few decades, that allowed people to draw far more than they had ever paid, are never coming back.

The issue is compounded by the fact the 22(!) payroll tax increases have never been enough to make the system actuarially sound. It’s always been a Ponzi, just without the ability of ‘contributors’ to flee once they see the writing on the wall.

Now that SS is draining the IOUs the Ponzi nature is even clearer.

When the Boomers leave the stage the system remains in structural deficits with about 77% of outlays funded by the payroll tax.

There is no investment to create a higher return for the later withdrawal. It’s a Ponzi. ‘Contributors’ in the end don’t come out ahead.
 
Last edited:
Finance85 said:
Oh... the Chinese are going to be less and less of a bond buyer as their economy treads water.
Click to expand...
Chinese haven’t been net buyers for a decade.

NOVEMBER 4, 2023 12:39 JST
TOKYO -- China continues to pare its holdings of U.S. Treasurys, arousing market speculations over its motives. The country's stockpile of U.S. government debt hit the lowest level in 14 years at the end of August, with the pace of decline accelerating.
Some analysts said Chinese monetary authorities are leading the move to shore up the yuan, while others blame it for a recent bond rout in the U.S.
"Maybe China is behind the rise in U.S. long rates," said Apollo Global Management economist Torsten Slok in a blog posted in early October, when yields on long-term U.S. bonds reached a 16-year high. A chart displayed with the comment showed China's Treasury holdings falling steadily after peaking in 2013.
 
Stop throwing money to every country in the world and maybe we'd be able to take care of our own. I grow tired of being the World's police force and baby daddy.

8cvqp8.jpg
 
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alaskanseminole said:
Stop throwing money to every country in the world and maybe we'd be able to take care of our own. I grow tired of being the World's police force and baby daddy.

8cvqp8.jpg
Click to expand...
Obviously you love Putin.
It’s the only conclusion if someone doesn’t support constant wars overseas.
 
seminole97 said:
Obviously you love Putin.
It’s the only conclusion if someone doesn’t support constant wars overseas.
Click to expand...
Meh...same reason I want to shut the goram border down. I don't care if brown, blue, or purple people are coming across. They're not here to rape and murder our women and children, but we suck at taking care of the numbers we have, so why add more mouths to feed.

It's all about resources for me, always has been.
 
thewop said:
Every time anyone wants to do anything to fix it the other party says "see they want to get rid of your social security and leave grandma homeless," and it gets lapped up by the low information voter. Then no politician wants to touch it, because they're always thinking about their next election instead of figuring out what's really best for America.

We collectively have ourselves to blame.
Click to expand...
This. Remember Republicans pushing grannies wheelchair off the cliff? Worked well with the low info Ds. Now if SS grew with the stock market like W talked about with the help of Nancy Pelosi’s advisors we’d all be rich…
 
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