Gyroscopic Investing

What does "unfunded" actually mean? These welfare programs are transfer payment schemes "funded" via current tax revenue. It's not really "funded" by some kind of endowment the way the term makes you think of. Even the vaunted "Social Security Trust Fund" isn't really a real trust fund, like you might imagine a pension fund; it's simply a bucket for surplus tax revenue to sit until it needs to be spent later. Not at all anything like "33x projected Social Security expenses in perpetuity" that a real trust fund or endowment would be.

Pointedstick wrote: What does "unfunded" actually mean? These welfare programs are transfer payment schemes "funded" via current tax revenue. It's not really "funded" by some kind of endowment the way the term makes you think of. Even the vaunted "Social Security Trust Fund" isn't really a real trust fund, like you might imagine a pension fund; it's simply a bucket for surplus tax revenue to sit until it needs to be spent later. Not at all anything like "33x projected Social Security expenses in perpetuity" that a real trust fund or endowment would be.

It is a real trust fund.  The 15% FICA tax goes directly to the trust as I mentioned before.  The fund then swaps the money for special, non-marketable Treasuries -- if there is a profit after paying current claims.  Back in the beginning the trust fund actually had dead, stagnant money reserves sitting around doing nothing, but it was too deflationary to the economy, so they switched over to pay-as-you-go.  Much better!

"Unfunded" means that you like have a $50K income and a $500K mortgage.  After putting down a 20% down payment, you have an "unfunded liability" of 400K whereas your debt service is no more than 40% of your income.  Like the debt to GDP ratio, it's just rightwing cognitive dissonance fearspeak for political purposes of "starving the beast".

BTW, OASDI isn't welfare.  It's an entitlement.  Important difference.  Welfare has means-testing.  It's like the difference between the Citizen's Dividend (Universal Basic Income) and a Guaranteed Minimum Income.

https://www.pragcap.com/the-us-governme ... -the-hole/

https://www.pragcap.com/biggest-myths-in-economics/


Here are some contrarian views on the US debt and QE. The articles are a few years old but I would be interest to read some opinions on them.