Wednesday, September 19, 2012

QE3 and Social Security

No, not "Queen Elizabeth".

"Quantitative Easing".

It's the Federal Reserve's policy of buying back U.S. Government debt in the trillions of dollars. The Treasury doesn't have trillions in cash sitting around, but that's OK, the Fed just prints it. They print it electronically, of course, but the effect is the same.

Who owns this debt? Well, one of the biggest owners is the Social Security Administration. During the 1980's and 90's the SSA ran a surplus, to prepare for retiring Baby Boomers. This extra cash was used to buy T-bills, the same T-bills that the Fed is now buying back.

Well, doesn't that mean that Washington is printing money to meet Social Security obligations? And doing it in the trillions of dollars?

Just asking.

3 comments:

Old NFO said...

Um... 2+0=6??? yeah, yeah, it's that NEW math! Sigh...

Roberta X said...

I am reminded of the signs reputed to be in the loos of Zimbabwe's neighboring nations at border crossings: "Use supplied tissue paper only! No cardboard, no newspaper, NO ZIM DOLLARS."

At least greenbacks are soft.

perlhaqr said...

Bobbi: But dirty. You'll want to thoroughly launder that money first. Literally.