Forgotten Wisdom
"What the advocates of the reserve program fail to see is that the principle of full reserves, indispensable to private insurance, is not only inapplicable to social insurance programs established by the government but that, reserves or no reserves, such governmental programs can never escape being on a 'pay as you go' basis. . . .
Also, unlike a private company, a government cannot protect its future by saving money in the form of its own reserves for, as we shall see later, such governmental reserves are liabilities rather than assets. In the final analysis a government depends not on reserves but on its credit, which in turn is based upon its ability to tax the people as the needs arise or on its capacity to borrow money."
-- Why Reserves Are Not Applicable to Social Insurance
Insecurity: A Challenge to America
Abraham Epstein
Second Revised Edition, 1938
As we near a government financing crisis (two, actually, but the larger one quite overshadows the smaller one), I am reminded of a criticism during the Reagan years. Republicans used to attack "the Democrats' tax and spend policies," but they only substituted their own "borrow and spend" policies. For their wealthy backers, this has the great advantage of further enriching those rentiers rather than removing a small portion of their sometimes vast wealth for the betterment of the hoi polloi.
Quoting a reader of Talking Points Memo's "What Defaulting On Our Debt Would Actually Look Like" (https://talkingpointsmemo.com/news/debt-default-house-republican), commenting on the discussions of "prioritization":
"So the rentier class and our global creditors get theirs while, for the rest of us, it’s a long way down. I guess if you’re a reactionary, there’s not much not to like in that: it is, for all intents and purposes, their prime, unstated policy plank."
So then, we were mislead back when Reagan and O’Neil raised SS rates and set up the trust fund?