Friday, February 18, 2005

The "Worthless IOU" Challenge

by Tom Bozzo

Charles Krauthammer (via the Daily Howler) phones one in to the Washington Post, claiming among other things that the Social Security Trust Fund is non-existent:
These pieces of paper [the Trust Fund's special issue bonds] might be useful for rolling cigars. They will not fund your retirement.

To the good doctor, and indeed anyone else inclined to peddle the "worthless IOU" argument, I offer the following. I will buy any U.S. federal government debt that happens to be uselessly cluttering your portfolios for five cents cash per dollar of face value. Since five percent is infinitely greater in percentage terms than nothing, this offer should be irresistible!

The objection that U.S. government obligations are miraculously valued above 5 cents on the dollar by virtue of their presence in a personal investment account shall be taken as evidence that the "worthless IOU" argument is illogical to the point of total idiocy.
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