From: "Gary Wiltshire" 

On Thu, 10 Feb 2005 21:34:03 -0500, Steve Ewing  wrote:

> On Wed, 09 Feb 2005 21:21:07 -0500, Gary Wiltshire  wrote:
>
>> On Wed, 9 Feb 2005 21:02:47 -0500, Geo  wrote:
>>> No not really, the problem is the government has been raiding the fund
>>> of all extra monies and using it like it was part of their budget.
>>>
>>> Geo.
>>>
>>
>> No, that is not all.  The change from 16:1 to 2:1 ratio is factual,
>> with or without borrowing from the account.
>
> Geo.: The "fund" has not been stashed in a vault, no, it has been used
> to buy Treasury bonds.  At some point the gov't is going to have to
> repay them, with interest.  Therefore there is a looming problem with
> the general fund (that will require tax increases to cover), but it is
> no different than if the bonds had been sold to the Chinese.  Except
> that there is some suspicion that Bush is setting us up to default on
> those bonds, which would be Bad.
>
> Gary: We seem to have handled the transition from 16:1 to 3:1 pretty
> handily.  Why is 3:1 to 2:1 such a crisis?
>

Partly because it will be no longer possible to use the fund to offset the
deficit and also because we're approaching a mathematical limit.

--
Gary Wiltshire

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