[Pikachu_Dad]

Since there is NO trust fund, as soon as they go in the red, THEY ARE OUT OF FUNDS.

They can only continue to operate with additional tax dollars.

[DannyTN]

"Since there is NO trust fund, as soon as they go in the red, THEY ARE OUT OF FUNDS. They can only continue to operate with additional tax dollars."

The U.S. treasury has to pay off those Treasury bills that were issued to Social Security one way or the other. Just like they have to pay off the Treasury bills issued to you and me or Japan or China.

The U.S. can either:

1. pay it off with tax dollars
2. or they can raise funds by issuing new debt. Just like refinancing a balloon mortgage or any kind of mortgage. Someone has to buy that new debt.

   If it's individuals or other countries or companies, the interest rate has to be high enough to attract buyers. Right now there are so many buyers that interest rates are extremely low.

   But they aren't dependent on others. The Federal Reserve can also buy that debt simply by issuing new dollars. For this reason, the U.S. gov't will not default on it's debt, because the debt is denominated in our own currency.

   If the Fed Reserve does does buy the debt, that does increase the money supply. But you always want a slight increase in money supply to encourage investment and to keep up with population growth and supply of goods growth. Plus in this deflationary environment with a credit squeeze and dropping values, increasing the money supply is a good thing.

   And if the money supply goes up too much, then it causes inflation and it represents a hidden tax on us all, as prices rise due to the supply of dollars.