Security of U.S. Bonds

A number of people have written saying that when the government borrows from the Social Security trust fund, all that it leaves in place of the money is an IOU, a U.S. Treasury bond. They complain that these bonds will someday have to be paid off by taxes. While this is true, it is also true for all the other $5 trillion worth of U.S. Treasury bonds that the government has issued over the years. Many of these U.S. bonds are held by banks, insurance companies and other pension funds. These too will have to be paid off from taxes.

U.S. bonds are still regarded as the safest investment in the world and carry the lowest rate of interest. No one can borrow money at an interest rate lower than the U.S. pays. If these bonds ever become worthless, then all other bonds will be worthless too.

Robert C. Mason

Simi Valley