Mr. Larry DeWitt
Dear Mr. DeWitt:
Arguing in today’s Washington Post that the U.S. Treasuries in Social Security’s Trust Fund are genuine assets that the government can redeem to help it meet its future Social Security obligations, you proclaim that “The Treasury owes the workers of America the value of the funds in the same way it owes the debt held by the wider public.”
I’ve got a great deal for you, Sir! In exchange for $10 million in cash from you today (every cent of which I’ll burn through over the next 12 months as I treat myself to lavish, extravagant high-living) I’ll promise to repay you $15 million in one-year’s time. That’s a fifty percent rate of return – and it’s guaranteed!
Now I must tell you that my current net worth, including the income that I’ll earn over the next year, is less than even $1 million. But don’t you worry, for upon my receipt of your $10 million in cash I’ll write an I.O.U. to myself, promising to pay to me $15 million in one-year’s time. My redemption of that I.O.U. will enable me to repay you, principal and interest, in full.
So you see, with your $10 million loan to me secured by my solemn promise to pay to myself $15 million in one-year’s time, you need not worry that I’ll not have sufficient funds on hand to pay to you what I owe you.
Please make your $10 million check payable to “Donald J. Boudreaux,” and mail it to me at the address below. When I receive your check I’ll send you a copy of the I.O.U. in which I promise to pay myself enough to enable me to repay you.
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
P.S. On second thought, I think I’ll make my I.O.U. to me worth, not $15 million, but $150 million. The extra cash will come in handy.