Just to add a little fuel to this fire. I have a retirement account (a 403(b)) from where I worked one year in another state. The interesting thing about this account is that while it is not a government pension, the option I chose by accident does have a guaranteed 4 1/2% return.

I am wondering how many accounts there are out there like mine and how that is working out for the company that sold these accounts. If there are very many of them then they should represent a large drag on the companies that sold them after four years of ZIRP.

Flap

I have a smallish whole life policy bought in 1987 (current value roughly $30k) that has a guaranteed minimum interest rate of 5%.

Bottom line, the SS trust fund was nothing but a tax increase, under the guise that it was money for your future benefit. So you got taxed once to give the government the money, then you are going to get taxed again so the money that isn't there can be paid out.

Since the interest on the trust fund is probably paid by sticking in another unmarketable bond, the interest earned is irrelevant as all it does is determine the amount of the future tax liability. Nothing from nothing is nothing.

Asimov wrote..

It's actually around 90% of the newly issued 10+ year treasuries that the fed is buying.

NINETY-****ING-PERCENT.

Asi, do you have a quote/cite on that? I'd love to look at the details as that seems crazy high.

Posted a chart a few months back of it... I'll try to locate it...

****, I don't know what to search for to find it. The only words I can think of that are in it for sure I say so often search is a bit pointless.

It was linked from zerohedge. Keep in mind that it's not ALL treasuries, just NEW ISSUANCE, 10yr+ that's around 90%.

I'm quite sure I've got the right range there, if not the exact figure.

2023? That's when I turn 67. I think I'll opt for 62 and take the cut early with the knowledge I might get 5 years of benefits. Bruce Kasting showed the bond percentages of what was expiring and what they were being replaced with. A Difference of 400-500 BPS seems to be in the majority of the bonds. An Assumption of a 4% return need to be pushed down about 275BPS.

What they can't predict is how many who will opt for early benefits which cuts the total fund. With predictions of the funds bonds being exhausted at earlier and earlier dates it 's reasonable to expect the same effect as a "run on the bank". That may lop 5 more years off it.

It's almost fall down funny as commentators suggest that seniors will have to work longer. Work longer doing what? The only jobs available to seniors will be a limited number of low pay service jobs ( maybe) and jobs they create themselves. We can't invest too much supplementary savings as the cost of failure would be much higher than someone who was in the 20s-40s. I don't think the USA is ready to see what is already happening in Greece.

This FRED graph shows that the FederalReserve's holdings of Treasury securities has been flat for about a year.

In other words, the Fed is not a net buyer of Treasuries. The dealers are, and they are probably parking them with the Fed as excess reserves.

http://research.stlouisfed.org/fred2/ser....

Marvin: Because for the last year or so of operation twist, they've been buying the **** out of the long end and selling the short end while holding their total balance about the same.

Just look at this month, and be sure to note the maturities: http://www.newyorkfed.org/markets/tot_op....

Yes, but now they seem to be (just about) out of short-end bonds to twist with..... oops.

Asimov,

Agreed. You missed part of the discussion in the previous page. I wanted to show that net Treasury holdings by the Fed were roughly constant, because Twist involves the Fed selling the short end to buy the long.

The USTreasury is selling approx $1.3T in bonds per year, but overall its not going into the Fed.

The factoid about primary dealers buying and holding the net debt issuance as excess reserves is just a guess. Who is holding the net debt of the USGov?