Real trust funds are fiduciary accounts handled by one or more people entrusted with the stewardship of property. Trustees whose primary task is to make certain that property does not lose value or depreciate, but instead gains value through proper care and investment. Federal trusts do not qualify. With one exception, the federal varieties are not real trust funds.

There would be absolutely no need to debate or even think about lock-boxes if the government had real trust funds. Real trust funds are lock-boxes.

What’s known as the Social Security Trust Fund, the largest pseudo trust, now holds $1.016 trillion in “special obligation” nonmarketable bonds and accounts for 18 percent of the National Debt. This was at the close of the government’s fiscal 2000, September 30th, seven months ago. And all of this debt is conveniently listed under the Treasury category for “Federal” or “Intragovernmental” debt, supposedly opposed to “Public” debt.

The way this trust builds is as follows. Every year the government takes every cent of Social Security “surplus” and spends that money elsewhere. Once denied, they now confess to this theft. Under a law with all sorts of loopholes in it, they then claim that they must place Treasury securities in trust to account for the money stolen. Of course, they place “special obligation” bonds in this trust, not because they have any special value but because they do not want these bogus bonds intermingled with legitimate bonds sold under honest contract to investors on the open market. A market that would collapse overnight if legitimate investors realized that the government passes these special bonds out like candy from Santa Claus.

All 163 of the 164 listed federal trust funds contain nothing but nonmarketable bonds and account for $2.268 trillion or almost 40 percent of the National Debt as of the close of fiscal 2000. They are debit black hole accounts holding nothing but debt.

Proving that the government can do it if they want to, the single exception to all of this is the federal government’s own Thrift Savings Plan. A real trust fund that the government manages for federal employees, part of which invests in the Standard & Poors Index of the New York Stock Exchange through Barclay Bank of Great Britain, with matching taxpayer money.

Treasury securities

Treasury securities are “the safest investment in the world” for one reason, and one reason only. That reason is that they are backed by (guaranteed and paid off by) every man, woman, and child in the nation. Every person who will ever pay taxes.

Politicians, experts, spinsters, commentators, and so-called investigative reporters and analysts tend to forget or simply ignore this, along with its implications.

Bonds, bills, notes or Treasury securities in general contracted on the open market provide an honest method of government borrowing. A system that can raise billions overnight. A system left to us by our founding fathers. A system that provides a safe haven for the wealthy, other nations, anyone with extra cash or little old ladies who walk in with their eyes wide open seeking a safe refuge for money with a decent return on investment. Contracting to borrow in this manner is an extremely convenient and quick way for the federal government to raise money for unforeseen emergencies ranging from natural disasters to war.

Since 1997, and the passage of the Balanced Unified Budget Act, the American people have been taught that this method of borrowing, which causes deficits, is as evil as communism. Something to be avoided at all cost. As one result, we now have a President talking about “contingency funding” as though it were a good thing instead of falling under the fraudulent policy that follows.

Nonmarketable “special obligation” Treasury bonds are promissory notes just like normal bonds except that they have no market value; i.e., they cannot be traded on the open market. They are "cashed-in” by taking taxpayer dollars from the Treasury’s General Fund exactly like all other Treasury securities.

It is absolutely criminal that money American workers pay in entitlement “surplus” magically, through alchemy and transubstantiation, ends up as debt that can be redeemed only by American taxpayers.

Cash flow

Federal trust funds never hold money, despite what you hear to the contrary. Everything you hear about “raiding” trust funds or “setting aside” Social Security’s money—is a lie. In the federal government, all money goes into the Treasury’s General Fund where it stays until it’s spent. And you don’t have to take my word for it.

The U.S. Supreme Court has said: “Payroll deductions from workers DO NOT go into a pool or trust fund, but the proceeds of both (the employees and the employer) taxes are paid into the Treasury like other internal revenue generally, and are NOT earmarked in any way.” HELVERING v. DAVIS, US 619, 635 (1937) and still standing.

In his fiscal 2000 budget proposal, President William Jefferson Clinton said: “trust fund bonds are not real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

Experts, like Robert D. Reischauer, former Director of the Congressional Budget Office (CBO), have echoed the same thing. Even some of TV’s talking heads will mention this lightly, then dance away as fast as they can.

“Earmarking”

Funds may not be earmarked for individual contributors, but the Treasury and the respective entitlements know exactly how much money comes in monthly, whether it’s for Social Security or some other entitlement, and how much “surplus” is involved.

Your employer sends FICA taxes, payroll taxes, to the IRS with a single lump-sum periodic check. The IRS reports how much comes in from FICA taxes and the Social Security Administration knows immediately how much is surplus. Even though your employer’s check is cashed by the Treasury and receipts credited to the General Fund, it’s easy to figure that 81.05 percent of the monthly FICA total is from Social Security’s 12.4 percent payroll tax and 18.95 percent from Medicare’s 2.9 percent.

Knowing how much must be paid out in monthly responsibilities immediately tells them how much “surplus” there is and how many funny money bonds to deposit in the trust fund.

What it means

The President of the United States, the Trustees of the Social Security Trust Fund, politicians and their media lackeys all know they are lying through their teeth when they tell you how they’re strengthening Social Security, extending it’s life span, or building up some sort of reserve by depositing more nonmarketable bonds in trust funds.

When President Bush tells you that he intends to “set aside” Social Security’s surplus, what he really means is that he’s going to spend that money and then put more bogus bonds in the trust fund. All anyone has to ask him is: “Mr. President, does this mean that you are going to set up a special trust fund like the Thrift Savings Trust Fund?” The same applies to his crazy idea for “contingency” funding. You will never hear this question asked, and you would not get an answer if it were.

The working public would be better off if the government deposited nothing in these phony trusts. Better off if workers never paid a surplus in the first place. Even better off if workers simply threw that surplus money in the ocean, giving it to other bottom feeders. At least, then the public would not be going further into debt. Going in the hole with a minus 100 percent return on money, plus annual interest added by simply throwing more bogus bonds into the pool, no cash involved.

All so called penetrating hard questioning news people and TV talking heads know this. If they don’t, the alternative is that they’re just plain dumb. All they have to do is think about why the Social Security Trust Fund, currently holding $1.016 trillion in bogus bonds is, at the same time, 18 percent of the National Debt. That would at least be a starting point for their inquiring minds.

Double Taxation, plain and simple

We give them money. They give us debt. When you hear stories or forecasts about how the life of Social Security has been extended to 2036 or whatever, just remember that it is not a solution to any problem.

There’s a good book by economists Dean Baker and Mark Weisbrot titled “Social Security, the phony crisis” that covers why Social Security is not “in trouble” now or in the future. It covers why a system generating $94.4 billion in profits last year alone is not going broke. Unfortunately, but typical of most people steeped in their own professional point-of-view, it misses the rip-off entirely.

The real problem is what happens if Social Security must ever start drawing on its trust fund. This too, gets pushed further ahead with each new estimate. I think it’s up to the year 2016 by now.

It gets pushed ahead because the Oligarchy knows or hopes it will never happen. At least, not until after the public has paid off their credit card of real debt run up by selling honest securities on the open market. Until your retirement and health care payments have been used to pay down the honest borrowing side of the National Debt.

In the highly unlikely event that Social Security must ever turn to its trust fund, you or your children will be paying more income taxes to cover the withdrawal. Or the government will be borrowing money on the open market using its credit card and increasing the national debt for you to pay later with interest. Or the government will have to cut discretionary spending for items you pay for like defense, education, and so forth. This is what Clinton and Reischauer talked about.

On top of it all, you will still be paying 15.3 percent of your cost to be employed in normal payroll taxes at the same time. That will not change. In fact, it might be raised even higher to help cover the above.

What the government has working in its favor is that Social Security will probably not ever need to turn to its trust fund. The fantastic stories you’ve been told about baby-boomers, people living longer, going broke, and so forth, are all fictional scare stories meant to grease the path to higher taxes and more booty for them. They’ve already raised the age of retirement and pushed up the cutoff point for payroll taxes from $72,600 two years ago to $80,400 today just to increase their booty.

They know people are too busy with work and their families to figure this out. And they have very creative staffs to provide a preponderance of diversions to distract and keep you off balance. Small wonder younger generations believe that a system generating hundred of billions in annual profits will not be there for them.

Meanwhile, the greatest swindle of all time continues unabated. Between now and the year 2012, your government is planning to take more than $5 trillion from your retirement and health care payments. Real cash that should have been working for you, not against you.