Can't Be Both A Liability And An Asset

The treasury bonds in the social security fund are IOU's that the government has written to itself. They only exist as an accounting trick.

How can a bond be both a liability AND an asset, to the same party? The answer is: it can't.

The government is counting these bonds as assets, but they can't have any value unless they are redeemed. Who has to redeem them? Answer: the US government. Who has to pay off on them? The same US government. They only exist as a lien on future wealth. In their present state, they're like powdered milk. Unless future taxpayers and wage earners add water to them, they can't be distributed as benefits.

Quoting Don Luskin, who writes for SmartMoney: "The existence of those Treasury bonds doesn't really affect the government's wherewithal to pay benefits one way or the other... it would make no difference whatsoever if the Trust Fund simply surrendered them, or for that matter tore them up and threw them in the ocean."