Ramesh: you are being, if anything, too charitable to Brad DeLong on the point of the nature of the IOUs in Social Security. He is right to point out that, on some level, any financial security is an IOU. It represents a claim on future income. Thus it represents, inevitably, an asset for the payee and a liability for the payer. If the payee and the payer are the same person, it represents precisely nothing. The fact that the federal government always pays its debts, and thus federal bonds are a popular security, is entirely irrelevant. A private person with excellent credit who everyday filled a box with IOUs for a Christmas-present fund would, when December rolls around, be no better off that if he hadn’t bothered to do so.

This is the one argument against Social Security accounts that really makes me cringe. It’s embarrassing — particularly for the DeLongs and Krugmans of the world and those who mindlessly peddle their nonsense.