@dpp @jgordon A very interesting twist on retirement social insurance! Since we’ve made retirement so asset-centered in the US, insure retirement assets. 1/

@dpp @jgordon I think you’d want not to let the amount of these gap notes depend on individual transaction prices and home values. It’s too gamable. The government could develop zillow-like notional values and rely upon those and just the purchase and sales dates. There’d be some legit “basis risk”, as your home’s value evolution might differ from the Fedestimate, but it’d be very hard to police overpriced purchases underpriced sales + side agreements. 2/

@dpp @jgordon Same for portfolios: The state could tie these notes to the performance of a reference portfolio (perhaps age sensitive, to accommodate older savers’ greater bond preference). There’s a bit less risk of self-dealing with prices of buys/sells of public securities via regulated brokers. But people can do idiosyncratic things in their IRAs, for example, and that could create Springtime-for-Hitler-style temptations to milk. 3/

@dpp @jgordon Alternatively these things can be declared fraud and seriously policed, but that creates new costs and risks on both sides, and in some sense escalates the risk. I’d think I’d go with notional rather than actual experience. 4/

@dpp @jgordon A minor nitpick: I think for most purposes it’s best to consolidate the debt position of the Treasury with the Fed. (For example, when the Fed buys bonds, “debt held by the public” doesn’t typically change. The “public” includes the Fed, which makes sense when you realize the public no longer holds Treasuries, but it now holds Fed reserves and notes.) 5/

@dpp @jgordon I think the Federal debt in an accounting sense means a lot less than most people think. (Recall Stephanie Kelton!) But to the degree we’re interested in that kind of accounting, I think these notes should be included as a form of debt. /fin