Social security trust fund accounting

Don Boudreax at Cafe Hayek has some great posts on how the Federal government's accounting in regard to the Social Security Trust Fund is fraudulent. He writes:

When sensible people ... note that these obligations are so massive that honoring them in full will require drastic tax hikes or spending reductions, accounting-challenged defenders of the status quo exclaim “Not to worry! The Social Security trust fund holds lots of U.S. Treasury bonds. Those bonds are assets. So Social Security’s obligations are covered!”

But those bonds are held by the same party that issued them, namely, Uncle Sam; the creditor here is one with the debtor.... The bonds in the ‘trust fund’ are no independent source of revenue for Uncle Sam to tap into to meet his Social Security obligations as these bonds would be if they were issued instead by, say, Microsoft or by Her Majesty’s government in the U.K.

Here is an example:

Suppose I have a savings account with $10K, and I empty it to pay for a car. Most sane people would say that I now have a car worth $10K, and a savings account worth $0.

If I were the federal government, however, the accounting would be a little bit different. When I empty the savings account, I would replace it with an IOU from myself, and claim that the IOU is worth $10K. So I now have a car worth $10K and an IOU (from myself) "worth" $10K. All of a sudden, I have assets worth $20K!

At some point in the future, my income falls short of my expenses, and I need money, so I begin selling assets. I eventually get to the $10K in IOUs and have no choice but to sell them. But here’s the problem: because the person who is obligated to make the IOU payments is me, and I am in no position to make those payments, so the IOUs are worthless!

How did this happen? It was never an asset to begin with.