PRINCIPLES OF INSURANCE

Social Security's Long Term Solvency Problems

Social Security's Long Term Solvency Problems

In context of social security's long term solvency problems, all part of a fairly common confusion between liquidity problems and solvency problems. A company is not solvent when their assets are not sufficient to support its liabilities. That is, not selling all you could pay your debts. A liquidity problem is not the same, simply a problem of payments and collections in the short term; taken to the simple, no hard cash to meet short-term payments.

Liquidity problems in financial institutions are taking these days because the interbank market ...