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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Hawkmoon who wrote (3016)	2/16/2001 3:33:57 AM
From: Don Lloyd	Read Replies (1) of 3536

Ron - Everything you say is likely true, although the surplus is just temporary. My concern is that a partial privatization doesn't work unless the excess returns from the partial part are so large that they can replace the entire payout. Right now, the FICA surplus is entirely wasted, from the POV of SS itself, as it is just spent along with general revenue and the special treasury debt placed in the 'trust' fund is simply an IOU with no economic value whatever. If the FICA surplus were to be used to help attack SS insolvency, the way to do it would be for the government to use the surplus to buy an annuity from Fidelity, or whoever, and use the future cash flows to pay a part of the future SS payouts. My claim is that while complete privatization is a proper answer, partial privatization, using only the surplus, seems likely to either add risk without reward for the individual, or else miss the opportunity to use the surplus to help fund SS itself as with the annuity mentioned above. Regards, Don

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