Ordinary pension funds have diversified portfolios, trying to balance growth and the minimization of risk over the long term. A manager who invested solely in T- bills would have been derelict in his fiduciary responsibility to provide reasonable growth.
No other trust fund holding T- bills is dependent solely on their redemption to meet its obligations, and therefore, the situation of the Social Security "trust fund" is unique, insofar as it entails a massive burden on the federal budget.
The pressure is not the same for Social Security debt and other debt. The pace at which other debt comes due is much more relaxed. In essence, regardless of T- notes held, the federal budget will have to pay out to meet obligations at an accelerating rate. You remain hypnotized by the fiction of the "trust fund".
A real investment is one made according to sound principles of portfolio management. No one in his right mind invests exclusively in T- bills, which are low- growth instruments, used to counter potential volatility. Social Security, by law, has to buy these Treasury notes when it runs a surplus, and they are not even negotiable. Therefore, it has not been investing, in any meaningful sense, it has merely deferred obligations to be paid by the general fund at some point in the future....... |
