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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: KyrosL who wrote (15176)11/8/2004 9:28:33 PM
From: Elroy Jetson  Read Replies (1) of 116555
 
This won't make sense to some, but America has very little experience with investing huge sums for the nation's retirement.

The market system so far relies on fairly risky stock and bond investments, then falls back to government funded Social Security payments when those investments fail.

Australia has far more experience and not surprisingly uses a different approach. While a small portion can be invested in stocks and bonds, the major portion must globally diversified and invested in real and infrastructure with very, very, conservative leverage or no leverage at all. This is money which will be available for Australian retirement, regardless of when the next economic depression occurs.

Of course, the larger problem for the U.S. is that there is no money to pay for an investment scheme replacement for Social Security. Almost every dollar of Social Security tax diverted to an investment scheme, rather than paying for current Social Security payments needs to be funded with debt or a new tax.

Once someone decides what new tax will pay for the investment scheme, or who will buy the trillions of dollars in new government debt - only then can America face it's inexperience with investing where failure isn't an option.

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