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Strategies & Market Trends : The coming US dollar crisis
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To: RJA_ who wrote (3280)1/12/2008 11:49:40 PM
From: Larry S.  Read Replies (1) of 71455
 
RJA

I don't know that it is really appropriate for this thread but the end of the second Utube part should be disturbing to all. I grant that Ron Paul is the only Candidate of either party that doesn't appear to have failed eco 101 but what would he suggest should be done with the surplus dollars in the SS Trust Fund? The surplus is the result of the Reagan and Bush Sr. Administrations increases in the payroll tax to create a surplus to help cover the retiree bubble the will occur with the retirement of the Baby Boomers - all in accordance with the 1983 recs. of the Greenspan Commission.

It would clearly be a mistake not to invest the surplus so that the fund value would at least hopefully keep up with inflation. And, what more secure investment is there than is securities guaranteed by the full faith and credit of the US Gov? The special treasuries pay interest equal to the average of the 4- and great-year Treasury notes. Yes, there are alternatives that would provide a greater return but along with a greater risk.

And, given that the money is invested in special treasuries, what would he think the treasury should do with the dollars it receives? They should spend it so that they borrow less from the public. The problem is that the Unified Budget (introduced during the Johnson Administration) hides the interest paid and creates the illusion of a lower deficit. If Reagan had been a real fiscal conservative, he would have worked to eliminate the Unified Budget but it would have exposed the increases in our deficit during his Administration.

And if Ron Paul were the fiscal conservative that he claims to be, he would talk about the fraudulent nature of the Unified Budget every chance he gets. The real concern with the SS Trust Fund is that, in about 2017, we will start redemptions and it will be necessary to start transferring the debt in the Fund to the public. It is now over 4 trillion and will be over 6 trillion by then and this increase in borrowing from the public will drive up interest rates.

Sorry for the length of the rant.

Larry
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