Text from AG's speech today
bog.frb.fed.us
It usually takes me a while to cipher what he says but I think he's against SS money in the market.
"This risk might be worth taking if having the social security trust fund invest in equities provided real benefits to households. But this is not likely to be the case on average. Having the trust fund invest in private securities most likely will increase its rate of return, although perhaps not on a properly risk-adjusted basis. But, as I have argued previously before this committee, unless new savings are created in the process, the corporate securities that displace Treasury securities in the social security trust funds must be exactly offset by the mirror image displacement of corporate securities by
government securities in private portfolios, probably largely in private funds held for retirement. This swap is essentially a zero sum game. To a first approximation, aggregate retirement resources--from both social security and private funds--do not change. "
Then he closes by weighing in on the side of conservatism I think:
"It is possible, as some maintain, that the OASI actuaries are too conservative, and that productivity growth could be far greater than is anticipated in their "intermediate" estimate. If that is, in fact, our prospect, the social security system is not in as much jeopardy as it currently appears. But proper fiscal planning requires that consequences of mistakes in all directions be evaluated. If we move now to shore up the social security program, or replace it, in part or in whole, with a private system, and subsequently find that we had been too pessimistic in our projections, the costs to our society would be few. If we assume more optimistic scenarios and they prove
wrong, the imbalances could become overwhelming, and finding a solution would be even more divisive than today's problem." |
