Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (3016)	2/16/2001 3:33:57 AM
From: Don Lloyd	Read Replies (1) \| Respond to 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

To: Hawkmoon who wrote (3016)	2/17/2001 9:19:45 PM
From: Fiscally Conservative	Read Replies (1) \| Respond to of 3536

Ron "The very definition of surplus is that the SSTF is taking in more than it is paying out in SS benefits. In fact, the SSTF is AWASH IN SURPLUSES.. And if those surpluses were permitted to be invested in AAA corporate or mortgage bonds, actual hard assets and not governmental obligation notes, then it wouldn't be so severe an issue, but they're not. The sole place those surpluses can be parked is in Govt treasuries." "Thus, if we take whatever portion of those surpluses not immediately required for current benefit payments, they can be applied to private retirement purposes." "And overall, what is accomplished is that economic growth will be spurred and grow to such a size that by the time the boomers retire, many of them will be so wealthy they won't need SS (means testing). That will leave the remainder for those less fortunate.. AS IT WAS INTENDED ORIGINALLY." --------------------- How would this wealth be generated. The mere idea that because this extra capital could or would be invested in private markets does not mean there would be huge wealth generated down the road for all that invested. I would think it is much more complicated than that,although I am not so sure. Is is expectable as a debter nation to continue to grow wealth by means of domestic private capital investments without a reversal of the current capital trade deficits? What would happen if there were ever a world wide flight of capital out of US Treasuries. All of this confuses me.