GeoLane at PTD dot NET wrote in message
...
On Thu, 14 Jul 2011 01:28:14 -0400, "Ed Huntress"
wrote:


GeoLane at PTD dot NET wrote in message
. ..

Hypothetical: SS revenues this year are larger than outlays. So Treasury
takes in the extra SS money from individuals and puts it into an
account.
You might think of it as an escrow account -- only it can't be,
actually,
because there is no higher bank or other place they can deposit that
money
to assure it's going to stay there. So they just put it in something
like
a
federal banking reserve account (let's not get the Fed involved here
unless
you really want to). Treasury itself is keeping the account.

What has actually happened? The account is not a demand account -- it
doesn't "belong" to any individual or institution. Any claims against it
are
theoretical; they occur in the future, and ONLY if the actuarial
guesswork
was right. No one can withdraw from it on demand or use it as
collateral.
It's no longer part of the money supply. It's dead numbers on a page.

Ed. As a hypothetical, because it's never going to happen in our
lifetime. What would happen if that enormous sum of money were
invested by buying stocks and bonds of US companies, or all over the
world if the amount of money were too large for the US economy?

I haven't been reading on this, so there may be a downside that I
don't know about, but my intuition is that it would put the money to
useful purpose by allowing business to expand.

RWL

...................

It's an interesting thought, and it's come up in some previous
discussions.
I do see some downsides.

....snip
......
4) You will distort markets all to hell because of the size and the
predictability of your purchases and sales.

5) Because of the above, you will always be buying high and selling low.
You
will lose money rather than making it.

Otherwise, it's a great idea. d8-)

This is not to say that there isn't some kind of solution buried within
your
general idea. I just can't imagine what it would be. Maybe someone else
can
see an angle by which it would work.

..............................

The potential for political favoritism is high, so it would have to be
spread in a diversified fashion - i.e. an index. The distortion to
the markets is also very valid. Ideally it would be spread worldwide,
but our political system would never allow that. It was a
hypothetical. Just curious to see if any of the ecnomists had
proposed that and what the pluses and minuses were.

They probably have, but I haven't read about it. I'll bet there is plenty of
discussion about it in the professional economics literature.

Having the government invested in private business is something that makes
me edgy. I'm in favor of our involvement with GM and Chrysler, but only with
the understanding we'll get out of it as soon as it makes sense to do so.
Setting up some permanent investment system for Social Security doesn't make
much sense to me. If we were going to do that, it would be better to
partially privatize the system.

But that would upend the idea that Social Security is *secure*. Investment
in business is always a risk. Philosophically, I'm not in favor of adding
risk to the system. When you're ready to retire, it's too late to be rolling
dice. To the degree that the government is involved with the real economy,
my feeling is that their primary job is to encourage growth.

--
Ed Huntress


RWL