"Bill" wrote in message
...
Ed Huntress wrote:
wrote in message
...
On Jul 15, 10:15 am, "Ed wrote:
wrote in message

...
On Jul 14, 10:57 pm, "Ed wrote:

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

Mutual fund managers believe there is also a risk of not being
invested.

And what is the nature of that risk?


You do not make any money and run out of money when you are retired.
If you do not make more money than the rate of inflation, you are
losing wealth.

That's not a risk. You know the situation going in. The risk is that your
investment doesn't perform, and it's all a big surprise.


That is the risk Social Security is now taking. It is not
invested and it is not providing any return. A diversified investment
is safer than one that is not diversified.

Of course. How about one diversified across all revenue sources to the
United States government?


Not well diversified. That is essentially only one source so it does
not count as being diversified at all. If the U.S. government
defaults on its loans, you have nothing else to fall back on.

Dan

It's basically diversified across the entire economy. If the government
defaults, we're all screwed,

Some probably more than others. Land is surely to hold some value
(whether you measure its "asset value" as 0 or 1 zillion dollars. )

Maybe, but the performance of the economy after a default is unknown,
including land values. Also unknown is how SS will be handled after a
default. It won't just collapse, or the seniors will descend on Washington
with torches and pitchforks.

It's unlikely, IMO, that SS will do worse than land values. Of course, we
won't be buying much imported caviar either way, but that's not the kind of
hardship that would be in the works if there is much of a default.


Other commodities and international investments should hold some value.

Maybe. Some economists say that a default crisis in the US would result in
an international domino effect. I don't think that anyone really knows what
would happen, anymore than they knew what a real estate crisis would do to
the broad financial markets a few years ago.

The quants sure didn't know.




and your other investments probably will go
with it.

See my comments above. --and slow down! : )

Bill





As risks go, a government default is pretty well hedged -- not by a
guarentee of performance, but by a near guarentee that everything else
would
go with it, anyway.

If you're worried about that, buy gold. You can always use it to weight
down
your shoes when you drown yourself. d8-)