http://money.cnn.com/2008/03/18/news/ec ... 2008031904


I have strong opinions about this, but I thought I'd see what the board community thinks before I spout off.

I can guarantee you that the requirement to invest SS bucks in government securities will not go away. It is an essential cog in our current "borrow and spend" fiscal policy.

I think that is sort of the point though> When SS is taking out instead of putting in, there will be a double whammy to the regular goverment cash flow statement,> no more source to borrow from, and cash out to pay benefits which wasn't there before. In 10 years they won't be able to decide how new money gets "invested"

In 10 years, the government loses a "captive' source to borrow money from. Instead, SS starts to cash these bonds in. When we were starting to run surpluses (see before Bush) this would not have been as big a problem since we were in the process of retiring debt and buying back (redeeming) bonds is a way to do this. If things don't improve in the next 10 years, this simply means we will have to borrow even more money from China, Saudia Arabia, etc., In addition to returning to a sane fiscal policy, some legislative changes must be made so SS does not actually get to the point where more $ are going out than are coming in. Finding politicians with the courage to actually do this will be tricky.

So why not allow the surplus to be invested in assets that beat inflation? You don't have to go all the way to equity. Why not limit investment classes to those with low risk of principal loss and try to acheive say a 4-5% annual return. You would still be serving the public good: Municipals/Mortgage backed securites seem to deliver a public good don't they?