;
Any privatisation plan should have a plan. In theory
once transferred, the funds cannot be re-deposited into
government coffers - being in private accounts. How this
can be done is by Congress (or Duma) introducing a bill
requiring either a certain percentage of social security
savings OR a gradual re-routing of social security trust
funds to private investment funds. Of coz, these
investments can equally be done by a govt agency. But
governments have a bad habit of misusing public funds.
During the 1980's the Reagan Administration financed
government debt (composed mainly of social security
payments) via government bonds.
Effectively, increasing the fiat-money supply via the
treasury reserve bonds (capital) and fractional reserve
system in the banking system. The bonds were, of course,
sold to the federal reserve, banks and financial
institutions which subsequently were resold/bought in the
secondary bond markets.
Theoretically, government bonds can increase
indefinitely, but this also increases the budget
deficit - repaid only via government revenues (taxes or
investments).
In a way, privatizing social security is similiar to
financing social security payments via direct government
financial investments. The possibilities are endless,
such as direct government economic investments, too. So
here, there is a choice. However, I believe the profit
motive may generate real ROI as when changing political
hands.
There is, of course, a dark side to pension funds. For
instance, if a specific stock is de-listed or its issues
traded are "frozen" due to the regulatory organizations,
this may put the pension funds "in the red (loss)."
Best Regards,
Crystal.
Subject: Daily Editorials - September 7, 1998
Date: Mon, 7 Sep 1998 16:15:51 -0500
From: Harris Publishing Newsletter Mailing
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To: "[log in to unmask]" <[log in to unmask]>
Dear editorial subscriber:
THOUGHTS ON SOCIAL SECURITY
To many, Social Security exemplifies the achievements of
the welfare state. It has stretched a safety net beneath
every American family and, due to automatic increases
tied to increases in the Consumer Price Index, greatly
reduced the poverty rate for the elderly. According to
the popular misconceptions about how the system
functions, every worker pays taxes into a personal
account in a Social Security "trust fund", which later
pays his pension. In reality the system is a government
operated pyramid scheme in which today's workers support
yesterday's. Taxes collected today from each worker's
earnings cover current benefits and currently generate a
surplus. In about 15 years' time, the baby boomers will
begin retiring and the resulting demographic change will
upset the system because by 2030, about 50 people will
collect Social Security for every 100 active workers.
Finding a way to finance the graying of America is one
of the greatest challenges facing the government. One
option is to change the way in which Social Security
invests its money. A better alternative is to gradually
replace Social Security with personal retirement plans.
Chile has taken this approach and its success provides
a lesson for the USA. The system requires each worker
to place a percentage of his earnings with a private
fund manager. These funds are invested in diversified,
relatively low-risk portfolios and can move their money
in and out of competing funds, but they cannot be
withdrawn before retirement.
The Harris Organisation Product of the day:
CORPORATE ATM CARD: Our Harris ATM Card is now available
to all fully structured clients of The Harris
Organisation. To find out more about the corporate ATM
card, please contact The Client Relations Group, The Firm
of Marc M. Harris, Inc., E-Mail:
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Daily Editorials
Harris Publishing, Inc.
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