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URL:  http://boards.fool.com/michael-savage-listener-pekinrobin-ive-heard-21853512.aspx

Subject:  Re: Even SS does better than this Date:  1/4/2005  11:26 AM
Author:  qaddy Number:  43870 of 75381

Michael Savage listener, pekinrobin?
I've heard him use the "sheeple" term, is why I ask.

> There are people even on this board, apparently people who had benefit of college, who can't figure out that adding a layer of commissions and fees to any service will raise its costs and lower its return. What can you do if a man will not agree that 2 plus 2 equals 4?


I'm not sure if I agree with this or not. The 2 main problems with SS as far as I understand (which could be totally wrong and I am open to correction)

a) the money doens't really exist anywhere (i.e. there is no real fund) distributions are paid out of current budget. if the money doesn't really exist somewhere what kind of return can you really expect from it?

b) managed funds underperform the market. and anything the goverment manages had a predisposition to underperfom commonsense.

Privatization I think alleviates (A) because it designates "real" accounts like IRA's that the goverment cannot spend. I think it helps (B) because it at least opens up the possibility of people following the market. Although I haven't heard about this 9% gain cap.

The extra layer and fees I think are more than offset by those 2 benefits.

The main reason that I think privatization wouldn't work is that there is just too much money involved. It's easier to beat the market up until the point when the money you are using actually *moves* the market because it is a significant portion of said market. Also this would put some in goverment in a situation where guaranteed market returns would be desired and I think it opens up the possibility of artifically propping up the marketplace.

qaddy





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