The Motley Fool Discussion Boards
Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: Proposal to end public pensions||Date: 7/11/2013 7:14 PM|
|Author: jerryab||Number: 428533 of 470337|
Let's imagine that a private company (we'll call it Pyramid Inc.) funded its pension the way Washington funds SS.
Big difference. The SSTF is required to invest in govt securities or govt-backed securities, so that restriction is a major issue that can not be matched by the banking industry. The SSTF has demand notes--so they can be redeemed at any time.
The problem is (was, anyway) the surplus was known to be temporary. Now the time to start paying back the borrowed funds is here. The money would have been borrowed anyway--because Congress spent the money. The borrowing was needed to fund govt expenditures. So, the REAL problem is Congress--not SS or the SSTF.
Another relevant point is the govt can print money--which is something only govt can do. So, having the cash to pay is not a problem for govt. If private business tried to do that, there would be problems.
Finally, if a business fails, people can find jobs elsewhere. If a govt fails, then the entire economy based on that govt fails as well. So, the money has no value--except as souvenirs.
|Copyright 1996-2015 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|