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It was a fantastic proposal under Bush 2. It was basically "the government will take half as much from you as it does now, and the other half you get to invest". Said another way, "we'll let you have 10% annual compounded returns on the other half instead of the ~2% we're giving you now".
The pushback was both severe and ridiculous. "How DARE you trust us with our own money?! What do we look like, a free country or something? NO- you take my money and you give me a low return or I'll scream"
Really a bad idea - the "you get to invest" is an issue because few will actually invest unless forced to. And then, few will take the risks necessary to get anywhere close to 10%. Then many would complain that they cannot make ends meet with half the SS. Would end up just kicking the can down the road without fixing anything, just making it worse.
That's a logical fallacy known as an invalid comparison.
Norway is a nation-State kingdom with a population of 5.4 Million people which is less than the population of Cook County (Chicago), Illinois.
I guess you have a logical fallacy because you seemed to miss the point and mis-stated what was said. Read the rest of my post - it was clear I was not making a comparison or even recommending. I was informing others about what the fund would be - as I said, not sure if it is a good idea. Might look at the link I gave before commenting on something you seem to know little about.
The idea of the government investing in private businesses for investments is well known - called a Sovereign Wealth Fund - from wikipedia;
Quote:
A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally. Most SWFs are funded by revenues from commodity exports or from foreign-exchange reserves held by the central bank.
Not about Norway since I was not making a comparison, just showing an example. Maybe you would prefer the French (with 6-7x the population of Norway) that is bigger than Norway's or Alaska's version that is the largest in the US (12 states have versions of these) or maybe China's - much bigger than the US in population and well over a couple of Trillion in their 2 funds.
A sovereign wealth fund run by Uncle Sam would instantly be the biggest force in markets, making and breaking companies with the penstroke of a bureaucrat.
Norway can do what they do because they are so small that they are still price takers. An American sovereign wealth fund would move a lot of capital allocation decisions out of markets, reducing total economic performance.
A sovereign wealth fund run by Uncle Sam would instantly be the biggest force in markets, making and breaking companies with the penstroke of a bureaucrat.
Norway can do what they do because they are so small that they are still price takers. An American sovereign wealth fund would move a lot of capital allocation decisions out of markets, reducing total economic performance.
Unless people invest their own money how they want…
I think think letting the government invest in SS would work great if we could trust BOTH Joe Biden AND Donald Trump AND their parties to do the right thing.
like everything the govt does , they wait until the 11th hour and then find a solution.
i would bet congress will fully fund ss when the time comes
much ado about nothing
I think the political consequences for politicians in power who allowed social security to stop making the payments would be dire indeed. I think they would be literally run out of office on a rail.
I expect at the last minute we will see payroll tax increases and maybe a gradual increase in retirement ages that will give ss another twenty years before more reforms are needed.
I guess you have a logical fallacy because you seemed to miss the point and mis-stated what was said. Read the rest of my post - it was clear I was not making a comparison or even recommending. I was informing others about what the fund would be - as I said, not sure if it is a good idea. Might look at the link I gave before commenting on something you seem to know little about.
The idea of the government investing in private businesses for investments is well known - called a Sovereign Wealth Fund - from wikipedia;
Not about Norway since I was not making a comparison, just showing an example. Maybe you would prefer the French (with 6-7x the population of Norway) that is bigger than Norway's or Alaska's version that is the largest in the US (12 states have versions of these) or maybe China's - much bigger than the US in population and well over a couple of Trillion in their 2 funds.
Then you are ill-informed because Norway's Sovereign Wealth Fund is the largest on Earth.
According to the Sovereign Wealth Fund Institute, Norway's Fund has the most money: $1,477,729,733,526
That's what you get for relying on Pukipedia instead of relying on primary sources that are readily available on the internet.
France's Sovereign Fund isn't even in the Top 20 but Korea and Turkey are #14 and #15 respectively.
In fact, France's Sovereign Fund isn't even in the Top 100. That's because France's Fonds de reserve pour les retraites is actually a pension fund and not an SWF.
You stand corrected.
France tiny little $49 Billion in their pension fund that you mistook for a SWF is not gonna fund France's pensions through 2045.
That is why France slashed their pensions from 50% of wages to 37.5% of wages.
It's why France increased the number of years of work to 42 years (compared to 35 years for the US) except for those born after 1973 who have to work 43 years.
It's why France increased the penalty for early retirement.
It's why France increased the retirement age and then when high unemployment blew up in their face they dropped it back to where it was.
That is also why France will have to slash pensions again to 28.5% because their "SWF" isn't working.
You neglected to mention that the overwhelming majority of SWFs are oil-based or currency exchange based.
Norway is a kingdom. The government owns Statoil the State-owned oil company and Norway's SWF is funded by oil export profits. That is a logical fallacy of invalid comparison because the US is not a kingdom, is not a nation-State (and never will be) and the US government does not own oil companies.
Note that the UAE did have the largest SWF but due to volatility in oil prices and other factors, they dropped down to #12.
The three largest and most successful pension funds are the Social Security Trust Fund, the Japanese
GPIF, and the Korean National Pension Fund.
Who on this forum would like to know why? It's precisely because they are based on government securities and not based on foreign assets or foreign exchange rates and because they do not invest domestically and engage in protectionism and lastly, because of the extreme transparency of those funds.
Where other countries failed, it's because they succumbed to pressure from people like you.
And then, of course, the protectionists with their little brains start screaming. You got people here who think manufacturing is the be-all-end-all of everything. They don't understand that if the education system is reformed, within a generation 20% of GDP will be from R&D and R&D jobs that pay way more than manufacturing ever could.
Transparency goes right out the window. You can't let people see where government is investing because 90% of "investors" are sheeple, McTraders who do what everybody else is doing and if government is investing in certain companies or economic sectors then they'll pull their money and put it where government is putting its money.
All good? Hell, no. That creates extreme volatility domestically and worse than that, government sucks at picking winners and losers and then if government is engaging in protectionism it's a recipe for failure. Those companies are gonna fail because A) they have a bad business model and having government fix their business model is not a road you wanna go down and/or B) they just can't compete domestically and/or globally and no amount of investment will ever change that reality.
Everyone can see how government could create asset bubbles. That will end badly.
At the end of the day, it's the same old story: People want something for nothing. It doesn't work that way in this Universe.
You neglected to mention that the overwhelming majority of SWFs are oil-based or currency exchange based.
Norway is a kingdom. The government owns Statoil the State-owned oil company and Norway's SWF is funded by oil export profits. That is a logical fallacy of invalid comparison because the US is not a kingdom, is not a nation-State (and never will be) and the US government does not own oil companies.
Some countries use SWF money to build infrastructure for which they can charge a fee. For example, both Malaysia and Indonesia use pension fund money, both local and foreign, for building their toll roads.
When former Malaysian PM Mahathir Mohamad visited the US years ago, he was impressed with the interstate highway system, and saw that as a way for speeding up the development of Malaysia. However, instead of free roads, he had toll roads built so that the heavy users of the roads paid a larger share. These days, tolls are collected electronically as cars pass beneath a scanner; thus, there is no longer the traffic jams that the old in-person collection system created.
I would like to see the US SS system think outside the box and look for investments abroad (e.g., port facilities like China did with Gwadar and Hambantota) that keep open our access to those areas and their natural resources. China's belt-and-road financing is giving them an edge in access to resources. Instead, it seems that we give away money with mostly human rights stipulations.
Then you are ill-informed because Norway's Sovereign Wealth Fund is the largest on Earth.
According to the Sovereign Wealth Fund Institute, Norway's Fund has the most money: $1,477,729,733,526
That's what you get for relying on Pukipedia instead of relying on primary sources that are readily available on the internet.
France's Sovereign Fund isn't even in the Top 20 but Korea and Turkey are #14 and #15 respectively.
In fact, France's Sovereign Fund isn't even in the Top 100. That's because France's Fonds de reserve pour les retraites is actually a pension fund and not an SWF.
You stand corrected.
France tiny little $49 Billion in their pension fund that you mistook for a SWF is not gonna fund France's pensions through 2045.
That is why France slashed their pensions from 50% of wages to 37.5% of wages.
It's why France increased the number of years of work to 42 years (compared to 35 years for the US) except for those born after 1973 who have to work 43 years.
It's why France increased the penalty for early retirement.
It's why France increased the retirement age and then when high unemployment blew up in their face they dropped it back to where it was.
That is also why France will have to slash pensions again to 28.5% because their "SWF" isn't working.
You neglected to mention that the overwhelming majority of SWFs are oil-based or currency exchange based.
Norway is a kingdom. The government owns Statoil the State-owned oil company and Norway's SWF is funded by oil export profits. That is a logical fallacy of invalid comparison because the US is not a kingdom, is not a nation-State (and never will be) and the US government does not own oil companies.
Note that the UAE did have the largest SWF but due to volatility in oil prices and other factors, they dropped down to #12.
The three largest and most successful pension funds are the Social Security Trust Fund, the Japanese
GPIF, and the Korean National Pension Fund.
Who on this forum would like to know why? It's precisely because they are based on government securities and not based on foreign assets or foreign exchange rates and because they do not invest domestically and engage in protectionism and lastly, because of the extreme transparency of those funds.
Where other countries failed, it's because they succumbed to pressure from people like you.
And then, of course, the protectionists with their little brains start screaming. You got people here who think manufacturing is the be-all-end-all of everything. They don't understand that if the education system is reformed, within a generation 20% of GDP will be from R&D and R&D jobs that pay way more than manufacturing ever could.
Transparency goes right out the window. You can't let people see where government is investing because 90% of "investors" are sheeple, McTraders who do what everybody else is doing and if government is investing in certain companies or economic sectors then they'll pull their money and put it where government is putting its money.
All good? Hell, no. That creates extreme volatility domestically and worse than that, government sucks at picking winners and losers and then if government is engaging in protectionism it's a recipe for failure. Those companies are gonna fail because A) they have a bad business model and having government fix their business model is not a road you wanna go down and/or B) they just can't compete domestically and/or globally and no amount of investment will ever change that reality.
Everyone can see how government could create asset bubbles. That will end badly.
At the end of the day, it's the same old story: People want something for nothing. It doesn't work that way in this Universe.
Most of this is not true but really doesn't matter. I never discussed any source of funds for them, just was trying to inform what they are called. You seem to miss what I said - I said it was not about any one country fund or how they are funded - it was ONLY about what they are called - a Sovereign Wealth Fund. What do you not get?
It was never about Norway - which I said repeatedly. Norway was just an example of one. You were the one that was trying to make a comparison - I NEVER did.
BTW - Your source is a US consulting company based out of Las Vegas, NV, not really an independent source. But just to clarify, the list of largest funds I used was in the link I gave prior - https://en.wikipedia.org/wiki/Sovereign_wealth_fund - the data actually comes from the same source according to the notes. You stand corrected because it just depends on your source and criteria for SWF. The numbers change daily - it shows France with the largest and Norway second followed by 2 China funds and UAE;
France - $1.42 T
Norway - $1.37 T
China - $1.35 T
China - $1.02 T
UAE - $993 B
France ..... as one of the few Western nations with an SWF due to its large public sector economy. Norway is yet another example, although unlike France its USD1.4 trillion SWF is filled with petrodollars.
The France funding is very different, just like some of those in the middle east - Norway's fund is mostly funded by oil also so IDK why matters where it is funded from.
If you go by Global SWF data (globalswf) that is updated more often - that some other sites use, like Statisica. According to them, the top ones are China, UAE, Norway, Singapore, Saudi - US is 9th - slightly different SWF criteria makes a big change. They also track Public Pension Funds - the US is over 5x bigger than the next one, Japan, followed by Canada, Netherlands & Australia.
Allowing SS to invest in the stock market instead of just buying treasuries should increase the overall returns and at least partially cover the funding shortfalls. However, my question is what happens in an extended downturn (recession/depression)?
What do you think about this?
I'd suggest it would be no different than what happens with an IRA. Smart people evaluate their risk vs age and when they will need to withdraw money from their IRA. Usually with higher-return but riskier investments at a younger age, with those funds trending to safer investments as they get older. Even with that-the DOW has grown at 8% per year over about the last century. Through upturns, downturns, wars, etc. That is simply the average rate of return. So if people got that kind of gain-even in a downturn like '08, they are FAR better off than the meager returns from the money taken from them for SS. And-those invested funds are yours-and may be passed on as you desire upon your death. Unlike SS, where you might pay in all your life, and if you die before collecting-those funds become the property of the US government (unless your spouse gets some benefit).
Concerning funding existing commitments while converting to a privatized system, it's pretty simple. Raise the interest rates paid on the bonds borrowed from the SS trust fund as high as needed to fund those commitments. At the least those returns should match the average 8% rate of the DOW-but if they need to be higher to account for decades of theft and corruption by our government-so be it.
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