Tuesday, March 01, 2005

Keep your hands out of that cookie jar!

I know, I know, the last thing you want to read is another dopey blog on social security reform but I can't help asking one question. If the social security system is going to run out of steam in 2053, or whenever, why would diverting cash from it to personal accounts help things?!

Wouldn't it make more sense to leave it alone and just expand the 401K system so people can put a little more cash into that instead? Am I being too simple minded?

The answer, your stock broker might tell you, is NO because stock markets in other countries where pension systems have been privatized are booming as the mutual funds have to scramble to invest payroll taxes into the market every month. Presumably this is better for you, but this is how bubbles are built. It's a giant pyramid scheme where the brokers make a killing on commisions regardless of where the market ends up.

The system might last a little longer if our politicos kept their hands out of the cookie jar and stopped spending our current social security surplus on porkbarrel projects.


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