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An Argument for Better Investment of Social Security Funds
In a post yesterday on marningstar.com, finance writer Brent Arends takes exception to how Social Security’s trust fund reserves have been invested over the years, suggesting that deploying the balance in selected U.S. stocks could have produced a return far exceeding the 2.6% return achieved via the legally required special-issue Treasury bonds. It’s an interesting argument, but not a new one, that has been visited multiple times in the past with the conclusion being to avoid the risk of stock market fluctuations. Arends’ article also touches on a view of how the current investment approach–while legally mandated–enables the federal government to, in effect, “use” Social Security funds for other purposes while issuing Treasury bonds as collateral. This portion of the argument, naturally, leads many to propagate rumors about why Social Security has a long-term solvency problem, especially those who discount the viability of U.S. debt.
Read Arends’ post here.
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