Pure Genius Act - Saving Social Security

Save Social Security Trust Fund - Buy Fort Knox

In another decade, I will become eligible to start collecting social security. Throughout my life I have paid into the social security trust fund. That trust fund is meant to support me when I retire. The problem is that the money in the trust fund has been loaned to the federal government. The federal government has no practical means to pay that money back, except by printing it. Currently, the social security trust fund is worth over 2 trillion dollars, but unfortunately those are fiat dollars. That money is earning interest that is significantly below the true rate of inflation. The fund is slowly losing about 5% of its value every year. Worse yet, the dollar is probably headed for some very serious inflation during this decade.

In the past there have been some ideas for social security to invest its excess funds in the stock market. But this has several huge difficulties. The biggest being which stocks would be bought. This would result in huge amounts of favoritism as companies and investment firms tried to guess and manipulate the buying and selling of stocks by the social security department. Politicians would be bought with corrupt money. Corporatism would replace capitalism even more than exist today.

This would result in stock market bubbles and crashes. Ultimately, money would be lost in the stock market, harming social security and it's beneficiaries. This problem would exist for almost any kind of investment.

I was considering the plight of social security when an idea of pure genius struck. I am calling it the Pure Genius Act. In a nutshell, the Pure Genius Act is:

Buy Fort Knox, start acquiring gold and create a competing currency!

Fort Knox could save Social Security
Fort Knox could save Social Security

The Pure Genius Act

The Pure Genius Act would begin converting fiat paper investments held by the social security trust fund to gold, followed by the creation of a competing gold backed currency. This act would not only save social security, but possibly even save the United States and the world by providing a safe haven for value in the possible event of hyperinflation.

How would this work in practice? As a first step, the federal government would transfer ownership of Fort Knox over to the social security department. The value of the gold in the vaults would be subtracted from the amount of money owed to the social security department by the federal government. This would be the first entry into its gold account. This first step would be accomplished with no direct effect on the gold market since it wouldn't disrupt either the supply or the demand for gold.

The second step would be more aggressive as the social security fund began converting its federal bonds to gold and moving the newly acquired gold to Fort Knox. This gold would be immune to the ravages of inflation. The social security department would later convert this gold back to fiat currency whenever the need arises to make payments to social security recipients. This would have some effect on the gold market by increasing demand for gold.

The third step is the most aggressive of all and would provide a safe alternative plan for anyone investing in their retirement. The social security would buy and sell gold bullion certificates. These certificates would be 100% backed by gold. Fort Knox would in essence serve double duty. Not only would this provide a safe haven for investors, but would help support the price of gold for future retirees. The gold bullion certificates could be traded, in effect, creating a competing currency.

The beauty of this plan takes advantage of the fact that gold is a true store of value. It is a storage of wealth. Paper money is a unit of exchange that constantly decreases in value in the long run. The gold bullion certificates would be held to preserve savings.

Some people don't trust gold due to its apparent value going up and down. This is actually a false observation. It is not the value of gold that rapidly fluctuates, but the fiat currency that fluctuates. When people lose faith in a fiat currency, then it takes more of that fiat currency to buy the same amount of gold. This can work the other way around too. If people gain faith in a fiat currency due to proper government management of that currency, then it will take less of that currency to buy the same amount of gold.


Enemies of Social Security

This plan would require the support of congress to be accomplished. Every politician needs to support this idea or admit that they don't care about the future of social security. Claiming that the social security trust fund is not rapidly losing value is disingenuous.

In the long run, as gold reserves dwindle, there will be a fourth requirement to save social security. Payments to social security recipients must be balanced to social security tax receipts. Paying out more money than is received will eventually be irresponsible.

Conclusion: Saving paper money is like saving grain in a rodent infested warehouse. Government vermin eat the value of paper money through inflation of the money supply.

Preserve the social security trust fund with gold.




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smcopywrite 5 years ago from all over the web

sounds like a plan. great hub. lots of questions surrounding our social security and how to sustain it. its not mine yet but i am buying into it like it is because one day it will be. we need to get everyone to feel that way to get this ideas off of the ground and the backing they need to succeed.

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