LeeACIC
05-12-2009, 01:15 PM
I started this thread on a Vangaurd Forum.
Please take the time to read and contribute!
Disclaimer this is only an idea I had a few months ago, but would like to know what you folks think.
The way I see it we pay taxes the $$ we pay is just spent as a matter of fact more $$ is being spent than we have. It seems to me the gov bubble is doomed to crash just as the RE bubble.
My question is why are our tax dollars not invested and all the programs that are needed funded by those returns?
If this was done correctly and managed by honest people (yea I know Ha Ha) the taxpayers of the US would be the largest investment fund in the world UMM what could we do with that?
Residents could choose to keep any surplus or reinvest as with derivatives. Like how residents of Alaska get $$$ from the pipeline every year.
Governor
05-08-2009, 3:20 PM | Post #26523830
You are suggesting the US be run like an endowment fund? It possible but very hard to go from Paygo to having a sizable fund that could support all the programs on the federal dole.
Governor,
Hard yes but not insurmountable
and what about the benefits to the nation as a whole?
Maybe I’m not seeing all the facts here but, the more I study the US economy the more I see “we the people” as indentured servants who will be paying off gov debt for generations.
Bailing out failed institutions and companies WTF if a company or an institution is insolvent it should be allowed to fail. Is that not the basis of a free capital market?
I’m just saying let’s run a little model here and just see between those of us on this site willing to participate, if we had took the $$$ being used to save these failing companies and used that money to invest how much different would the US balance sheet look?
Governor
05-08-2009, 3:41 PM | Post #26523930
Lee,
Norway is very similar to this type of structure. Saudi Arabia is as well to a lesser degree. Norway has the largest public fund in the world largely due to oil revenues.
I think the main problem could be inflationary pressures brought on by the huge sums of investable capital that must be invested in to the market driving down interest rates. I also surmise that the fed would lose some or all of its monetary policy abilities. Just a theory though.
Governor,
I did not know that about Norway or Saudi Aradia.
As far as low interest rates is that not good for the economy especially while recovering from a resession?
From the resurch I've done on the Quazi gov agency the "FED" from it's inception. Don't let the door hit you!
BTW I appreciate your creative controbution here I had partially expected to be labled "wingnut" and laughed off the forum.
Governor
05-08-2009, 3:56 PM | Post #26523960
Mostly the Arab nations use sovereign wealth funds as a means of creating "endowments" for their countries. Abu Dhabi has a large one (expecially when you look at it per capita) that they are currently using trying to diversify away from the energy sector into other industries.
Norway has a large one as well from oil profits. They use it to support their large welfare state.
As for the interest rates being low, yes they would help right now but what about boom times? The inability to artificially raise interest rates during boom years would create large inflationary pressures.
Of course, I'm speculating on the lower interest rates but think they make sense.
LeeACIC
05-08-2009, 4:16 PM | Post #26524040
Seems to me we are headed the way of Norway with our welfare programs. How well will we fare without such a fund?
Don't interest rates rise from printing too much money and gov debt.
We rase interest rates to stave off inflation because there is nothing supporting our $$$ but other contries belief that we will pay it back.
If we were on the gold standard this would not be the case there would be no need for inflation to raise prices simply because people had more $$$ and were getting scared of it's true worth.
It is my opinion that you are right but, if the current system was not baised on debt. Take the debt out of the equasion and I don't see the problem.
Mark49
05-08-2009, 8:19 PM | Post #26524450
I think the main problem could be inflationary pressures brought on by the huge sums of investable capital that must be invested in to the market driving down interest rates.
Gov, lower interest rates are a short term effect, not a cause, of an increase in the supply of money. This is where we are now in our economy. The longer term effect of increasing the money supply is inflation, and that drives interest rates higher. That is where we are going.
Having investable capital would induce, what else, investment in productive capital. This would increase our productivity and output, increasing real wealth for everyone.
On the other side of the fence is having large deficits, which have the opposite effects. That is also where we are going.
Mark
Governor
05-09-2009, 12:06 PM | Post #26525800
Mark,
The $30 trillion is the present value of the liability; it is not needed every year. But you are correct otherwise, the amount needed for the budget this year would be $3.6 trillion plus a few hundred billion for SS and medicare to be fully funded. So you are looking at $4-$4.4 trillion. At a 5% return, you would need $88 trillion in the fund. That is 6.3 times our current GDP.
If we had an abundant natural resource like oil or nat gas that we could export in huge quantities and develop a SWF, then its possible. But we don't. We also have $10 trillion in debt already on the books.
LeeACIC
05-11-2009, 12:02 PM | Post #26530420
Mark & Gov,
For me the important thing here is that it is a good idea, that will benefit every US citizen.
I'm going to have to spend some time studying exactly how Norway has this set up.
Perhaps we don't have to implement it all at once.
What we should focus on now is can we gain any real support?
JimD2
18 hours, 53 minutes ago | Post #26531820
Let me just ask this would the US be better off with such a fund?
Of course. You are always better off being out of debt. But first, one must balance the budget (which we can't do), and then one must pay off the debt- something there seems to be no intention of doing. Only then can one begin to start a fund. The subject is DOA.
Jim
LeeACIC
18 hours, 19 minutes ago | Post #26531960
(Dr. McCoy style) Dam it Jim!
I'm not saying this is something that we can do tomorrow but, perhaps in my lifetime.
All I want is to start a movement in order to change the course of our great nation to something that is sustainable.
If that means we have to balance the budget and pay off debt (which should be done anyway) then I say so be it!
It just seems to me that balancing the budget and paying off debt is what we need to do in order to reach our goal of a SWF.
I am simply looking for citizens who want the same thing for their children & grandchildren.
All the Best, Lee
LeeACIC
17 hours, 28 minutes ago | Post #26532160
norbertc,
Like I said I agree we are not in a position to start one today.
If five years ago I was telling you we would be spending trillions in bailouts and stimulus I bet you would have thought It was joke too!
An SWF is not unobtainable in say 30-40 years.
:-) you changed your original post Thanks!
It just seems to me that we all agree on what's wrong with the economy and what we need to fix. Banking, Healthcare, Social security
Accomplishing these tasks or any tasks for that matter is more easily and readily done when there is a goal.
I simply propose this be the goal.
Lee
norbertc
9 hours, 6 minutes ago | Post #26533100
LeeACIC:
It just seems to me that we all agree on what's wrong with the economy and what we need to fix. Banking, Healthcare, Social security
Accomplishing these tasks or any tasks for that matter is more easily and readily done when there is a goal.
I simply propose this be the goal.
I also want the US to be strong. We're starting to see daylight on the Banking front - at least I think so. You don't want to cut spending in the middle of a serious recession, however.
But the most important thing IMHO is to change the direction of the US away from having a "finance economy" focus - which generates nothing real. Finance is just a tool, not an end in itself.
We need to lead in things like engineering, health care, self-sustaining energy development, efficient transportation, etc. Not investment banking, subprime mortgages, and oil imports.
All this will take infrastructure investment in the short term. Otherwise we'll never have the pleasure of starting a SWF in, say, 10-20 years.
I look forward to all of your opinions
All the Best, Lee
Please take the time to read and contribute!
Disclaimer this is only an idea I had a few months ago, but would like to know what you folks think.
The way I see it we pay taxes the $$ we pay is just spent as a matter of fact more $$ is being spent than we have. It seems to me the gov bubble is doomed to crash just as the RE bubble.
My question is why are our tax dollars not invested and all the programs that are needed funded by those returns?
If this was done correctly and managed by honest people (yea I know Ha Ha) the taxpayers of the US would be the largest investment fund in the world UMM what could we do with that?
Residents could choose to keep any surplus or reinvest as with derivatives. Like how residents of Alaska get $$$ from the pipeline every year.
Governor
05-08-2009, 3:20 PM | Post #26523830
You are suggesting the US be run like an endowment fund? It possible but very hard to go from Paygo to having a sizable fund that could support all the programs on the federal dole.
Governor,
Hard yes but not insurmountable
and what about the benefits to the nation as a whole?
Maybe I’m not seeing all the facts here but, the more I study the US economy the more I see “we the people” as indentured servants who will be paying off gov debt for generations.
Bailing out failed institutions and companies WTF if a company or an institution is insolvent it should be allowed to fail. Is that not the basis of a free capital market?
I’m just saying let’s run a little model here and just see between those of us on this site willing to participate, if we had took the $$$ being used to save these failing companies and used that money to invest how much different would the US balance sheet look?
Governor
05-08-2009, 3:41 PM | Post #26523930
Lee,
Norway is very similar to this type of structure. Saudi Arabia is as well to a lesser degree. Norway has the largest public fund in the world largely due to oil revenues.
I think the main problem could be inflationary pressures brought on by the huge sums of investable capital that must be invested in to the market driving down interest rates. I also surmise that the fed would lose some or all of its monetary policy abilities. Just a theory though.
Governor,
I did not know that about Norway or Saudi Aradia.
As far as low interest rates is that not good for the economy especially while recovering from a resession?
From the resurch I've done on the Quazi gov agency the "FED" from it's inception. Don't let the door hit you!
BTW I appreciate your creative controbution here I had partially expected to be labled "wingnut" and laughed off the forum.
Governor
05-08-2009, 3:56 PM | Post #26523960
Mostly the Arab nations use sovereign wealth funds as a means of creating "endowments" for their countries. Abu Dhabi has a large one (expecially when you look at it per capita) that they are currently using trying to diversify away from the energy sector into other industries.
Norway has a large one as well from oil profits. They use it to support their large welfare state.
As for the interest rates being low, yes they would help right now but what about boom times? The inability to artificially raise interest rates during boom years would create large inflationary pressures.
Of course, I'm speculating on the lower interest rates but think they make sense.
LeeACIC
05-08-2009, 4:16 PM | Post #26524040
Seems to me we are headed the way of Norway with our welfare programs. How well will we fare without such a fund?
Don't interest rates rise from printing too much money and gov debt.
We rase interest rates to stave off inflation because there is nothing supporting our $$$ but other contries belief that we will pay it back.
If we were on the gold standard this would not be the case there would be no need for inflation to raise prices simply because people had more $$$ and were getting scared of it's true worth.
It is my opinion that you are right but, if the current system was not baised on debt. Take the debt out of the equasion and I don't see the problem.
Mark49
05-08-2009, 8:19 PM | Post #26524450
I think the main problem could be inflationary pressures brought on by the huge sums of investable capital that must be invested in to the market driving down interest rates.
Gov, lower interest rates are a short term effect, not a cause, of an increase in the supply of money. This is where we are now in our economy. The longer term effect of increasing the money supply is inflation, and that drives interest rates higher. That is where we are going.
Having investable capital would induce, what else, investment in productive capital. This would increase our productivity and output, increasing real wealth for everyone.
On the other side of the fence is having large deficits, which have the opposite effects. That is also where we are going.
Mark
Governor
05-09-2009, 12:06 PM | Post #26525800
Mark,
The $30 trillion is the present value of the liability; it is not needed every year. But you are correct otherwise, the amount needed for the budget this year would be $3.6 trillion plus a few hundred billion for SS and medicare to be fully funded. So you are looking at $4-$4.4 trillion. At a 5% return, you would need $88 trillion in the fund. That is 6.3 times our current GDP.
If we had an abundant natural resource like oil or nat gas that we could export in huge quantities and develop a SWF, then its possible. But we don't. We also have $10 trillion in debt already on the books.
LeeACIC
05-11-2009, 12:02 PM | Post #26530420
Mark & Gov,
For me the important thing here is that it is a good idea, that will benefit every US citizen.
I'm going to have to spend some time studying exactly how Norway has this set up.
Perhaps we don't have to implement it all at once.
What we should focus on now is can we gain any real support?
JimD2
18 hours, 53 minutes ago | Post #26531820
Let me just ask this would the US be better off with such a fund?
Of course. You are always better off being out of debt. But first, one must balance the budget (which we can't do), and then one must pay off the debt- something there seems to be no intention of doing. Only then can one begin to start a fund. The subject is DOA.
Jim
LeeACIC
18 hours, 19 minutes ago | Post #26531960
(Dr. McCoy style) Dam it Jim!
I'm not saying this is something that we can do tomorrow but, perhaps in my lifetime.
All I want is to start a movement in order to change the course of our great nation to something that is sustainable.
If that means we have to balance the budget and pay off debt (which should be done anyway) then I say so be it!
It just seems to me that balancing the budget and paying off debt is what we need to do in order to reach our goal of a SWF.
I am simply looking for citizens who want the same thing for their children & grandchildren.
All the Best, Lee
LeeACIC
17 hours, 28 minutes ago | Post #26532160
norbertc,
Like I said I agree we are not in a position to start one today.
If five years ago I was telling you we would be spending trillions in bailouts and stimulus I bet you would have thought It was joke too!
An SWF is not unobtainable in say 30-40 years.
:-) you changed your original post Thanks!
It just seems to me that we all agree on what's wrong with the economy and what we need to fix. Banking, Healthcare, Social security
Accomplishing these tasks or any tasks for that matter is more easily and readily done when there is a goal.
I simply propose this be the goal.
Lee
norbertc
9 hours, 6 minutes ago | Post #26533100
LeeACIC:
It just seems to me that we all agree on what's wrong with the economy and what we need to fix. Banking, Healthcare, Social security
Accomplishing these tasks or any tasks for that matter is more easily and readily done when there is a goal.
I simply propose this be the goal.
I also want the US to be strong. We're starting to see daylight on the Banking front - at least I think so. You don't want to cut spending in the middle of a serious recession, however.
But the most important thing IMHO is to change the direction of the US away from having a "finance economy" focus - which generates nothing real. Finance is just a tool, not an end in itself.
We need to lead in things like engineering, health care, self-sustaining energy development, efficient transportation, etc. Not investment banking, subprime mortgages, and oil imports.
All this will take infrastructure investment in the short term. Otherwise we'll never have the pleasure of starting a SWF in, say, 10-20 years.
I look forward to all of your opinions
All the Best, Lee