I have been investing about half my life, since I was 16, and I have become pretty good at it, profiting not just during the golden years of the 90s, but holding my own in the lean times. So being able to invest a small portion of my Social Security tax has certain appeal to me, since I am not one of those who fear the market. However, there are some serious concerns that are not being addressed either by the 'shills' of the presidents plan, nor by the opposition.

First off, we will have trillions of dollars flowing into the free market. Several economists have argued (effectively IMHO), that at least a significant part of the bubble-90's, at least in the tech sector, was driven by an over-investment of capital. So much money was available for investment into start-ups that it eroded conservative investing principles. I heard at least one Venture Capitalist who worked in that sector describe the atmosphere as 'the money people were chasing after the idea people, and not the other way around!'.

Another occassionally sited cause of the 'bubble' (it wasn't, BTW, a classical bubble- thats really just a sales pitch with political origins) was the rise of the mutual fund over the last 20 years (go online and google up a chart of fund capitalization! And also compare the number of funds to the number of tradable stock issues!!!!, its quite surprising!) . Anyway, the argument goes like this: The market is already a crowded place. As more money floods the market, and funds compete for issues, a natural supply-and-demand upward pressure is applied to stock price.

Obviously, I doubt our SS money will be siphoned off into VC funds- it does not fit the implied investment strategy. However, it is likely to flow into index funds, stock funds and etc. The addition of trillions of dollars forced into the free market will have an effect, thats not remotely arguable. The question is, in my mind, what will that effect be? If the argment that the rise of the mutual fund contributed to the so-called 'bubble' of the 90's, then what would this do?

Now, obviously, there are major political ramifications to allowing those private funds to be invested in the markets of other countries. Foreign economies could rise and fall on the decisions fo the pencil pushers who decide what goes in and what goes out of the gov't-approved funds.

Furthermore, who decides what goes in the basket, and what goes out!?. If some companies are preferentially listed in every fund available for investment, then its quite possibly those companies will see their stock price rise far beyond their otherwise-determined market value just by having millions/billions of dollars pumped into the purchase of their issuances. Now suppose the dept. head who makes that decision picks up a phone and calls some unscrupulous investor?

Also, are political filters going to be applied to the selection of companies? Are arbitrary non-freemarket critetrion going to be applied to companies? "No company who makes surgical instruments that are used in abortions can be in the government managed fund"...

And how do gov't managed funds respond to market corrections? Do they hold their issues in order to promote stability? Thats blatant federal manipulation of the market.

Lastly, there is the fools promise of 'guaranteed higher return'. Well, it depends on what time periods and when... A deflationary cycle like what Japan has spent 20 years in is not impossible in a free market economy. What if those were the highest-paid most productive years of my life. The returns don't look so beautiful then, especially since COL/Inflation are not reflected in this stock fund return, while SS payments adjust for them.

It really knocks me out that this plan is proposed by the people who claim they want little gov't interference with our lives and most especially with our economy. This will have a massive impact on our economy, and allow the government to exert unprecidented control over at least the valuation of any domestic publically traded company. This is a major increase in both the size of government and its power, all for the sake of 'smaller gov't'.

But given the patriot act, liberty at knifepoint, govenrment defined morality, and all the other odd innovations of the so-called 'conservative' part over the last few years, I shouldn't be surprised.

If this goes, the next 10 years are going to be great for the market. Its what happens after that that concerns me.

If we really want to try this 'magical mystery tour' with the engine of capitalism, the capital markets, we should spread out beyond stocks and bonds. We should allow REITS to be included in the funds, maybe allow people to spend part of their 'fund' on real-estate, even personal homes. This will have an impact on our economy, for sure, but this forces insertion of money into the stock markets really concerns me very seriously.

Additionally, there really isn't a problem. 2042 is where the 'trust' has to dip into assets... The actual 'critical' point, where total reciepts from SS since inception do not cover total outlay, is around 2070. Which is about as far from now as the origin of the fund is from now. The point is, who the hells knows what the world will be like then.

the conservative fix is to tweak the system to reflect the fact that we all live longer and spend longer 'retired'. Raise the retirement age gradually by 5 years over the next 25 years. We live longer and healthier today then ever, and have no reason to expect that trend to end. Lets reflect that in the SS retirment age. Smart people who invest well can retire earlier.

The real bomb is medicare. So if we break our bank to handle the system that is not the problem (SS), that would be sort of like invading a non-terrorist nation to stop terrorism.

Oh, wait...

Davin L.