Copyright 2005
Introduction
The following proposal suggests a new format for the Social Security Trust fund (Trust). The Trust is modified to move from a reliance on Federal Bonds to Mutual Fund type tools owned by the Government and is used to create a new tool for Federal debt management. Additionally, aspects of this model indicate that influence over foreign and global markets is possible adding additional tools to the US’s diplomatic capabilities.
Premise
A Social Security board is constructed on the model of the Federal Reserve board (Fed) with then intent of investing the total Social Security Trust across the board in all investment tools available by the creation of thousands of Government owned Mutual Funds. The US and the World are broken into Board of Governor regions that each invest within their portfolios and create fund types niches focused on their jurisdictions.
The Trust is Massively Divested (MD) with up to 10,000 individual funds grouped by region of the country, at a national level, by type (equities, commodities, fixed income), grouped by region of the world, and globally. The goal is to establish a rock solid return rate in excess of inflation in the 8% or greater return rate region. The rate of return will increase the funds in conjunction with payroll taxes as normal. As the fund grows, payroll taxes may be reduced.
Each Qualified US citizen is considered a part owner of the trust but without rights of survivors. Metrics can be set to limit how much and how often draws can be made from the fund to avoid runs on the fund for foreign and individual investors.
Individuals may participate in the new uber fund over and above their payroll contributions much like any mutual fund; this includes foreign nationals, foreign investment groups and foreign governments. They are considered investors and not principles. Participants will enjoy benefits not typically extended to mutual funds such as low or no taxes.
Individual’s participation outside of payroll taxation may allow reduction in real income much like 401k and IRA to a set limit. Institutions and Foreign Entities may participate utilizing these funds as a riskier form of bonds. Equally, deduction from the fund can be made tax free for the first 10 to 20 years of the funds life to assist in gaining initial fund equity.
These funds are owned by the US Government, structured by the board of governors and managed by fund managers under the oversight of the Government and audited by outside entities. Private organizations may manage the funds on day to day bases but the funds can be moved from one institution to another at the discretion of the Board of Governors with jurisdiction over the fund(s) question.
Value Proposition
1. Investments are Massively Diversified – MD -- so that no single economic issues will impact the Trust or no single country’s economic conditions could significantly impact the funds. Fund sizes may be limited to allow additional diversification between funds and fund groups. 10 trillion worth of assets could mean up to 10,000 different funds in the trust.
2. A fully funded Trust fund would give the US an important diplomatic tool. A fully funded trust fund would be approximately 10 trillion dollars in today’s dollars. Foreign participation in the fund would allow a mechanism of global influence more powerful than the US’s nuclear arsenal which could have a stabilizing effect on global economic conditions. Foreign investment would be in lines with a conservative or moderately conservative US perspective portfolio investment metric. This will work out to 2%-10% or so in foreign investment. (10 trillion worth of total assets would be 200 billion to 1 trillion dollars of clout)
3. A fully funded trust fund working with the Federal Reserve can be used as an additional backing for the value of the dollar. The fed can draw on it to adjust reserves via a liaison board. It can also be used for emergency purposes by the Fed (TBD).
Structure
Us and Foreign Investment Regions
The US would be broken into regional board of governors, much like the Federal Reserve, plus 3 national boards. In addition, the world will be broken into regional board of governors plus 3 global boards.
General Charter of the board of governors
1) The boards are responsible for establishing the investment type structure for their regions.
2) They are to enforce that expenses stay below a predetermined percentage
3) They are to manage the investment participates according to Service Level Agreements for rate of return.
4) They choose who the participates are (this would impact the diplomatic aspect of the fund – investments are not handled politically, who can participate is!)
5) Each region is audited both internally and externally. No two regions may use the same third party sources.
The Make up of the US Regional Investment groups
Each board of governors puts together
1) Investment groups consisting of qualified brokerage houses and establishes multiple mutual fund type investment tools (there must be many in each board).
2) Primary investment elements focus only on the region: Municipal bonds, regional commodities, regional business (stocks, bonds, loans), and regional real-estate. (If I missed anything, please inform me).
3) Auditing is handled by the board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
4) Regional participates only receive expenses, commission or other types of distributions on gains not transactions.
The Make up of the National Three Investment groups
The 3 boards would be for stocks, fixed return tools (such as bonds and real-estate and annuities in general), and commodities – investment can overlap regional:
1) Investment groups consisting of qualified brokerage houses and establishes multiple mutual fund type investment tools.
2) Primary investment elements focus only on the national elements.
3) Auditing is handled by the board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
The Global Regional Investment groups
1) Investment groups consisting of qualified Regional and US based brokerage houses and establish multiple mutual fund type investment tools within their foreign purview.
2) Primary investment elements focus only on the region: Bonds, regional commodities, regional business (stocks, bonds, loans), and regional real-estate. (If I missed anything, please inform me).
3) Auditing is handled by the US Staffed board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
The Three Global Investment groups
The 3 boards would be for stocks, fixed return tools (such as bonds and real-estate and annuities in general), and commodities – investment can overlap regional:
1) Investment groups consisting of qualified US and Foreign brokerage houses and establishes multiple mutual fund type investment tools.
2) Primary investment elements focus only on the global elements.
3) Auditing is handled by the board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
Copyright 2005
Introduction
The following proposal suggests a new format for the Social Security Trust fund (Trust). The Trust is modified to move from a reliance on Federal Bonds to Mutual Fund type tools owned by the Government and is used to create a new tool for Federal debt management. Additionally, aspects of this model indicate that influence over foreign and global markets is possible adding additional tools to the US’s diplomatic capabilities.
Premise
A Social Security board is constructed on the model of the Federal Reserve board (Fed) with then intent of investing the total Social Security Trust across the board in all investment tools available by the creation of thousands of Government owned Mutual Funds. The US and the World are broken into Board of Governor regions that each invest within their portfolios and create fund types niches focused on their jurisdictions.
The Trust is Massively Divested (MD) with up to 10,000 individual funds grouped by region of the country, at a national level, by type (equities, commodities, fixed income), grouped by region of the world, and globally. The goal is to establish a rock solid return rate in excess of inflation in the 8% or greater return rate region. The rate of return will increase the funds in conjunction with payroll taxes as normal. As the fund grows, payroll taxes may be reduced.
Each Qualified US citizen is considered a part owner of the trust but without rights of survivors. Metrics can be set to limit how much and how often draws can be made from the fund to avoid runs on the fund for foreign and individual investors.
Individuals may participate in the new uber fund over and above their payroll contributions much like any mutual fund; this includes foreign nationals, foreign investment groups and foreign governments. They are considered investors and not principles. Participants will enjoy benefits not typically extended to mutual funds such as low or no taxes.
Individual’s participation outside of payroll taxation may allow reduction in real income much like 401k and IRA to a set limit. Institutions and Foreign Entities may participate utilizing these funds as a riskier form of bonds. Equally, deduction from the fund can be made tax free for the first 10 to 20 years of the funds life to assist in gaining initial fund equity.
These funds are owned by the US Government, structured by the board of governors and managed by fund managers under the oversight of the Government and audited by outside entities. Private organizations may manage the funds on day to day bases but the funds can be moved from one institution to another at the discretion of the Board of Governors with jurisdiction over the fund(s) question.
Value Proposition
1. Investments are Massively Diversified – MD -- so that no single economic issues will impact the Trust or no single country’s economic conditions could significantly impact the funds. Fund sizes may be limited to allow additional diversification between funds and fund groups. 10 trillion worth of assets could mean up to 10,000 different funds in the trust.
2. A fully funded Trust fund would give the US an important diplomatic tool. A fully funded trust fund would be approximately 10 trillion dollars in today’s dollars. Foreign participation in the fund would allow a mechanism of global influence more powerful than the US’s nuclear arsenal which could have a stabilizing effect on global economic conditions. Foreign investment would be in lines with a conservative or moderately conservative US perspective portfolio investment metric. This will work out to 2%-10% or so in foreign investment. (10 trillion worth of total assets would be 200 billion to 1 trillion dollars of clout)
3. A fully funded trust fund working with the Federal Reserve can be used as an additional backing for the value of the dollar. The fed can draw on it to adjust reserves via a liaison board. It can also be used for emergency purposes by the Fed (TBD).
Structure
Us and Foreign Investment Regions
The US would be broken into regional board of governors, much like the Federal Reserve, plus 3 national boards. In addition, the world will be broken into regional board of governors plus 3 global boards.
General Charter of the board of governors
1) The boards are responsible for establishing the investment type structure for their regions.
2) They are to enforce that expenses stay below a predetermined percentage
3) They are to manage the investment participates according to Service Level Agreements for rate of return.
4) They choose who the participates are (this would impact the diplomatic aspect of the fund – investments are not handled politically, who can participate is!)
5) Each region is audited both internally and externally. No two regions may use the same third party sources.
The Make up of the US Regional Investment groups
Each board of governors puts together
1) Investment groups consisting of qualified brokerage houses and establishes multiple mutual fund type investment tools (there must be many in each board).
2) Primary investment elements focus only on the region: Municipal bonds, regional commodities, regional business (stocks, bonds, loans), and regional real-estate. (If I missed anything, please inform me).
3) Auditing is handled by the board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
4) Regional participates only receive expenses, commission or other types of distributions on gains not transactions.
The Make up of the National Three Investment groups
The 3 boards would be for stocks, fixed return tools (such as bonds and real-estate and annuities in general), and commodities – investment can overlap regional:
1) Investment groups consisting of qualified brokerage houses and establishes multiple mutual fund type investment tools.
2) Primary investment elements focus only on the national elements.
3) Auditing is handled by the board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
The Global Regional Investment groups
1) Investment groups consisting of qualified Regional and US based brokerage houses and establish multiple mutual fund type investment tools within their foreign purview.
2) Primary investment elements focus only on the region: Bonds, regional commodities, regional business (stocks, bonds, loans), and regional real-estate. (If I missed anything, please inform me).
3) Auditing is handled by the US Staffed board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
The Three Global Investment groups
The 3 boards would be for stocks, fixed return tools (such as bonds and real-estate and annuities in general), and commodities – investment can overlap regional:
1) Investment groups consisting of qualified US and Foreign brokerage houses and establishes multiple mutual fund type investment tools.
2) Primary investment elements focus only on the global elements.
3) Auditing is handled by the board of governors internally and with external accounting organizations not within this region. A different organization must be used each year.
Copyright 2005
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