There are major differences between your two items and private accounts for SS.
First, you are using the spread to get individuals to forgo 100% of the liability for only 40%. This is important and very different than your two examples. In your two examples there is no cost savings at the back end.
Second, the difference between individuals and the government directly investing in stocks is a huge one. Clinton actually proposed having the government doing the investing for SS back in the 90s. The problem who decides what companies to invest in? Is it the ones that provide you the most lobbying money? Do you think federal government can effectively manage that amount of money? They are forced into only buying large cap corporations which screws small businesses out of the money. I could keep on going with the problems with having the federal government investing all this money.
The best way to think about this stuff, is like a corporation. The federal government can feel free to take out all this debt and finance higher returning investments. This is actually usually best employed in lowering tax rates(because then you don't have the above problem). First, the more you do it the more treasuries will rise, eventually negating the returns. Also, what are you risking? You are risking what just happened to the UK and Iceland. Your government doesn't have enough access to credit when you need it and then your finished. That is why governments shouldn't tapout their debt because there is nobody to back them up(except maybe the IMF if your a small country). Governments need to be models of conservative behavior in terms of risk.
It isn't free money. The most productive use of money like this is to reduce taxes, but you are just compounding debt and pulling money out of the economy at the same time. Eventually the intersest rises until it goes negative and then the government is no longer a safety net against anything because it can collapse/fail.
"(Note that Smith's program does not increase real capital investment in the US economy. The money that the gov't puts into the economy by buying stocks is exactly offset by the money that the gov't is taking out of the economy by borrowing.)"
This is correct.
I can't put anymore thought into this one for a bit, I'm going to spend the rest of my day on a yacht.
First, you are using the spread to get individuals to forgo 100% of the liability for only 40%. This is important and very different than your two examples. In your two examples there is no cost savings at the back end.
Second, the difference between individuals and the government directly investing in stocks is a huge one. Clinton actually proposed having the government doing the investing for SS back in the 90s. The problem who decides what companies to invest in? Is it the ones that provide you the most lobbying money? Do you think federal government can effectively manage that amount of money? They are forced into only buying large cap corporations which screws small businesses out of the money. I could keep on going with the problems with having the federal government investing all this money.
The best way to think about this stuff, is like a corporation. The federal government can feel free to take out all this debt and finance higher returning investments. This is actually usually best employed in lowering tax rates(because then you don't have the above problem). First, the more you do it the more treasuries will rise, eventually negating the returns. Also, what are you risking? You are risking what just happened to the UK and Iceland. Your government doesn't have enough access to credit when you need it and then your finished. That is why governments shouldn't tapout their debt because there is nobody to back them up(except maybe the IMF if your a small country). Governments need to be models of conservative behavior in terms of risk.
It isn't free money. The most productive use of money like this is to reduce taxes, but you are just compounding debt and pulling money out of the economy at the same time. Eventually the intersest rises until it goes negative and then the government is no longer a safety net against anything because it can collapse/fail.
"(Note that Smith's program does not increase real capital investment in the US economy. The money that the gov't puts into the economy by buying stocks is exactly offset by the money that the gov't is taking out of the economy by borrowing.)"
This is correct.
I can't put anymore thought into this one for a bit, I'm going to spend the rest of my day on a yacht.