Greenspan Blew Chance to Fix Social Security

For the past quarter of a century, stock markets around the world have enjoyed the biggest boom in history. If you'd invested $1,000 on Wall Street in the early 1980s you'd have $13,000 or more today, and the numbers from many overseas markets are even bigger.

There's only one big group of investors who have missed out: those hoping to rely on Social Security in their old age.

In other words, you.

Throughout this period, while equities and other assets have soared, America's most important pension fund has had your money invested in low-yielding government bonds instead.

No wonder it's in crisis today.

This is, quite literally, a trillion dollar screw-up. And former Federal Reserve chief Alan Greenspan, who has been raising the alarm about the system, shoulders some of the blame.

He did, after all, head a commission on social security reform back in 1983, just when the great bull market began its run. To give him credit, he pushed through a number of important changes that has kept the system alive, such as taxing some benefits. But he left all the money languishing in Treasuries.

How badly has the fund done?

If you want to see, go to the back of the latest annual report from the Social Security and Disability Insurance trustees. Table VI.A4 in Appendix A shows all the money flowing in and out of the fund over the years.