Facing Up to the Truth About Social Security

It is now truly a "Trust Us" fund!

What can the government do? And what can you do?

Our government can "print" and borrow and tax. Those are its tools -- good as long as the rest of the world lets us get away with it.

Recently you heard the top Chinese finance minister opining that maybe instead of holding all those dollars (an estimated $1.5 trillion), perhaps China should hold another currency, or basket of currencies. That's not likely soon, but it is a warning shot.

And if foreigners (who have collected trillions of dollars during America's mass spending spree) are going to keep buying our Treasury IOUs (bills, notes, bonds), it's likely they'll demand higher interest rates to do so.

After all, they see us "printing" dollars -- actually creating more credit on the books of banks and other institutions -- with the click of a computer key.

So what can you do?

The answer is simple: Save more money. That's not a prescription to create a booming economy. But it does make sense on a financial basis.

You know how the airlines tell you to put on your oxygen mask before helping the person next to you? Well, if the government isn't doing the saving to deliver the promised Social Security benefits, it's going to be up to you to have the money you'll need to survive into old age.

That increased "saving" should come in several forms: Stocks have always outpaced inflation over the long run. "Chicken money" in short-term bank CDs or Treasury bills gives you liquidity, safety and the chance to capture rising rates if inflation returns. And gold is an insurance policy against extremes of inflation, an insurance policy you hope you'll never use, just as you hope not to use your homeowner's fire insurance.