Luskin-fisk

Luskin writes:

Suppose you have $1,000 in a money market fund earning 3 percent, and you are considering investing that money in the stock market. The opportunity cost of that investment will be 3 percent, because you give up the 3 percent yield of the money market fund. That means you'll only come out net ahead on the stock investment if it returns more than 3 percent. That's just how it would be for the proposed Social Security personal accounts. But there's no loan involved here. None.

This would be true except the money you invest in the "private account" goes back to the government so you can purchase that annuity that keeps you above the poverty line for life. In Luskin's example, you take the money from your market fund and invest it. But the market fund never requires the money you took from it to return. The government in this instance, does.

You are "borrowing" your money to try and get a better rate of return. Anything less than a 3% rate goes back to the government to buy the annuity, and cannot be passed down to your children.

Make sense?

See here (my emphasis):

If an individual had a personal account balance, if they had chosen to take a personal account, they would not be able to withdraw money from their account to such a degree that by doing so they would move themselves below the poverty line. In other words, there would have to be a sufficient amount coming to them, in terms of a monthly inflation index benefit stream, from the traditional system and the annuities portion of their personal account to be able to fund a poverty-level benefit.

Now, to the extent that their personal account enables them to have total benefits that are higher than that, they would have flexibility over the disposition of those funds. They would be permitted to leave those funds in the account to continue to appreciate; they could withdraw those amounts as lump sums to deal with a pressing financial need -- and, obviously, any additional accumulations in the accounts could be left as an inheritance. But the main restriction, again, to repeat, is that people would not be permitted to withdraw money from the accounts to such a degree that by doing so they would spend themselves below the poverty line.

And later:

Well, we certainly are providing for inheritability. We specifically say that the money that is not annuitized can be left as an inheritance.

And later:

Q But at death, what happens to the annuity? Does it go to the federal government?

SR. ADMIN. OFFICIAL: The annuity part would not come back, obviously, but the rest could be inherited.

Luskin would be proposing a system without the annuity and one could argue a higher risk to longevity.

Now my question is what these life projections are based on and what kind of benefit one gets if they outlive it.

*UPDATE* Angry Bear has more.
Over there I ask, in hopes of an answer:

So by Luskin's way of thinking, some of the money in the trust fund is actually mine, right? Therefore I own the T-Bills, right? So if the government says they can't honor the t-bills, they are defaulting on my loan, right?

What kind of legal recourse is there for me?