John Waggoner is a personal finance and investment columnist for USA Today. He's a likeable, reasonable fellow, full of unflashy, prudent advice. And, unlike many personal finance columnists, he occasionally remembers that the vast majority of Americans do not have six-figure incomes and piles of money to invest at their leisure.
In this recent column, however, Waggoner demonstrates the limits of his stolid, moderate demeanor.
"For those who don't think Social Security will survive," he writes, "the question is how to replace it. Individual savings is one way, but it's an expensive one."
The rest of the column is taken up with a discussion of various vehicles for prudent individual savings: 401(k)s, IRAs, etc.
The factor that Waggoner fails to consider is why Social Security may not survive. If he listened to what the president is saying, he would realize that his sober prudence is misplaced.
Here's President Bush speaking on Feb. 9:
"Some in our country think that Social Security is a trust fund — in other words, there's a pile of money being accumulated. That's just simply not true. The money — payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust."
There you have the president of the United States stating that the government fully intends to default on trillions of dollars worth of treasury bonds. A statement like that can't be met with Waggonerian moderation. A statement like that, if Bush is serious, calls for stark, raving panic.
If Bush is serious, or if he is to be taken seriously, this means more than just "Don't invest in treasury bonds, invest in your 401(k) instead." If the government defaults on its loans, your 401(k) isn't going to look terribly solid either. If the government defaults on its loans, we're Argentina. Or worse.
If the scenario President Bush describes is true, then we need to stop taking investment advice from John Waggoner and start taking investment advice from Burt Gummer:
I recommend gold. Your cash won't be worth the paper it's printed on. The banks can no longer be trusted, so you'll need to store the gold in your bunker. Oh, right, you'll need a bunker, preferably underground and suitably remote. Northern Idaho is good. You're going to need food for five years, a thousand gallons of gas, air filtration, water filtration, a Geiger counter. And ammunition. Lots of ammunition.
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(Burt Gummer pic courtesy of shadoemagic's comprehensive Michael Gross site.)
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