Peter Schiff’s partner has wild idea for Social Security | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Peter Schiff is well-known for his controversial investment advice, including a focus on investing in precious metals and other alternative assets.

The financial advice of Schiff’s business partner James Hickman, who also writes under the name Simon Black, has sometimes gone against the grain, too. He claims that he accurately predicted many cataclysmic events in the U.S., including bank failures, social unrest, inflation, and the enormous debt bubble in the West.

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Schiff and Hickman have a joint website, Schiff Sovereign, with the tagline “Wealth.Freedom.Power.” and the site claims to provide “bold, uniquely insightful analysis catering to sophisticated free thinkers.”

The website also says, “If you barely recognize the country that you live in; if you’re amazed at how quickly ‘the experts’ have turned our world upside down; and if you’re trying to figure out where these trends will lead…we connect the dots.”

Recently, Hickman addressed one of the country’s more controversial issues on that website: the future of Social Security. He shared a pretty wild idea to fix it, and while the specifics of his proposal may be a little questionable, the general idea isn’t totally out of bounds.

Social Security needs a fix for its finances.

Image source&colon; TheStreet/Getty

Here’s how Peter Schiff’s partner wants to save Social Security

Hickman actually advised, half-jokingly, that we take a page out of a cryptocurrency billionaire’s playbook to help Social Security. The program is in financial trouble, as its trust fund is slated to run dry as early as 2034, which would result in an automatic 19% benefits cut.

Hickman pointed to cryptocurrency billionaire Michael Saylor, who he said borrowed money from investors to buy Bitcoin by issuing corporate bonds and buying the digital currency with them.

Saylor owns a company called “Strategy,” formerly called MicroStrategy. Hickman said the company has $69 billion in Bitcoin but a valuation of $124 billion, and yet investors still buy Strategy shares.

Hickman believes that, like Saylor, the government should borrow money to create a Sovereign Wealth Fund that would be managed by “America’s many talented investment managers.” This sovereign wealth fund could invest in “Real estate. Commodities. Equities. Precious metals. Crypto. The kinds of assets that can actually grow.”

He said Saylor did this by borrowing from the bond market to build risk assets, and that the government could do the same. If it did, and earned 9% average annual returns, which he believes a Sovereign Wealth Fund would, the government could still pay 6% returns to their bondholders while shoring up Social Security’s trust fund enough to make it solvent.

Investing in assets with a higher rate of return isn’t such a crazy plan

Of course, Hickman has expressed doubts that the U.S. government is going to make these kind of investments, and rightfully so.

Congress has already been accused of raiding the Social Security trust fund (a claim that isn’t really true; the trust fund is invested in special issue treasury bonds by law). If any lawmaker suggested gambling the nation’s retirement fund to buy a bunch of cryptocurrency and precious metals, that would probably not be the most popular idea with voters.

However, the reality is that the special issue trust funds that Social Security invests in are providing a pretty poor return on investment.

While Hickman said the trust fund is earning “pitiful returns averaging a measly 2%,” the Social Security Administration said the 12-month interest rate applied to new issues in 2024 was 4.271%. Because the trust fund also invested in bonds in the past when rates were lower, however, the overall return on trust fund assets in 2024 was 2.512%.

It’s not entirely out of bounds to suggest that trust fund assets should be invested in something that has a track record of providing better returns. In fact, this idea has been kicking around for a long time, as a 1997 draft paper from the Congressional Budget Office shows.

So far, lawmakers haven’t acted, in large part out of concerns about exposing the retirement funds of millions to market risk. However, with the date drawing nearer when the trust fund runs dry, something is going to have to give.

More on retirement:

At this point, throwing all of the ideas out on the table can only help the situation, as lawmakers need to break the logjam and try to strengthen one of the country’s most popular and essential programs.