Editorials

"An Informed Voter Is The Best Defense Against Bad Government"

"MY, BUT WE HAVE STARTED THE YEAR OFF WELL!"

By John J. Kiernan.  January 29, 2004

TIM BENINTENDI, in his article, "Fund would work fine as endowment",
(Published: ADN January 1, 2004) writes: "A major consideration for the
public as it considers this proposal is weighing the occasional prospect of
drawing from Permanent Fund principal when the fund does not earn the full 5
percent versus seeing declining PFDs in years, under the current framework,
when markets do not yield enough to pay a PFD at levels currently enjoyed."

Isn't it better to suffer smaller dividends when the market does not earn
sufficient income, and know that the fund's principal remains intact and is
continuing to be inflation proofed for the benefit of future generations of
'Alaskans?  The fund has functioned really well up to now.  Why are we
trying to change the fund's structure into an endowment and basing the funds
payout on a percent of the total market value of the entire fund? Why put
the fund's capital at risk? If "the occasional prospect of drawing from
Permanent Fund principal when the fund does not earn the full 5 percent"
were to continue for a period of 10 years when, let's say, it earns only an
average of 3% then  hypothetically with a capital loss of 2% per year, 20% of
the total fund would be wiped out in ten years.  20% of $28Billion, wiped
out, gone!  Why put the funds capital at risk at all?  Bottom line, protect
and secure the fund's capital not only from inflation but from the big
spender Fat Cats and Carnivorous Bully Bears, all of whom would eat our 

inheritance in one gulp.

 

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