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The starting question for public policy analysis in the retirement security area ought to be this: “Is retirement security possible?” My text is drawn from the classic trust case Harvard College v. Amory, decided in 1830, in which the Massachusetts Supreme Judicial Court announced the prudent investor rule by stating, “Do what you will, the capital is at hazard.” The modern understanding of that text is not that there are no “risk free” assets. After all, the United States government assures the timely payment of principal and interest on Treasury securities backstopped in turn by Treasury’s unlimited call on the money-creation capacities of the Federal Reserve. Rather, we understand that even if principal and interest are paid as promised, that still leaves inflation-related risk to the purchasing power of trust assets. In that sense, “the capital is at hazard.”


Labor and Employment Law | Law