Pensions: Promises and reality

It is difficult for this blogger to get excited about pensions because he grew up to Doris Day singing “Whatever will be, will be“.  I heard that song so many times I still believe it.

There are two things that make pensions difficult.  They are part of a big business and they involve promises to be redeemed  in an unknown future.

This post was inspired by this article in The Economist about pension problems in Taiwan but the ideas here apply anywhere around the world where people rely upon pensions for their future.

Pensions are a problem because we evaluate economic problems in monetary terms and assume there will be no inflation or deflation.  We would get a more accurate evaluation if we did it in physical terms.  The reality is that our future standards of living depend upon the ratio of population to the quantity of goods and services we will be capable of producing. Monetary savings will probably be irrelevant thanks to inflation or bankruptcy.

We know, or we should know, from experience that the economic growth is fractal in nature rather than linear as we learned in university economics.  Being fractal means there are a series of ups and downs and sometimes major changes in direction.  There is some evidence that we are experiencing a major turning down.  This blogger  believes current economic problems are because we have used up the most easily accessible energy and mineral resources.  Yes, there are lots left but they require so much energy to extract they are mostly useless.  Regardless of what financial people say there may  be some grim prospects. If this analysis is correct the best career and investment is a market garden.

Pensions and other forms of savings are a big business in which sales people earn  commissions and profits on current sales.  They are selling promises for a future they probably will not have to keep.  The reality is that there may not be enough resources to keep them.

To believe in pensions one must have a lot of faith that the world is going to continue as it is for the rest of one’s life.  We can sometimes see into the near future but the further out we look the more blurred is our vision.

Back to Doris Day.

 

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