If America borrows 100% of its wealth..

lostinrates

CLAPTON wrote: »

somewhere in all that you enjoy yourself.. a bit messy but its worked for 2 million years and will probably continue for a bit longer.
..

yes, enjoying yourself is important But while I don't disagree, we're muddling through much the same as previous societies did (more or less) some of those societies have fallen, rather dramatically. I wonder if that counts as sucess. Would we count is as functional if, for eample we faced decline and fall but, say, China thrived? I doubt it. Fwiw I think that the same type of fall wouldn't happen now, too globalised.

Generali

andygb wrote: »

Generali, do not take this as a dig at you, but what is the alternative to not paying people a pension which they can live on? As people live longer, and the need for "manpower" decreases (due to advances in technology), how will everyone survive? This is not the first time that you have mentioned defaulting on promise, and I find it a deeply disturbing idea.
An ageing population.
Less employment opportunities.
Supposedly more young people leaving school with higher qualifications, and even higher expectations.
If we raise the retirement age to 70 who will it really benefit? By making people work longer,we are simply depriving the young of employment opportunities. By forcing people to hang on without work, until they become eligible to claim their pension, then we will be forcing tens of millions into poverty, because the private pension plans which they have contributed to will not be worth very much.
Maybe we will see more people working as carers, but maybe a lot of people, fed up with seeing so many "Old people" around, unable to fend for themselves, will suggest some sort of state controlled euthanasia programme to get rid of the "problem".
The future does not look very welcoming.

I don't take it as a dig at all.

There are two problems that the UK (and many others) face as a result of the burden of an aging population not having been addressed during their working lives. One is that those people as they age will require looking after financially, the other is that they've been promised something that they most likely can't have as the money isn't there for it to be paid.

The most likely thing IMO will be a combination of things. Raiding private pensions to make good on some of the promises, defaulting on some of the promises (people working longer, Civil Servants getting drastically reduced pensions, income and wealth means testing for example) and reducing the level of health and welfare services across the board (eg using the Australian model of a basic level of care being provided by the state with the user being expected to top up the provision either pay as you use or via insurance and also by restricting access to welfare payments by the working or unemployed of working age).

Clearly if the money isn't there to pay for something, it can't be paid for. I reckon that the end result is going to be a fudge that will end up with a much reduced standard of living in retirement for middle class and richer working class retirees and groups of people that expect not to have to work getting an introduction into the world of paid employment.

lostinrates

lemonjelly wrote: »

We'll need a load of carers & nurses to look after the old codgers.;)
Who else is gonna push their wheelchairs?

Perhaps the standard of care will fall, if it can't be paid for. There are places where the elderly and the severely disabled are seen much less in public, I don't think because they are personally loved less, or considered less important, but because there is not the money to pay for people to assist them out.

purch

there is not the money to pay

Yes.

Many of the services and benefits that we have considered normal parts of our current or future lives, we have been unable to afford for many years, and that problem will only get worse in the future, as our expectations rise along with the costs of providing the services and benefits.

CLAPTON

Generali wrote: »

I don't take it as a dig at all.

There are two problems that the UK (and many others) face as a result of the burden of an aging population not having been addressed during their working lives. One is that those people as they age will require looking after financially, the other is that they've been promised something that they most likely can't have as the money isn't there for it to be paid.

The most likely thing IMO will be a combination of things. Raiding private pensions to make good on some of the promises, defaulting on some of the promises (people working longer, Civil Servants getting drastically reduced pensions, income and wealth means testing for example) and reducing the level of health and welfare services across the board (eg using the Australian model of a basic level of care being provided by the state with the user being expected to top up the provision either pay as you use or via insurance and also by restricting access to welfare payments by the working or unemployed of working age).

Clearly if the money isn't there to pay for something, it can't be paid for. I reckon that the end result is going to be a fudge that will end up with a much reduced standard of living in retirement for middle class and richer working class retirees and groups of people that expect not to have to work getting an introduction into the world of paid employment.

How do people address the problem of their own old age during their working lives?
There is no practical way for the entire community to save in this way.

As you well know in terms of the resources required there is NO difference between funded and unfunded schems for pensions or health care (or water electricity food either)
.
Now of course funded schemes provide opportunities for richer people to have better provision that poorer people and so affects the distribution of the resources amoungst the population.

But if we are to provide any given level of pensions, healthcare etc, the resources required come from the then working population and is not specifically affect by the way its funded.

Earlier decisions may of course efffect the total investment available but that's another story

lostinrates

Generali wrote: »

The trouble is, I think that your conflating two things. There's money which is a representation of value (often called a store of wealth) and wealth itself (eg land and other productive assets).

The amount of money in circulation need bear no fixed relationship between the total value of assets. One reason for that is practical - the total value of any asset class is set by the last sale by convention. To change the amount of money in circulation because the price of a particular asset has changed would be impractical.

Another reason is that the money supply depends on 2 things: the amount of cash in circulation and also how often it changes hands (known technically as velocity of circulation or just velocity).

Part of the problem is that money isn't really anything at all - most (all?) currencies are what are called fiat currencies, that is that they are created and destroyed by fiat (Government order). If the Government wants some more money in existance it prints some or creates it on a computer. This is done every Christmas for example as the demand for money rises predictably every Christmas as people want to buy Christmas presents etc.

OK, thank you, this is closer to the answer I need to understand!

Yes, I understand money and wealth are different (I was clumsily saying money was representative to make the distinction).

So is wealth finite?, like a pie, after all? (I'm onfused over this because I thought it was and then someone told me no, I presumed un found/eploited resources were part of the finite whole)

Generali

lostinrates wrote: »

OK, thank you, this is closer to the answer I need to understand!

Yes, I understand money and wealth are different (I was clumsily saying money was representative to make the distinction).

So is wealth finite?, like a pie, after all? (I'm onfused over this because I thought it was and then someone told me no, I presumed un found/eploited resources were part of the finite whole)

Is wealth finite? Excellent question and I'd not considered it before. I guess there is a finite limit in theory, however it seems to be possible to use things ever more productively so to make wealth more-and-more productive. If wealth is more productive then it's more valuable if you believe (as I do) that an asset is ultimately worth what it can produce.

CLAPTON wrote: »

How do people address the problem of their own old age during their working lives?
There is no practical way for the entire community to save in this way.

As you well know in terms of the resources required there is NO difference between funded and unfunded schems for pensions or health care (or water electricity food either)
.
Now of course funded schemes provide opportunities for richer people to have better provision that poorer people and so affects the distribution of the resources amoungst the population.

But if we are to provide any given level of pensions, healthcare etc, the resources required come from the then working population and is not specifically affect by the way its funded.

Earlier decisions may of course efffect the total investment available but that's another story

There is absolutely no difference in cost between a funded and an unfunded scheme, you're right. However, with an unfunded scheme you can make unrealistic promises and that, IMO, is what has been done.

The Australian Super system looks like a good system to me (employers have to pay 9% of an employee's wage into a pension fund), coupled with a scheme to slowly build a fund to pay for existing promises. The system hasn't been tested by having large numbers of retirees and there may well be problems relating to large numbers wanting to sell risky assets simultaneously.

lemonjelly

lostinrates wrote: »

Perhaps the standard of care will fall, if it can't be paid for. There are places where the elderly and the severely disabled are seen much less in public, I don't think because they are personally loved less, or considered less important, but because there is not the money to pay for people to assist them out.

Because there will be loads of jobs doing this, unemployment will hopefully fall?
We'll need to expand the education system to train all of them - so there's more jobs. Of course, income tax receipts will rise.

I was being quite flippant with my original reply to be honest...Perhaps it could result in a re-affirmation of the family unit, with people taking responsibility for their loved ones & generations co-habiting (I doubt it, but may be cost effective - Hey dad, sell your house & move in with us!)

Generali wrote: »

Clearly if the money isn't there to pay for something, it can't be paid for. I reckon that the end result is going to be a fudge that will end up with a much reduced standard of living in retirement for middle class and richer working class retirees and groups of people that expect not to have to work getting an introduction into the world of paid employment.

With some of the welfare reforms taking place now, this is already happening. Incapacity benefit has gone, & its replacement is designed to be more robust. Having had training on how it is supposed to work, I think it is a positive step. I can also see how it could be restricted even further. I work in the advice sector, and can see many who claim to be too ill to work. It's bullsh!t IMO, but unfortunately impacts negatively on the genuinely disabled. However, expect to see a lot of the "borderline" incapacitated being shunted towards Jobseekers llowance, & ultimately having to prove they're looking for work. I do wonder if we'll see JSA tightened next. I saw someone the other day whining about going on one of those courses you get sent on. But she's been on JSA for 7 years. There is no reason why in the last 7 years she couldn't have had some sort of job! I felt she just didn't have the intention.

purch wrote: »

Yes.

Many of the services and benefits that we have considered normal parts of our current or future lives, we have been unable to afford for many years, and that problem will only get worse in the future, as our expectations rise along with the costs of providing the services and benefits.

Absolutely right. Everyone goes on about their rights & entitlements. Would like to see a few more of us wake up & accept our responsibilities which come with these.

lostinrates

lemonjelly wrote: »

..Perhaps it could result in a re-affirmation of the family unit, with people taking responsibility for their loved ones & generations co-habiting (I doubt it, but may be cost effective - Hey dad, sell your house & move in with us!)

actually, thts more or less where we are right now. My parents have seen the benefit of having younger people to help with maintaining, and the freedom living with us affords them (built in pet and house sitters) and would like to ome with us. The problem for us is we would like some more privacy, planners seem less positive about an annee to provide care for family, thereby reducing strain on local services, but thats another story.

lemonjelly

lostinrates wrote: »

actually, thts more or less where we are right now. My parents have seen the benefit of having younger people to help with maintaining, and the freedom living with us affords them (built in pet and house sitters) and would like to ome with us. The problem for us is we would like some more privacy, planners seem less positive about an annee to provide care for family, thereby reducing strain on local services, but thats another story.

I have a couple of friends who are looking for properties with granny flats or annexes with a plan for them to sell up together with a set of parents/in-laws. Wonder if a trend could happen? Might start affecting planning decision making if so...