If America borrows 100% of its wealth..

CLAPTON

Generali wrote: »

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.



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.

in unfunded schemes its typically politicians that make unrealistic promises that inevitably will be trimmed.. as you say increases in pension age is one example. the good side is that there is some level of democracy there that detemines the outcomes.

in funded schemes salemans make unrealistic promises (or imply unrealistic promises) that probably won't be met either..however the adjustment process is a bit opague and confuses people.
Its also probably that no one has tried to model your example of large numbers of retirees selling their risky assets simultaneously because its not in the anyone interest to do so. But we know the result will be a reduction in price of assets and a reduced pension.

So both schemes pretty much the same really as must be the case if the same level of resources are used...
just the politics are different.

lostinrates

lemonjelly wrote: »

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...

Thank you for understanding some truley lir-style typing


I hope so. I think the point is, that my parents might want more than a bed and bathroom, but also a private reeption room and kithen, two bedrooms. I think as they get older it might also be prudnt to count on needing some sort of provision for live in/home carer. even with this, I think its more sustainable, and less taking from Loal authority coiffers than the alternatives.

lostinrates

Generali wrote: »

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.
.

I like this. I sort of understand it. But the value of the wealth is then, if other wealth is also being used more productively, similar relatively, no? (or is this where I'm bring money back into the equation too basically?)

Generali

lostinrates wrote: »

I like this. I sort of understand it. But the value of the wealth is then, if other wealth is also being used more productively, similar relatively, no? (or is this where I'm bring money back into the equation too basically?)

Perhaps it's easier to use an example.

Take a 3 hectare field growing turnips, what is it worth (ie what wealth does it represent to its owner)?

Is it the price that could be realised at auction by selling it?

Is it the value of turnips that can be grown on the land from now until the end of time (minus some boring accountancy stuff)?

Is it the value of this year's turnips plus next year's wheat plus the output from the factory that you build the year afterwards.....

lostinrates

Generali wrote: »

Perhaps it's easier to use an example.

Take a 3 hectare field growing turnips, what is it worth (ie what wealth does it represent to its owner)?

Is it the price that could be realised at auction by selling it?

Is it the value of turnips that can be grown on the land from now until the end of time (minus some boring accountancy stuff)?

Is it the value of this year's turnips plus next year's wheat plus the output from the factory that you build the year afterwards.....

well, its said frequently on this board that its worth what someone is willing to pay.

To me when I'm looking for its worth some intrinsic value bt also what I can make on it minus the amount it will cost to run and maintain that, practically and fiscally. Hmm, its not very clear that, is it. (Its worth something practically sustainable in dbt repayment plus the inspiation to make me want to work like a beaver to make it work that hard)

To the farmer the fields worth might depend on whether its owned outright?

I don't know the answer

Generali

lostinrates wrote: »

well, its said frequently on this board that its worth what someone is willing to pay.

To me when I'm looking for its worth some intrinsic value bt also what I can make on it minus the amount it will cost to run and maintain that, practically and fiscally. Hmm, its not very clear that, is it.

To the farmer the fields worth might depend on whether its owned outright?

I don't know the answer

As far as I've ever been able to work out, there isn't a right answer. It depends on how you look at things really. (It wasn't meant to be a trick question, just an illustrative one BTW).

lostinrates

Generali wrote: »

As far as I've ever been able to work out, there isn't a right answer. It depends on how you look at things really. (It wasn't meant to be a trick question, just an illustrative one BTW).

Its fantastic Generali, I might not pay you, nor be your best student but I bet I count as one of the most enthusiastic. Thank you for tking the time to help me understand big-un housewifey things.:D

Generali

lostinrates wrote: »

Its fantastic Generali, I might not pay you, nor be your best student but I bet I count as one of the most enthusiastic. Thank you for tking the time to help me understand big-un housewifey things.:D

I am always HTH BTW. I've seen you post along the lines that you'd rather not ask again and all that sort of thing. If you ask I'll answer if I can.

lostinrates

Generali wrote: »

I am always HTH BTW. I've seen you post along the lines that you'd rather not ask again and all that sort of thing. If you ask I'll answer if I can.

Thank you.

I think its a general point. (no thats the whole truth, I do feel dull of wit asking the same question over and over!:o) I. Monkfish posts fascinating but sometimes inscrutable pieces of information which I think only a handful of clever people truely understand. I sometimes want to just ask what it all means, but ....:o in fact, its not just the OPs, which often are clear, its the discussion that follows amoung a small number of people...almost always the same few of the few of us. . [STRIKE][/STRIKE]

Generali

lostinrates wrote: »

Thank you.

I think its a general point. (no thats the whole truth, I do feel dull of wit asking the same question over and over!:o) I. Monkfish posts fascinating but sometimes inscrutable pieces of information which I think only a handful of clever people truely understand. I sometimes want to just ask what it all means, but ....:o in fact, its not just the OPs, which often are clear, its the discussion that follows amoung a small number of people...almost always the same few of the few of us. .

Monkfish often posts quotations from 'wires', that is information that is sold to a particular professional set. It's very informative and interesting if you understand the jargon and the ideas behind what is being said.

I'm sure you could post an Estate Agent's description of a farm that would equally leave Monkfish flummoxed. It doesn't make one of you brighter or better than the other, you just have different areas of expertise.