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The base is a ponzi scheme. Promise to pay people over 65 a guaranteed sum per month and hope that the taxes on working people can fund it. You're right that i
by user5994461 9y ago
The base is a ponzi scheme. Promise to pay people over 65 a guaranteed sum per month and hope that the taxes on working people can fund it.
You're right that it doesn't have to be a ponzi scheme. The government could increase the age of retirement and/or lower the pensions. However that's not possible in practice, it doesn't get you elected and it'd provoke massive strikes for months.
The government would rather accumulate debt for 20 years than cut any pension. Then the next generation has to deal with unfunded pensions and trillions of debt. It's actually possible to go beyond recoverable and collapse because of the non elasticity, this has happened before historically.
- RobertoG 9y ago>"Then the next generation has to deal with unfunded pensions and trillions of debt" That doesn't make any sense. The next generation could have enough real resources or not. If they have they will be OK, if they don't they will have a problem. Real resources in the future come from investment now, not from "saving money". Saving money makes sense in a personal perspective, but not as a nation.
- user5994461 9y agoYou can't save money personally. The nation takes 20% of your gross salary to pay retirees. You don't have a choice. In exchange, the nation promises to give you 80% of your last average salaries as a monthly income after you retire (in half a century) until the end of your life. These numbers are not linked to real resources and are not adjusted periodically.
- TheCoelacanth 9y agoThe "guaranteed sum" is not really guaranteed because the sum is denominated in a currency that is not pegged to any real resource. If the next generation can't produce enough real resources, then the pension amount will just be decreased via inflation.