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Pensions and Personal Savings

Hugo Salinas Price

The idea has taken hold in the West and is spreading to what are called the "emerging economies" that pensions are a right to which all old people are entitled.

This is a fairly new idea, little more than a hundred years' old. The Iron Chancellor of Germany, Otto von Bismarck introduced this idea in Germany in 1890.

Perhaps a strictly disciplined government might be able to assist its elderly citizens with modest pensions and include these in a balanced budget, but as yet we haven't seen any such government anywhere.

Private enterprises which have fully funded pension plans for their retired workers and which will be able to maintain those plans fully funded in the future are few and far between. Most, if not all, of those plans will fail, unable to fulfill their promises.

There is in the Nature of Things a phenomenon called “Reversion to Mean”, according to which everything that is extraordinary must inevitably fade and return to what has been ordinary in human life through the ages. For instance: no enterprise can maintain extraordinary profitability for any length of time.

Regarding pensions, the world is "reverting to mean". The mean in this case is that if you haven't saved up for old age, or been the beneficiary of a substantial inheritance late in life, or won the lottery, then you are simply going to starve. That's the way the world has ever been and all evidence shows that we are returning to the "the mean".

From here on it’s going to be a tough time. Lots of rage, lots of violence, lots of words and promises, but to no avail: no personal savings will fairly soon mean no bread, no heat and no shoes.

It will be a long time before the idea of entitlement to a comfortable pension has been eradicated from popular consciousness.

Cheap and abundant oil and ample credit made possible by fiat money have spoiled humanity. Like a spoiled child, humanity is going to have a difficult time coming to terms with reality.

This is why we have been drumming for personal savings in the form of a monetized silver coin, to circulate in parallel with paper money. The idea of pensions for all old people is wishful thinking. It is vitally important that people be given the chance of saving up for their old age in a medium that cannot be confiscated by devaluation: silver money.

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Hugo Salinas Price, World Riba Conference, Kuala Lumpur, Malaysia, Nov. 26, 2012.
Hugo Salinas Price, World Riba Conference, Kuala Lumpur, Malaysia, Nov. 26, 2012.
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