Further Comments On Funded Public Pensions — Brian Romanchuk

As a further comment on “funded” public pensions (link to previous note), I just want to comment on the side effects of such “funding.” (To recap, a central government could create fictitious bonds to match “pension contributions,” which has the same cash flows as a pure “pay-as-you-go” scheme. The alternative Canada has switched towards is to buy financial assets with the “pension contributions” — although some of those assets would be reinvested in bonds guaranteed by the Government of Canada.) As I discussed, this is economically equivalent to the Government of Canada levering up its balance — issuing bonds to the private sector to buy private sector assets.

In this article, I will make some random comments about the implications of that policy. Although I believe that the procedure is somewhat silly from an economic standpoint, there is a logic behind it.

Usually the logic behind what a neoliberal government does is some special interests' profits.

Bond Economics

Further Comments On Funded Public Pensions
Brian Romanchuk