September 19, 2016

Pensions: Beware of suits and tempting promises

Posted in Sunday Business Post · 102 comments ·

On Wednesday night, I gave a talk at my old primary school, Johnstown National School in Dún Laoghaire. One of the many interesting questions from the parents of the pupils focused on pensions and what this early-middle-aged group could expect from them.


I am considering this question in more detail now as I fly to the States. The little map on my screen tells me that I am at 38,000 feet above Newfoundland, the vast territory uncharted until French Canadian trappers began to map it out. The question for your pension is whether we are now in similar territory.


In the old days, when short-term interest rates were around 5 per cent, the pension fund manager could simply buy a government bond yielding 6 per cent and go on holidays, sage in the knowledge that the government would pay him 6 per cent at the end of the year. If the stocks he also bought did reasonably well, he might be able to generate a sweet double-digit return on the pension without having to do much. In such an environment, inflation is likely to be running at around 3 per cent, but punters tended to look at the headline number. Back in the 1970s when I was at Johnstown National School, pensions would have been yielding double-digit headline returns due to high inflation.


However, since that time, inflation has been falling – and so too have interest rates.


But the interest rate is driven by more than just what is happening to inflation.


The rate of interest is set by the Central Bank in order to achieve certain things in the economy. If, for example, the economy is very weak and has just experienced a recession, the rate of interest will be cut dramatically to support demand by encouraging people to borrow.


Alternatively, if the economy is overheating and growing too quickly, the rate of interest will be increased to stop people spending too much, as a higher interest rate encourages people to save.


So the natural rate of interest is the one that would pertain if central banks were neither trying to cool down the economy nor trying to heat it up. Over the past 30 years, the ‘natural rate of interest’ has fallen from about 6 or 7 per cent to around 1.5 per cent in Britain, near zero for the US and below zero for the eurozone. These are very low levels of interest; you would normally associate these levels with recessions, but we are not in recession.


The US is growing strongly, unemployment is below 5 per cent and most indicators point to an economy that is in mature recovery – so much so that all the talk now is of the next rate rise, not cut. Britain is also growing, unemployment is also low and exports are robust post-Brexit. Only in the EU is the zero interest rate reflective of a truly convalescent economy.


So why are rates so low, and why is your pension costing you, rather than making you, money? The real reason for the decline in the natural interest rate is the forces that are affecting the supply and demand for funds. These include ageing. Old people save rather than spend. Slowing productivity growth is also a factor because as productivity slows, economies tend to invest less. There is also the China effect, which is the fall in the price of big investment goods. Big machines that used to cost companies so much in the old days, and demand lots of funds to do so, have fallen in price because they are now made more cheaply in China.


We have also seen a sharp decline in public investment for building schools, hospitals and roads. The fewer of these our societies build, the less money the state needs to borrow. Obviously, austerity amplified this process. Rising inequality plays its part because if more and more money that used to go to lots of people now goes to fewer and fewer people, the demand for cash will fall because fewer and fewer people can never spend as much – even if they try (and they do).


Taken together, these global factors imply that there is money sitting in bank accounts, rather than being used productively in the economy. This excess supply of savings is driving rates down.


But if everyone is saving, who is spending? And if everyone is saving and the return on ‘safe’ assets, like government bonds, has collapsed, what are fund managers doing with your money?


They are taking bigger and bigger risks to generate yield for you. This means they are buying products that promise higher returns. But in a low-interest environment, how can products generate higher return? They must entail more risk, because you can’t have higher return without taking more risk. This is the name of the game. The only way something that looks safe can generate more return for you is if it has lots of leverage, so you think you are buying more of something than you are because the leverage allows you to gain more exposure for your investment.


But be careful, because – as we experienced in the housing boom – leverage is a great man when things are going up, but when the market turns, leverage not only destroys your one investment, but leaves you owing lots of money too.


With financial markets at all-time highs and interest rates in the US on the way up, the risk of whiplash in some leveraged pension products sold over the past three years to unsuspecting punters is increasing by the day.


Be wary when a man in a Hugo Boss suit promises you over-the-odds returns on a pension product. And remember, he takes his fee first whether the investment goes up or down and, by the way, his fee is your money.

  1. McCawber

    David you raise an issue that should be dear to all our hearts.
    Pension funds, not surprisingly, are mainly for the benefit of the financial system. It wasn’t always the case.
    I’m not a socialist but one wonders what the future woukd be fir PENSIONERS if governments and cibil servants had maintain defined benefit pokicy and not succumbed to the defined contribution future.
    We’re told DB was not sustainable.
    Why – because companies profits were effected and governments didn’t want to only spend 19 shillings and 6 pence.
    Mccawberland comes at a price that nobody seems to want to pay.
    It’s called restraint.
    The world is totally lacking in restraint and tomorrow was spent ten years ago.

  2. StephenKenny

    But the argument above excludes the fact that global debt levels have increased by something like $70Trn over the past 8 years. All this money is sitting somewhere, and bank accounts are the only place that money can sit (excluding money under beds).
    Interest rates are not just ‘low’, they are at all time record lows. In the UK, where reasonably reliable trade records go back almost 1,000 years, this means that interest rates are at a 1,000 year low! And have been there for almost 8 years – thats a full business cycle.
    Further, were people really saving rather than spending, then the spending figures would be falling, which they certainly aren’t!
    The low interest rates are an indicator that there is nothing for this $70Trn to be usefully invested in. So demand for money is far, far, below the amount available to borrow. Even at 1%, the vast majority of businesses don’t want to borrow the stuff, except for speculative purposes i.e. not for investment in some form of productive activity. In fact demand for money is so low, that investment managers are actually paying others to hold their money – the so-called negative interest rates, lower than low!
    The economies that look good are all increasing their debt levels by something like 8% of their GDP per year to keep it so. David, you’re spinning a yarn here!

    • McCawber

      Technological productivity growth and the associated longevity of product life it brings is the elephant in the corner that nobody seems to want to discuss.
      IE What will (should we want) our society to look like in 20/30 years time.
      A society where there is no work.
      Bear in mind too, that mindset of Offialdom and all their make work (jobs) schemes.
      “It’s not work we want it’s jobs”
      A recipe for waste!

    • Grzegorz Kolodziej

      “The economies that look good are all increasing their debt levels by something like 8% of their GDP per year to keep it so.”

      Yes, i.e. the viscious circle of incurring ever more debt to produced ever less GDP growth is now global, even in countries which 5 years ago we would have considered financially sound; in China for example they need, since around 2008, to incur more and more debt in order to produce diminishing returns of growth – everyone talks about the US debt, but what is not mentioned in the media that often China also has a huge internal debt and two leading empires: China and the US – bring up to my mind Mr Nial Ferguson’s Chimerica concept, which lays a claim to an argument that it is not easy for a n y of the two empires to decouple from each other without war (which in our times does not have to be conducted using energetic methods: the generals always prepare to previous wars); Mr Ferguson compared that unhealthy symbiosis of excess debt and excess credit to pre-WWI Prussia and England.
      Sadly I lost some of my databases last year due to my PC’s hard disc crash, where I had the exact data as to how much internal debt China needs to incur in order to produce 1% of growth.
      Perhaps someone has quick access to data that shows China’s diminishing returns in the credit growth/GDP growth equation.

      To illustrate that, a very important Chinese official Xu Shanda (responsible for tax databases) said the following this year (in an article published in an online journal by the website

      “In previous years, China made large investments in the energy sector. Looking at it now, these investments were useful in ensuring energy supplies, though financial losses were large,”

      He pointed out to cutting excess capacity as the most difficult challenge for China’s supply-side reform agenda due to an insufficient social safety net in the face of a rise in unemployment and the problem of how to deal with shrinking state-owned assets due to mothballed production facilities.

      It’s gas how in the era of ubiquitous information the really interesting charts are hard to find (I’m referring to the charts I lost). In 18th century, a wise person was who had most information. In 21th century – it is who cuts off the unnecessary information from his brain who has the deepest insight (I have noticed a paradox that up to a certain IQ treshold people who are most behind in geopolitical, military and economic trends are those who watch the news and read newspapers on the daily basis)…

      It’s like in that poem by Julian Tuwim “Tenants” (my impromptu translation) about people who sleepwalk thought their lives surrounded by information noise and are unable to associate facts and draw conclusion from them:

      “Gibberish from the morning. They mumble, harp on
      That it is raining, that it is expensive, that this or that
      They walk a bit, then they sit down.
      All of that mirage. All of that phantoms.

      They would check the time, check their pockets.
      They would preen their ties, tension lapels
      And swagger from their flats onto the earth
      Which is well know, round.

      And they go, wrapped up
      They look right, they look left
      And while looking – they see everything separately
      That there is a house… Stanislaus… tree”

  3. patricia03

    In New Zealand we have what you would call a UBI for all New Zealanders over the age of, now, 65. It is provided by the Government. At the moment it is NZ$769.00 per fortnight for a person living alone and NZ$1152.40 for a couple. It is adjusted every April to account for inflation and is a % of the average wage. Generally speaking it doesn’t matter what you own or what other income you have, all New Zealanders get it. It is adjusted every April to account for inflation and is a % of the average wage. This has been going for such a long time I hesitate to say when. Probably before WW11. We also have what is called KiwiSaver, which is optional, and which is contributed to by the employee and employer. However that is run by private enterprise and your comments are very relevant to that. But the state universal superannuation, which is what it is called, is a godsend to the elderly here.

  4. Deco

    I am reminded of an incident during the boom era. When a highly leverage fund formed by a former Revenue Commissioner, specialised in tax efficient investments that made no economic sense, based on fundamentals. But with Tricky Jean Claude pulling the interest rate lever, the projects were possible.

    In fact low interest rates, elevated many dodgy investments to viable. And then there was the asset price inflation.

    In any case, the whole thing was funded by Anglo Irish Bank. Actually, it was a case of “extreme” leverage. Leverage on steroids. A bit like some of the bankers themselves.

    Professionals, would borrow to get involved in Private. And would get stuck in. Private would then use this money as a means to borrow more. And much of this was done on Anglo. Some also on BoI and AIB.

    This built a massive fund on very little capital. And then the fund went mad outbidding the Arabs and the Russian oligarchs for trophy assets.

    Asked, afterwards, why they did it, the professionals replied saying that “everybody else was doing it”. And in their world, many were doing it. It was a lemming event. It became the height of good fashion, to indicate that you were in the loop. It was Madoff-like.

    Except in the leafy suburbs, there were several Madoffs. Ireland seems to have “punched above it’s weight” in the production of Bernie Madoffs.

    Fair point. Beware these expensively clothed, slick hard sell merchants.

    And also beware your idiot neighbours telling you that they are on something, like as if, they are finding an investment that is the height of good taste, and expression of the inner Bernaysian idiot.

    In other words, people who know nothing about investments, making investments on the basis of “this years trend”.

  5. Deco

    After Madoff got sentenced, the New York’s King of Ponzi pronounced the most telling quote of all. An open and frank admission.

    He declared public debt, with it’s massive commitments, and over extended state reach to be unredeemable. He was thinking about the US Federal Deficit. He was proven correct with respect to Greece. He will be proven correct with respect to Belgium, Ireland and possibly Italy.


    ” Thomas Nash was an Irish Catholic fisherman who permanently settled in Newfoundland despite English rule. He established the fishing town of Branch.[15] He and his cousin Father Patrick Power of Callan, County Kilkenny, spread Catholicism in Newfoundland. This settlement attracted a major migration of Irish Catholic immigrants to Newfoundland in the early eighteenth century.[16]”

    much of the rest of Canada may have been explored by French Trappers this was not the case with Newfoundland. Visted and briefly settled by Norse in the 1100′s the Newfoundland Grand Banks were the attraction for the huge volume of the cod fishery.

    Many peoples were represented but the settlement was Chartered by the English as their first colony. current place names reflect the West Country English in the 16th cent followed by a large wave of Irish settlement in the 17th and 18th cent.

    The Newfie dialect is a combination of West country burr and grammar interwoven with Irish Brogue.

    St. Pierre and Michelon are two Island possessions of the French remaining as a remnant of the french fishing fleet in Newfoundland waters.

    • David NZ

      There’s a tv show called Cold Water Cowboys about Newfoundland fishermen, and it’s exactly like you say. When they’re talking one minute they sound Irish and the next like they come from Cornwall or Devon.

      • Exactly.
        All the best Canadian comedians come from Newfoundland. It is a lovely mix of irreverence and satire delivered with that delightful non north american accent.
        conjugating the verb to Be.
        I be
        You be
        They be
        Us be
        We be
        They be

        Where be ‘e goin’ now? I be going to transplant some strawberries.
        Do ‘e have a nice day there me buoy.

  7. michaelcoughlan

    Hi David,

    How can you write an article like this and not mention debt levels (public and private) and government deficits?

    • michaelcoughlan

      Hi David,

      Would you like to comment on rogoff’s book; The curse of cash?

      • Here is a centralist. He, Rogoff, argues the case that government/central banks can freely manipulate the currency markets and the financial markets.
        Free markets are dead. They do not exist. Without rebellion we are being set up for more and more centralization.
        First the light touch.
        Distortions from policy must be corrected. Now a less light touch.
        More distortions as political considerations drive policy and create economic chaos.
        More control exercised to cure the problems.
        Crash the system. Blame the inflexible markets. Blame capitalism. Blame all but the real cause.

        Set up the one world currency. Ban cash. Have all transactions and trades electronically reported. Exercise complete control.

        “Give me control of a countries money and I care not who makes its laws”–Rothschild.

        Give an entity control of the world money and it controls the world.

        Welcome to economic serfdom where only the obedient are able to eat.

        gold/silver is a freeman’s money. get some before it is too late. There is a limited supply. A little will go a long way.

  8. AlfieMoone

    Ah, yes! The sinking of the Bismarck legacy…..pension were only ever invented to stall the Bolshevik threat, it was never intended to actually pay out. Ditto the entire ‘pension industry’ scamsters who, as the song goes:

    “The sanest days are mad
    Why don’t you find out for yourself?
    Then you’ll see the price
    Very closely
    Some men here
    They have a special interest
    In your career
    They want to help you to grow
    And then siphon all your dough
    Why don’t you find out for yourself?
    Then you’ll see the glass
    Hidden in the grass”

    ‘Retirement’ is just another Capitalist Consumer Concept like ‘teenager’. Either you are alive or you are dead. Or disabled. If you belong to the first category a sane economy should always provide Right Livelihood opportunities as per Buddha and E F Schumacher. If you belong to the second category then you don’t need to worry about pensions. If you belong to the third category then the premise of the first category is a surplus of Right Livelihood energies to take care of you. Everything else is nonsense. Capitalism ends with Robotics. The entire current premises of work/income/savings/retirement collapse under the inexorable logic of endless production by non-human agents without a human consumer to absorb the artefacts. I guess Capitalists can always try and export their tawdry baubles to Mars when nobody on the planet has an income to buy the ‘stuff’. *Interesting Times* etc.

  9. “The US is growing strongly, unemployment is below 5 per cent and most indicators point to an economy that is in mature recovery – so much so that all the talk now is of the next rate rise, not cut. ”

    This statement is a bold faced lie.

    Talk is cheap. Cheaper than the proposed interest rate hikes. It has been many years since 2009 when we were assured the US was in recovery. Why, “green shoots” were the rage. Not a raise was forecast but a string of them in succession.

    What happened. Why the debts increased many fold. The national debt has doubled. Corporate debt the same. The stock market (DOW) is elevated by the Presidents working group on Financial Markets. When that fails with jaw boning the central bankers buy Shares of major corporations that influence the index. Executives of the same corporations borrow money from the banks and use it to buy back company shares. This increases corporate liabilities and debt while the executives reward themselves with huge bonus because (“look at the great job we have done with the company. Look at the share prices. ) their stock options in the millions are good at these high levels. They cash out. The mum and pop investor is being taken for a ride.

    Here are the real stats

    Unemployment rate is 23%

    • What is your comment on this statistic, David.

      In the ongoing economic collapse into 2008 and 2009, and the non-recovery thereafter, the broad drop in
      the U.3 unemployment rate from its headline peak of 10.0% in 2009, to the May 2016 headline 4.7%, was
      due largely to the unemployed giving up looking for work (common in severe economic contractions and
      major economic displacements). Those giving up looking for work are redefined out of headline reporting and the labor force, as discouraged workers. The declines in the headline unemployment rate
      often reflect that, as opposed to unemployed individuals finding new and gainful employment, as was
      reflected in the headline May 2016 data. (John Williams)

      Silence , of course, it has been posted 8-10 times already with no comment pro or con.

      • Unemployment figures are pure fantasy. As you say Tony a lot of people have totally dropped out – ‘discouraged workers’.

        Many of the remainder are just miserable debt slaves, which is shocking considering the US is supposed to be the most prosperous nation on Earth.

    • Oh! I forgot. One piddly quarter point raise was given only to have the market crash the same day. OOPS! forget that. lower the rates and double the money supply.

      It is the governments fault, not the central banks. The governments have not done enough fiscal stimulus. how about infrastructure projects. Of course it can’t happen without the government borrowing even more and doubling the debt again. Seems like fiscal stimulus cannot happen with a central loan again. How much are the interest rates on those government bonds. Why negative interest on the bonds. We will pay you to borrow and charge you on your savings. For f—cks borrow some more or we will drop it on the streets just like Uncle Ben suggested.

    • The participation rate is dropping for 8 years. Looks like a real recovery!!?

    • Share buy backs should be illegal and for the life of me I cannot understand why they aren’t – well I can – pure greed.

      They will be done away with eventually though.

      Good article about it here:

      “Profits Without Prosperity”

  10. “So why are rates so low, and why is your pension costing you, rather than making you, money? The real reason for the decline in the natural interest rate is the forces that are affecting the supply and demand for funds.”

    Not a mention of the central banking system and the fractional reserve policies of the commercial banks flooding the world with debt so much, that nobody wants any more. There is so much garbage paper money flying around that the interest rates have gone negative. I’ll pay you to borrow is the cry.

    The reasons that the OAP’s are not spending but saving is that they need every penny to eek out an existence in their old age. They are afraid their money will run out before they do. They will die dead broke if they are not careful.

    • McCawber

      Increased life expectancy could have a sting in its’ tail.
      We are continually told that the world can’t afford a longer living population.
      That’s a load of bollox.
      The truth is the world doesn’t want to plan for the future it just wants instant gratification and nearly everyone is guilty.
      Forget about politicians lying to us, WE, yes you and me, WE are lying to ourselves.
      It’s a very convenient lie, it goes by the name DENIAL, It’s a conspiracy of denial.

  11. “Be wary when a man in a Hugo Boss suit promises you over-the-odds returns on a pension product. And remember, he takes his fee first whether the investment goes up or down and, by the way, his fee is your money.”

    Be more wary of central bankers promising you a golden future when the inflation robs you blind every year. Especially when surrounded by a bunch of economists, whose advice is pandered by the complicit press, trained and inculcated by the central banks themselves.

    Those who set up the central banking system set it up to fail. Fail it will. Guaranteed.

    • StephenKenny

      And I know that resorting to the ‘Nazis’ in an argument is not a good sign, but it’s impossible to resist reminding everyone that it was no less than Hugo Boss to designed the very smart, black, SS uniforms.

  12. This is the looming immediate future for pensioners. Everyone else too.

    The great reset when the bond bubble bursts. That will be when interest rates find their natural level.

  13. McCawber

    The indexes have been near all time highs or so it’s claimed.
    What’s driving the indexes.
    It’s not miners or bankers or energy producers.
    Strip those categories out and you end up with a very hot “niche” bubble.
    The surge in the indexes is very narrow. Very like the Irish economy just before the bust, there is a huge imbalance.
    The whole system is resting on very narrow shoulders.
    That’s just an observation.
    WHEN/if the day of reckoning comes it won’t be pleasent.
    Ireland for example is on a knife edge.
    Our levels of personal taxation are extremely high and yet Official Ireland behaves as if our problems are behind us.
    We are not prepared or preparing for war.
    Joseph advised the Pharoah to prepare for bad times and the Pharoah listened.
    The German government recently advised it’s citizens to stockpile at least two weeks supply of food.
    It hardly got a mention just quietly get on with it, no fuss.
    Ireland needs to be doing the same – the Germans know what they are about.

    • McCawber

      A few survival tips.
      Store your own garden produce and buy food.
      Keep the petrol tank full.
      Keep your garden mower petrol canS full.
      Top up your oil central heating tank.
      Dig out that old Aran jumper.
      Cash is? king.
      And remember just because I’m paranoid doesn’t mean they’re not out to get YOU.
      What if is a good place to start.

  14. Grzegorz Kolodziej

    David McWilliams’ writes about Mr Donald Trump’s plan, “He’s assuming trade deficits are synonymous with job losses. They are not. (For example, the UK has the highest trade deficit in Europe but one of the lowest rates of unemployment.)”.

    While trade deficits are not the only factor leading to job loses, there are some macroeconomic schools who correlate them with unemployment – i.e. the Stock-Flow Consistent models show that fiscal balances of the government and financial sectors (domestic and foreign) must, by definition, have a zero-sum of deficits and surpluses across them. Thus if peripheral EU countries have huge government sector deficits, they must be balanced by their huge surpluses in either domestic or foreign financial sectors. So what about the UK and its low unemployment? UK has a huge trade deficit in goods, but a financial account surplus (i.e. portfolio flows). Ireland’s vulnerability lies in its dependence on maintaining tax loopholes, but the risk to its foreign direct investment sector could be counteracted by gaining a foothold in foreign markets by influencing their elites via diplomacy. For example, despite controlling the seas with its navy, Venice was a weaker player on the continent than Genoa, which controlled much of the grain trade – but Venice made sure that the elites of the Kingdom of Poland would study in Venice-influenced Padua rather than in Genoa-influenced Bologna. It’s diplomacy supported a cunning plan to marry the Lithuanian Prince Jagiello with the Polish Queen Jadwiga, which torpedoed Genoa’s plan to prolong the union of Poland and Hungary (Hungary’s financial market was dominated by Genoa). As a result, Venice gained a territory from the Baltic Sea to the Black Sea, without firing a shot. Perhaps the Irish diplomacy could manage to marry Mr Jaroslaw Kaczynski with Mrs Yulia Tymoshenko while acting as Merchant-of-Venice-like money lenders and conquer the Ukrainian market with the Irish building companies (after all, they need more building companies to build their infrastructure than all other European countries combined), throwing out the German (they are building roads for them and they replaced the Poles with their agricultural products) and the US companies [Chevron is trying to take over the Ukrainian lithosphere after their failed attempt to do it in Poland (they wanted to dispose the villagers in Zurawlów and the villagers threw them out), but - maybe we can use Sinn Féin’s mortar expertise to smoke Chevron out off the Ukraine and install Dan Morrisey and his cement?]. I know, Mrs Tymonshenko was paid a fortune by Gazprom (she had the nickname ‘Gazproness’ in the Ukraine), but I’m not sure if she still has that money after her deserved sojourn in jail, while Mr Jaroslaw Kaczynski has no wife, a cat, shabby flat in Zoliborz, no car and no bank account (this is how you end up in Poland if you are, unlike some of his party colleagues, not corrupt), and smitten with Julia, he would soon need lots of money. Then they could establish their own dynasty, which would be under control of Bank of Ireland and Mr Michael O’Leary, who could use the excellent Ukrainian jet-engines factories to build Ireland’s first jet fighter, called ‘Da Black Shtuff 19-16 A.D.’. Why wait for the Yankees to come and launder their money in IFSC – why not colonise the Ukraine by doing the Venetian marriage-diplomacy trick in Kiev?

    I hope that jokes aside (after all we all need a smile), I have thrown some light (for David’s benefit) at the old Venice and its cunning history (on which he wants to model Ireland, an idea worth developing).

  15. patricia03

    Way back in the 1980s when we made the central Banks’ independent, that is from parliament, a world world wide fiasco was created. In my view the only answer from that is for all parliaments to take economic policy back from the Central Banks into the hands of Government. QE, that is the removing of the Banks’ bad debts, will do nothing. But if Parliament demanded that all the QE monies held by the Banks is now lent back to Governments, at zero interest, to invest in infrastructure that would actually start a surge in GDP – if GDP is the answer. But I think it would be a possible answer. People would be employed and that is probablly the only answer in a capitalist/consumer society. However, the people are so much in debt that unless there is also an abolition of a portion of their debt, nothing will be achieved. In the meantime, maybe we can develop a better economic system.

    • Almost there, patricia,
      Fire the central banks
      Have money issued from treasury, an arm of government, free to the government. Use it to pay off all existing debt.
      Result :: no national debt. All services of government paid for with own money rather than borrowing from the central bank, all citizen taxation is removed. Canada ran WW11 that way, built the 2nd largest navy in the world and the huge infrastructure of the St Lawrence Seaway.

      Then ban fractional reserve banking by commercial banks . This is where most of the debt based currency is produced. Banks business models will revert to service to customers only.

      This gets debt and interest on the debt out of the economy.

      Then as government has the unrestricted licence to produce unlimited money we would still be subject to (hyper) inflation.

      Remove the legal tender provisions and allow free competition on the use of money to add competition. This keeps the country’s currency honest.

      Monetize silver and gold as part of the restructuring and allow people to use the money they wish and desire.

      In the meantime the only resolution is a debt jubilee of grand proportions that will then allow another reset to place yet another system that robs us all and enriches the few. It is close at hand.

      • McCawber

        Given that the people in power know what’s coming – What “new system” of money do you think they will try to impose.
        The usual scam is to issue a new currency and declare the old currency invalid.
        That’s what the Soviet nations did post the collapse of the USSR.
        Before the new currency comes about they’ll probably have robbed our money via all sorts of bail ins.

      • Mike Lucey


        You say, “It is close at hand”, I think you could well be right as the CBs seem to have played all their cards and still have not produced a winning ace!

        Mike Maloney makes his arguments with graphs, these I understand. His latest graph of the current situation enforces your predictions.

        ‘Biggest Counterfeiting Operation In History – Mike Maloney’

    • Good points patricia. Hard to see it happening in reality – you never know though.

    • Deco

      Let’s all sue Soros. I actually think he should be sued for interfering with democracy, and trying to subvert the democratic process.

      His organizations have an explicit purpose to interfere with sovereign democratic entities, so as to prevent democracy from influencing policy formulation.

      I think a law against such interference should be constructed, and then he can be sued.

      It might result in a Robin Hood style wealth movement out of a speculator, and back to the welfare systems that he seeks to bankrupt.

  16. Deco

    A first rate tax avoider, with a first rate abaility at self publicity, and a second rate musical talent, has said that he is not happy with Trump.

    Actually, I am not happy with second rate citizens who carry the passport, and go around lecturing other people on how to run their affairs.

    He has used this country’s good name, to make himself rich. He proceeds to use another country to make sure that this country never gets anything out of it.

    An extractive pop-star. Not an artist. He has not produced ‘art’ in twenty years.

    The un-artful tax-dodger.

  17. mike flannelly

    “Over the odds pension returns” are for select Irish citizens only.

    The contributory pension of 230 euro/wk for 400,000 retired Irish workers costs approx 4.8 bn yearly. This money helps ALL retired workers with their basic safety needs such as food, clothes, medicine and shelter. ALL of this money is put straight back into the economy.

    Then we have Irelands Plastic Pension lump sums and payments. These are pension payments above the contributory pension that have no fund. These unfunded pension payments are for select Irish citizens only and are completely unconstitutional.

    No financial logic is even offered for these over the top lump sum payments plus pension top ups. Irelands Plastic Lefties who are big supporters of these unconstitutional payments to select citizens also want more money spent on social housing.(Just 70 social houses were built last year).

    Junior certs will be over the moon to know that the pension deficit at Irelands top pillar banks stands at approx 1 billion each. This is despite the fact that FG/LAB already diverted more than 1.5 billion of bailout money into bankers pensions. This money would have provided industry best practice split mortgage restructures for thousands of Irish Families with grossly overvalued debt to prevent homelessness.

    Irish Universities are also “over pensioned”. UCDs pension liabilities amount to 1.8bn. Trinity Colleges are about 1.4bn.

    One would imagine that the pension funds of our top bankers and top universities would be the best run funds in the country.

    In Ireland the select Irish citizens pension compensation is TOP PRIORITY and comes first out of the big magic pot.

    Homelessness and high ratio debt restructures come last.

    • Deco

      Irish Universities are also “over pensioned”. UCDs pension liabilities amount to 1.8bn. Trinity Colleges are about 1.4bn.

      Mad. Absolutely mad.

      How did that happen ?


      Irish Third level is the biggest fattest quango of all.

      Pure crazy.

      • Welcome to the culture of entitlement. It arrived in the 80′s with the “gimme, gimme, generation. It is mine, I am entitled.
        The Devil takes the hindmost.
        The government owes me.
        Welcome to the “ends justify the means”.
        Welcome to amorality. The lack of a moral standard. The age of relativity.
        Welcome to the decay of Western Civilization as it rots from within.

      • StephenKenny

        I think partly these things are happening, all over the place, because money just doesn’t mean so much any more.
        If you cast you mind back 20 years, an announcement that a government, a government of a developed country, was going to embark on money printing would have sent the global markets into free fall. It was the kind of thing that we expected from Zimbabwe. It was fairly reasonable to expect that governments would only exceed the 3% deficit for some years in the business cycle, and if it got to 4% or 5%, there were emergency meetings, emergency budgets, and talk of disaster.
        ‘Too much borrowing’ was seen as an indicator of an ‘over heating economy’, and steps would be taken to ‘cool it down’.
        We are neck deep in people worth over $10m, and a myriad worth over $5m.

        Today, if a government were to cut it’s deficit down to 5%, the markets would implode and there would be talk of meltdown. The idea of ‘too much borrowing’ has no meaning, as every professional economist is quite sure that economies can only grow as borrowing, consumer & government, grows.

    • Truthist

      Seems like a “Conspiracy Theory / Revelation” to me.
      Good investigating Mike !
      Glad to have u back.
      We might presently differ on the need to return to “Money” — i.e. Gold [ Bar & Coin, & hey "actual Gold Paper" ] & Silver [ Coin ] — instead of using Fiat Currency “Non actual Gold Paper” & “non-money” Coin [ vis. not Gold nor Silver ] whether issued through private Central Bank ONLY or State’s Treasury ONLY — but I greatly appreciate ur good work on investigating the Irish State’s very corrupt Health Care System, & other Irish State cosy shops.

  18. Deco

    I reckon Ireland’s most vociferous hypocrite intervening with his opinion on the US Presidential Contest is a sure sign that Trump is the lesser of two evils.

    He has no problem with the Clintons. No problem with their dodgy foundation. No problem with ‘pay2play’. No problem with ambassadorships for sale. No problem with Seth Rich getting murdered, in the context of Seth Rich being the likely leak behind the DNC revelations (that the DNC were blaming on th Russians).

    What astounds me is that a rat with such sewer-smelling pals, gets be feted by the Irish media.

    Respect him. Take him seriously.

    Eh, no.

    See things for what they are, I proclaim.

    And he can hand back his passport, until he starts paying taxes here.

  19. Some leopards do change their spots! They camouflage their real position.

  20. “The world, to be sure, is involved in a liquidity trend that is not about to stop. In fact, as we speculated yesterday, the idea is to create an unstoppable wave of liquidity that will eventually crash upon the world and justify a whole new financial system,

    This is probably why central banks have taken to purchasing gold again: They know what’s coming.”

    • “It’s not just physical metals either that central banks are buying. It’s recently been revealed, as we noted previously (here), that central banks in both Switzerland and Norway have begun purchasing miners – and this should be a significant warning to those who remain heavily invested in mainstream stocks and bonds.”

      • “The cycle is turning and physical precious metals as well as precious metals miners are likely to generate profits that will outstrip mainstream equity and fixed-income positions.”

        (fixed income investment = pensions, but even the Canada Pension Plan is now invested in PM miners )


    “So having a bit of gold in your portfolio – just like our central bankers – seems like a sensible precaution.”

    Seems like solid advice to offer any pensioner. There is nothing else to rely on.


    Notice to all Pensioners.
    Sever all dealings with Deutsche Bank at once.

  23. “I’ve written about this topic before. In a cashless society, your economic liberty is forever at risk. Every transaction could be monitored, taxed and charged a fee. Capital controls would be crippling, assets could be seized. Just ask the Colombians and Venezuelans”

  24. Truthist

    There are famous economists gloating over innocent peoples’ suffering
    New York Times Paul Krugman Gloats over Demise of White America
    Ron Paul Responds to Paul Krugman
    July 31, 2015

  25. Truthist

    Demographics imbalance spurred by porn ;
    Japan is surely having to pursue what McCawber promotes — “welfaring” technology — to cope with lack in numbers of human providers.
    Excerpts from link below ;
    “Japan has become the main audience in terms of pornography consumption.
    Japanese pornography is absolutely everywhere starting from magazines to apps for smartphones.
    It simply kills normal human desires,”
    The Japanese phenomenon of lack of interest to sexual activities even has a name ;
    “celibacy syndrome.”
    Surprisingly, Japan was never an sexually repressed nation compared to Europe.
    Intimate ties have never been seen as sinful in Japan.
    Maybe, some day the Japanese will be able to regain sexual desires & fix the demographic situation in Japan.

    • Deco

      It has long been indicated, that television, creates intellectual impotence.

      Essentially, people become too lazy to think.

      But you are saying that television (and presumably the internet as well), are causing complete ‘inpotence’. This might be correct.

      Certainly electronic entertainment produces a virtual reality that is a distraction from life.

      In other words electronic entertainment replace “life” in the lives of many people.

      The area does deserve more rigourous analysis.

      • Truthist

        It CAN BE attentiveness to be the “QUALITY / SUBSTANCE” of THE MEDIA” on the internet that causes “impotence” of a variety of types.
        But, it DEFINITELY IS attentiveness to “sheer VOLUME” from THE MEDIUM that causes “impotence” of a variety of types.

        Directly :
        Passive behavior.
        Info. & / or Entertainment addiction.
        inter alia
        Indirectly :
        Japan experience
        inter alia
        Perhaps, McLuhan includes “Viewer’s behavior to the Medium [ T.V. & Internet ] in his argument ;
        “The Medium is The Message.”
        Anyway, with the way the younger generations are because of indisputable destructive social engineering by our nefarious masters, the pension model up to now is doomed.

    • Pathetic, I didn’t know the Japanese were so weak.

    • McCawber

      Technology for humanity not welfare.
      The solution I seek is simply “What will give human beings meaningful lives when robots are doing all the work”
      Work being loosely defined in this instance.
      Meaningful also being loosely defined.

      • The Luddites had the same question at the advent of the industrial revolution. Then 70-80% of people worked on the land or were connected to it.
        Today in advanced economies 95% do nothing related to agricultural production.
        What on earth are they doing to have a decent quality of life??

      • Truthist

        Sorry McCawber for misrepresenting u ;
        Unintentional “misrepresentation” of course.
        However, u can understand that I was faced with some challenges as to how to term ur argument for its relevant inclusion in above report about present day Japanese society :
        U mentioned it as way to provide for welfare, inter alia
        That technology provides for the good of humanity is not a precedent.
        But, the statement that it can provide for the welfare [ state ] is new, & indeed “revolutionary”.
        I thought it apt to sum up ur argument into a snappy snazzy phrasal noun.
        And, I naturally referred to its “revolutionary” aspect.

        • McCawber

          You are right about welfare but welfare in the broadest sense.
          The word ‘welfare’ has certain modern day connotations that are better avoided.
          WELFARE is for the good of everyone be they rich or poor, we might even find room for David’s “men in suits”

          • Truthist

            I understood from the start exactly what u mean ;
            The capability of certain new technologies to provide for all of the human race & only require a relatively small amount of persons to attend to the design, management, manufacture, maintenance, repair, & replacement, etc. of these technologies.
            But, I choose to pick out the Welfare State provision capability of the new technologies for to give a specific option to Japan to cater for their demographic imbalance.

  26. [...] Pensions: Beware of Suits and Tempting Promises (DavidMCWilliams) [...]

  27. [...] Pensions: Beware of Suits and Tempting Promises (DavidMCWilliams) [...]

  28. “On the economy, with around 94 million people out of the workforce and the near record low Labor Force Participation rate, Dr. Roberts says, “The Labor Force Participation rate never falls during a recovery. It rises because people are entering the labor force to take advantage of the strong economy and jobs. So, there isn’t any economy. There is a house of cards that is held together by central bank money creation. The money flows into financial assets. That’s what keeps the stock market up, and it flows into bonds, which is why we have essentially 0% interest rates. . . . So, the economy is essentially a hoax.”

    Pensioners may have to go to work for the war effort!!

  29. [...] Pensions: Beware of Suits and Tempting Promises (DavidMCWilliams) [...]

  30. [...] Pensions: Beware of Suits and Tempting Promises (DavidMCWilliams) [...]

  31. [...] Pensions: Beware of Suits and Tempting Promises (DavidMCWilliams) [...]

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