This is not a problem that is going to go away. Both the government and corporations have played fast and loose with pensions. The government has effectively spent the money that was in the kitty replacing it with a bunch of paper IOUs. Corporations have made use of the funds in the kitty alternatively to make up for profit shortfalls in lean years and for trading purposes during financial market booms. Most corporations however, lost money on trading. The result is that pensions in the West are woefully underfunded.
As mentioned here and attested here, in a deflationary recession, pension dues will break the back of governments. However, before that happens, governments will re-direct funds from public services deemed less critical to those public services like pension payments the absence of which will more readily show that there is a problem at state level.
I’ll repeat here that deflation is not an undesirable dynamic. Deflation should be embraced and welcomed. A bout of deflation will make for a substantially better life style and for a much improved quality of life. Deflation is not the end of the world…. unless you are in debt.
The holy grail of government intervention today globally, is to restart inflation. That is because in the absence of inflation, government and the political process die. Inflation is the necessary precondition to running a fiat monetary system and fractional reserve banking. In the absence of inflation, the monetary system’s back is broken. This is the problem we are facing today.
This is the reason I am telling you that unless someone somewhere can restart inflation in some asset or some market, our leaders will plunge us into a world war within the next 3 to 5 years maximum.