Loading ...What I am getting from this article is that originally bonds were used to guarantee the safety of the future of the retirement systems, but higher returns were desired… so using blue chip stocks over a long period of time historically produced higher returns but much more volatility….. so if you ignored the volatility the returns would be greater over time using stocks than using bonds and would require smaller premiums to maintain the safety of the pension fund.
But as more and more people retired, the demand on performance grew greater than could be met, so in order to cover the failure of the pension funds, rather than raising the premiums, someone came up with replacing stocks with derivatives to make up the difference….But derivatives have NO actual value because all they do is TRACK the value of the sector or commodity they represent. They own nothing but they look like they are worth the value of the stocks or commodities they represent, like a mutual fund does, but are actually just bags of hot air that own nothing, and when that fact comes to light is when the whole house of cards comes down.
And now it has also been disclosed that the US FED is doing the same thing; buying ETF’s which are derivatives full of hot air to hide the fact that it is also broke and just buying itself a little more time while the new monetary systems are being put in place.
Anyway, that is what I see FWIW.