In thinking about China’s demographic problems, it occurred to me that much of the talk of the pension problem misses the point. Just like government funding of education benefits everyone (not just the parents of the educated children), the pension problems are simply a symptom of the fact that somehow, the working population will have to support the non-working population. Money is simply a record keeping mechanism, it’s not the actual goods and services that will be required. Even if current pension funds were fully funded, it’s not clear that it would make much of a difference. Shortages in goods and services would lead to inflation which would (in effect) wipe out the pension funds. You can’t cheat physical reality with accounting gimmicks. Just a thought to cheer you up for the weekend.