Times are hard but they will likely get harder. We’ve covered over gaping cracks in the world economy with fiat money paper mache, but it won’t last. In fact the paper mache is disintegrating right in front of us. What Poland did to its pensioners earlier this year is an example of the underlying instability in the world economic system.
Think this sort of thing is limited only to Poland or Cyprus, or Greece, or Spain? To Europe? Think again, we’re all connected.
Poland has pulled a destructive stunt worthy of Argentina. It is seizing half of the Polish people’s private retirement funds. All government bonds in these pension-plan portfolios are being forcibly transferred to the government. Since the bonds are no longer held by investors, the government is declaring that the national debt has been reduced by the face value of those securities. Neat trick, including the spin on this Soviet-style seizure: The government is calling the nationalization a “pension overhaul.” The ghosts of Stalin and Lenin must be smiling.