So literally pay investors so they can get richer without risk?
"A legal mandate requires these funds to generate 7.5% returns, and when they fail to do so, taxpayers foot the bill." - it sounds like it would be much cheaper for taxpayers to pay pension funds directly, instead of paying all investors, and hoping some of that money finds its way to pensions.
Actually, let me get back to "by reducing interest rates you are incentivizing risky behavior". Phrased this way, it sounds obvious that 'of course you should try to reduce risky behavior'. But risky behavior of what? Is a car manufacturer going to take more risks because of low interest rates? No - they make a profit from selling cars. Same for farming, mining, pharma, advertising... literally every industry, except the purely financial ones. So... are we just paying tax money to bankers, and getting nothing in return? Because they convinced us that if their profits were any lower, they'd start taking so many risks banking would collapse (instead of more prudent banks emerging)?
"A legal mandate requires these funds to generate 7.5% returns, and when they fail to do so, taxpayers foot the bill." - it sounds like it would be much cheaper for taxpayers to pay pension funds directly, instead of paying all investors, and hoping some of that money finds its way to pensions.
Actually, let me get back to "by reducing interest rates you are incentivizing risky behavior". Phrased this way, it sounds obvious that 'of course you should try to reduce risky behavior'. But risky behavior of what? Is a car manufacturer going to take more risks because of low interest rates? No - they make a profit from selling cars. Same for farming, mining, pharma, advertising... literally every industry, except the purely financial ones. So... are we just paying tax money to bankers, and getting nothing in return? Because they convinced us that if their profits were any lower, they'd start taking so many risks banking would collapse (instead of more prudent banks emerging)?