Scanning the news this morning, I read that pension funds and insurance companies are to be encouraged to hold more “safe” government bonds. I’m fairly sure this is a dreadful idea.

Government bonds amount to a promise to tax productive activity later. Unlike corporate bonds, they do not represent investment in productive assets but, overwhelmingly, spending on present consumption. Borrowing to fund present consumption is a route to poverty, not prosperity.

If major investors switch from supporting productive investment to present government consumption, we will all become poorer: where will future production come from without investment in it?

Without adding reflections on the present huge size of the state, I think I can safely say that investors should be encouraged to invest in capital goods, the means of production, not present consumption backed by the power to tax.

Guaranteed, stable returns are of course attractive to investors but greater investment in government debt will surely store up trouble for later. We need an economy based not just on save and invest but on genuine investment in production.


  1. Gary - Manchester

    Very commendable Steve….but you only have to look at the decline in UK manufacturing over the years to realise that we havent got that much production, and a lot of what we do have often has roots abroad. I m not suprised the pension funds are investing more in bonds, if government isnt seen as the safest bet of the lot, then we really are in trouble.

    • Gary, Steve,

      we really are in trouble, if you guys cannot work it out from the bottom up the system, it will eat its self, this system is finite, with limited lifespan defined by an inevitable, terminal sum of insoluble debt by the interest [%} add to boot the Central Banks and the purported High St Banks launder the promissory notes [Money] into there possession as if they own them….!!!! add to the fact the Central Banks perpetual, perverse, by concerted evasion of accountability before us therefore is no accident ‚ it is instead a calculated, vital accessory to the most serious, arrogant, and repulsive crimes in history….Wz

    • Gary - Manchester

      Wesley – had a look at that link, and quickly switched off as it looks like someone is simply venting his frustration. Whoever that guy is , you may need to tell him to ” keep things simple ” …..