Fraser Nelson gets it
Nelson in the Telegraph:
But the Bank of England cannot create wealth. All it can do is transfer it, from savers to debtors. Every extra penny enjoyed by those whose mortgage rate is now lower than inflation is a penny not going into a savings account – and the full effects are only now becoming apparent.
As those in the pensions industry know, what is happening is nothing short of a crisis. Pension Corporation, an insurance firm, estimates that the hole blown in British company pension schemes by the first round of QE was £74 billion. Firms are legally obliged to make up this shortfall – so they will need to find £20 million a day of real cash to repair the damage.
Same in US. Substitute Arch-Criminal Bugsy Bernanke, Greatest Thief In History, for Sir Mervyn King, and substitute Federal Reserve for Bank of England.
It's not just pension schemes that suffer, it's also insurance companies and the people who buy insurance. Many pension funds and insurance companies have legal or contractual restrictions on the types of investments they can make. With safe bonds yielding negative interest, those companies are earning less. This forces insurance premiums to go up.
I'm puzzled by this. Surely pension funds and insurance co's are big enough and financial enough to have influence in Congress. Why haven't they complained? Or if they have complained, why hasn't their influence moved Congress? I suppose the answer is obvious: Goldman Sachs wants it this way, and nothing else exists.
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Update 2/14/2012: Pension plans in Britain are finally starting to complain
publicly. I guess Goldman holds only 99.9999999% of the cards there.