The point is that, the government, can always pay future pensions because it can issue money.
The question is: can do it without generating inflation?
It depends of the productivity of the economy in that future.
The conclusion is that saving money means nothing, what is really important is generate real wealth now so we can pay in the future without generating inflation.
So, investment in real capacity (creating infrastructure and knowledge) now will allow generate the real resources for "paying" in the future. Just the opposite of what they try to sell us.
Never mind how much money you save now if, in the future, there are not real resources for taking care of everybody.
In theory, you're right, but the way we measure things now basically prohibits that. Let's say we made sure, today, that "investment" were high so that it can produce the "output" that pensioners can consume. What would that look like, when it all plays out?
"You were promised $600/month. Obviously, we can't do that because that would require taxing 70% of labor income, which is way past the Laffer point. We're paying you $400/month instead. But it's okay, because we made productivity enhancements that let the same money go further. For example, the food tastes 50% better, so it's all a wash. Plus, you can move ten miles out to a cheaper apartment because construction and transportation are better now."
if the government expend money in the economy beyond real available capacity (all else unchanged) we will see inflation.
If the government increase taxes in the economy in absence of inflation (all else unchanged), there is going to be a deflationary trend.
All the point of the argument is that if we have real available capacity in the economy you can spend, 600$ or whatever have been promised, and, if we don't have real resources available, we can't spend anything, never mind what have been promised.
It have nothing to do with how much money we have saved or how big is the deficit, but with the real resources available at the moment of paying.
>It have nothing to do with how much money we have saved or how big is the deficit, but with the real resources available at the moment of paying.
My point is that the obligation is phrased as "$600 + inflation index", not "the amount of utility you could have got for $600 at the time we made the promise". Improved productivity can help you meet the latter, not the former. The latter is a more reasonable promise, but the former is what was actually promised.
>All the point of the argument is that if we have real available capacity in the economy you can spend, 600$ or whatever have been promised,
It's not true that "if the real productive capacity is there, then taxing out the money for the pensions is no problem". The evasion behavior is non-linear and there's a cap to how much you can collect with taxes before e.g. pushing economic activity underground and into other countries. (Hence the Laffer curve point.)
The question is: can do it without generating inflation?
It depends of the productivity of the economy in that future.
The conclusion is that saving money means nothing, what is really important is generate real wealth now so we can pay in the future without generating inflation.
So, investment in real capacity (creating infrastructure and knowledge) now will allow generate the real resources for "paying" in the future. Just the opposite of what they try to sell us.
Never mind how much money you save now if, in the future, there are not real resources for taking care of everybody.