by nosianu | 2025-11-01 19:56:57+00:00
> The problem is having decedents pay for our retirement.

But that is unavoidable!

> Instead, end that system and start saving for your own retirement.

If you are not talking from an individual's PoV but economically, or even globally, finance does not change that in all cases the young work for the old, and that economy always takes place in the here and now. Your "saving" influences the current economy, nothing is magically shifted into the far future.

And even if only a few rich countries tried "investing", hoping to shift the later burden to other countries, the question is at what point those with a more numerous younger population won't accept it any more.

It's one thing for tiny Norway with a few million to "invest abroad" so that their own age pyramid will be supported with money - and that means goods and services in the end - from abroad. It's something entirely different when the whole West and Japan all try it.

I don't understand this magical finance thinking. "Saving" does not actually exist, globally. Nobody freezes doctors and goods and services to revive them fifty years later, and money is just numbers in computers. You have to look at the real world to see what is actually feasible, not at "money".

Saving for retirement works for the individual, and only when it isn't what everybody does and the age pyramid is against you.

The problem with many proposed "solutions" is that those making them confuse "works for anyone" with "works for everyone". What happens when everyone actually follows the proposal? All while remembering that money represented by electrons in computers is not what you actually want. You actually want the real world stuff, so you can have whatever numbers you want, when the politics and powers change, your aging country having less power, they may prefer not to send you everything you hoped for. On a wealthy-country level for later adjustment, there are plenty of ways even without outright breaking the official rules.

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From an economy PoV (very different from that of the average person who is forced to just live within the rules), the role of "saving" is not really to take care of the future. Savings are a money stream in the here and now. What is shifted to the future is only information, but what the people of the future do with that information about what you did with your money in the past is up to them. If they find themselves in a bind, they may not honor it the way you hoped for. Again, on an economic level, individuals are bound by the system, the larger entities less so, they make those rules after all.

Saving is a way to make people earning a lot of money not actually ask for as many products and services as they could. So you can pretend that people have much higher salaries than they really do. In return you get nothing but promises: For not asking for as many things now we will take care of you in the future!

"Savings" are not needed for investing. It is used right now because we have it anyway, but if nothing was saved, we have plenty of modern money options, from credit based money creation to monetary policy to much more. Saving is for that psychological effect I mentioned, making people think they are more wealthy than the economy can actually handle, if they actually all tried to use the money to buy stuff, and for all the (mostly but not only finance) institutions whose own incomes depend on that money stream.

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To avoid misunderstandings, let me repeat: This is the larger perspective. Of course, from an individual's PoV you have to use whatever system there is. What I just wrote does NOT contradict that people may find it in their best interest to "save for retirement".

You have to use whatever system you find, but it is good to keep in mind that those systems follow their own rules, and they may change over time.

What worked for an American in early 19th century may actually not have been that different from what one would do now, "saving" paid off. But one should keep in mind, one important condition for this is that America was one of the strongest countries consistently for a long time. What happens the next fifty years may or may not follow that trend.

Whatever virtual numbers you are going to end up with, they will be interpreted by people and the system of the future. If everybody, and for argument's sake, let's say everybody saves enough in private retirement accounts, what will that mean? The age pyramid is quote predictable for many decades, and relying on foreigners to take care of any significant imbalance is quite optimistic.

A side effect of channeling retirement through big finance is that now politicians have an increasing incentive to protect the stock market, and the burden to finance retirees will be disproportionally on the big players. Leading to more "too big to fail" and worse capitalism, because large failure is not an option, since that would destroy too many retirement plans, leading to angry voters.