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Actually retirement accounts are demand leakages. For example quantity theory of money gives us MV=PY money * velocity = prices * quantity of goods/services pr
by bubbleRefuge 15y ago
Actually retirement accounts are demand leakages. For example quantity theory of money gives us MV=PY money * velocity = prices * quantity of goods/services produced. So if money is squirreled away in retirement accounts it is no longer circulating in the economy and in order to maintain the same level of economic activity we have to 'make up' for the lost M. So retirement accounts are a drag on the economy.
- zg 15y agoRetirement accounts aren't usually held entirely in cash except very near the end. For younger people the bulk would be invested in equity i.e. funding businesses and thus being fed back into the economy.
- bubbleRefuge 15y agoIts money taken out of circulation that could have otherwise been spend on consumption. Buying IBM stock in my IRA doesn't do much for the economy compared to taking the same funds and buying an IPAD or 100 happy meals.