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> So okay, I understand the pyramid analogy there. There’s a problem though: the boomers will die. Well, after the boomers have died, Generation X and the Mill

> So okay, I understand the pyramid analogy there. There’s a problem though: the boomers will die. Well, after the boomers have died, Generation X and the Millenials will demand their retirement package. The population age distribution will not become a pyramid with the next generations. > just raise contributions a little bit A little bit. Lol. In Germany the contributions are quite unpopular, too (and rightly so with 20% removed from your gross income), but the government just increased the tax subsidies over the years. Nowadays, they amount to about 30% of Germany‘s federal budget — on top of all the contributions. How much money do you think does a society need to pay for their retirees to make a redistributive pension system sustainable? > See, even though you’re ostensibly investing money so you can retire later, what happens in practice is that your money is being injected in parts of the economy to fuel your investment. And ultimately, part of that money will be used to pay currently retired people. No. You have a weird notion of how capital markets work. In a capital based system an individual saves for his retirement. Money is put aside every month and invested over a long time. The individual‘s money and its returns of investment are used to pay the pension. You can make this a public system where everybody is forced to pay and even set up a national fund. It can be subsidied a little to support the poor when retiring. This is how to render this system fair and sustainable.

loup-vaillant 5y ago
> No. You have a weird notion of how capital markets work My point is, you can't eat money. You can only exchange money for food. You can't heat your home with money. You can only pay for energy. You can't drive with money… well you get the idea. So you're saving now so you can retire later. From an accounting perspective, sure, you increase a number there now, so you can decrease it later. What you cannot do is store actual food for several decades, accumulate enough energy for several decades, or store all the material you'll need several decades from now. What you'll eat 20-30 years from now will not be taken from the current economy, it will be taken from the economy we'll have 20-30 years in the future. If there's no food there you will not eat, and that's the end of it. Maybe you'll have your money all right, but food will just have become too expensive for you to buy enough of it. (Now I talk at the individual level, but this is obviously a scale thing: some people will eat all right, just not everyone.) Hence my argument that even capital markets ultimately are a form of redistribution. Because at some point, either the young work so the old can enjoy retirement, or we leave the old to fend for themselves. Or something between the two ends of that spectrum.

loup-vaillant 5y ago

> No. You have a weird notion of how capital markets work My point is, you can't eat money. You can only exchange money for food. You can't heat your home with money. You can only pay for energy. You can't drive with money… well you get the idea. So you're saving now so you can retire later. From an accounting perspective, sure, you increase a number there now, so you can decrease it later. What you cannot do is store actual food for several decades, accumulate enough energy for several decades, or store all the material you'll need several decades from now. What you'll eat 20-30 years from now will not be taken from the current economy, it will be taken from the economy we'll have 20-30 years in the future. If there's no food there you will not eat, and that's the end of it. Maybe you'll have your money all right, but food will just have become too expensive for you to buy enough of it. (Now I talk at the individual level, but this is obviously a scale thing: some people will eat all right, just not everyone.) Hence my argument that even capital markets ultimately are a form of redistribution. Because at some point, either the young work so the old can enjoy retirement, or we leave the old to fend for themselves. Or something between the two ends of that spectrum.