Source: Adam Smith Institute
by Tim Worstall
“People eat their capital to finance their retirements. This might be done inside a pension fund, a tax wrapper or simply directly and individually. But it is not true that a pension is simply the income made from some pot of money. It’s eating into that pot itself, that stock, over time. Therefore it is necessary that those assets — whatever they are, shares, bonds, direct assets like buildings, windmills, anything — be bought from the retiring generation by those now beginning to save themselves. Which is why much of the financial markets is indeed trading second hand pieces of paper. Because this generation of retirees needs to sell the things they invested in 30 and 50 years ago.” (04/17/24)
https://www.adamsmith.org/blog/pensions-net-matters-not-gross