I was listening to NPR this morning and they had economic reporters from WSJ, NYT, and (IIRC) FT. Very reasonable folks. However, towards the end of the hour a few callers had complained about money printing, inflation, and such. They didn't really address what I started thinking about, so here it goes:
So while everyone agrees that investment income is going to remain low for most of us regular folk, with Fed's boosting going away, and baby boomers starting to hit it now at full force in both withdrawals AND expected returns, is the stock market really going to be able to handle that?
With all the talk about baby boomers bankrupting Social Security, I'm not quite sure that even the 401(k)/IRA/Pension system is able to handle the retirees while guaranteeing the returns. I imagine they expect to get 4-5% return for their investments, but with the narrative to also keep inflation low, which will further slow the economy, I see the returns having a very strong downward pressure.
I don't know if my thinking is coming across here, but the short version is:
1) Boomers are cashing out
2) Other boomers are cashing in and disappointed about their returns
3) To protect whatever income they do get, they want low inflation
4) Lower inflation leads to lower economic growth
5) Lower economic growth reduces returns
6) Stop market growth halts leading people to lose faith in it as investment
So while everyone agrees that investment income is going to remain low for most of us regular folk, with Fed's boosting going away, and baby boomers starting to hit it now at full force in both withdrawals AND expected returns, is the stock market really going to be able to handle that?
With all the talk about baby boomers bankrupting Social Security, I'm not quite sure that even the 401(k)/IRA/Pension system is able to handle the retirees while guaranteeing the returns. I imagine they expect to get 4-5% return for their investments, but with the narrative to also keep inflation low, which will further slow the economy, I see the returns having a very strong downward pressure.
I don't know if my thinking is coming across here, but the short version is:
1) Boomers are cashing out
2) Other boomers are cashing in and disappointed about their returns
3) To protect whatever income they do get, they want low inflation
4) Lower inflation leads to lower economic growth
5) Lower economic growth reduces returns
6) Stop market growth halts leading people to lose faith in it as investment
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