Thursday, December 4, 2008
saving for the future
For a long time I've wondered how to make sense of an extreme example. Assume we are all the same age. And we all save diligently for retirement. And we all retire at roughly the same age. What are those savings worth? Anything? If cash? If non-portable assets? If portable assets? I'm thinking about conversion of retirement savings into services and whether this means, if the stock of available services is roughly fixed (number of people available to provide the services), that you just see crazy inflation. Oddly, does this also mean that, if we all got uniformly poorer (for example, if all of our equity portfolios got cut by 40%), is there a more muted effect than you might expect? I don't really get it.