1148 The Fed vs. Pensions

Supposedly there's $24 trillion of retirement funds in the Stock Market but even that only represents about half of what is owed to retirees. Retirement is a Ponzi scheme where new workers pay in but it's not enough to make payments to retired workers. Therefore the Market has to increase by at least 5% yearly to keep retirees from freaking out, especially voters, but the Market doesn't have any low risk investments of that magnitude except for the indexes which are dominated by the so-called FAANG stocks: keep those 5 companies up for the Market index to go up. The Fed uses interest rates and Open Market Operations to maintain a minimum yearly growth. Low interest rates allow companies to borrow money to buy back their own stock: the loans just keep getting rolled, and as long as they're interest free, it can go on forever. This elevates the share price which pleases the shareholders, triggers huge bonuses for management and keeps pension fund managers happy. Unfortunately, that means the price of those stocks is not tied to any fundamental underlying value of the companies, and the bubble has become so large that when it finally pops, retirees are going to be left with nothing.