How Gen X & Y are Prohibited from Investing in the Retirement Ponzi Scheme

In addition to the social security ponzi scheme, a lesser known, though probably larger scheme, is the retirement bubble.

I've gone into detail at length before, but in short, with trillions of dollars already invested into retirement funds over the past 40 years, prompted by tax breaks provided by the government, all that has done is inflate stock prices above their intrinsic value.  This makes mutual funds, stocks other investments a bad deal for any Gen Y or Gen Xer's entering their earning years and looking to stash away for retirement.

But there's another funny little aspect to this whole retirement program thing.  Oh, you'll call me "cynical" for making this observation, but that makes it all the more true.

It's not an issue of whether younger generations SHOULD invest in retirement plans.

It's an issue of whether they even CAN in the first place.

In order to invest for retirement you need money.  And not just money, but enough money to pay for food, clothing and shelter AND have enough disposable income left over for retirement investing.  But given the wonderful economy we've had under President Fluffy Bunnies not only is that disposable income non-existent, the jobs necessary to provide ANY income is non-existent.  And thus without jobs the retirement bubble ponzi scheme I believe will collapse quicker than I thought before.

To see if data had bore me out, I pulled some stats recently from the ICI (which provided me the statistics to the post I mentioned above 6 years ago).  Since then they've made the data private, but I was still able to find two telling charts showing you that the flows into mutual funds just isn't there to continue to support the retirement bubble:

First is the net new cash flows into mutual funds.  The ICI breaks it down between regular mutual funds and money market funds.  Particularly shocking is not just the collapse of contributions to money market funds, but the complete withdrawal from them during 2009-2011.  And not just a withdrawal, but more than enough to offset the NEW contributions into the other types of mutual funds.

Translation - people are selling their mutual funds to make ends, NOT reinvest in other funds.

Also notable in the chart is how (despite the summer of recovery) investment in mutual funds just plain stopped in 2011.  Aside from the financial crash of 2008, this is the lowest level of investment into mutual fund AND THAT INCLUDES THE RECESSION AND DOTCOM CRASH OF 2000-2001!

To paint an even clearer picture, just look at net contributions into equity funds.  Ignore the red line as they are merely providing that as a reference to global stock price performance, focus only on the volume of money going into or out of equity mutual funds.  What is not only painfully obvious is that no new money is flowing into equities.  Worse still, is the volume being taken out of the market in 2011.













Again, what this suggests to me is not only is it so bad people are wary of the market,

not only is it so bad that the replacement generations don't have the money to invest in the market,

it's SO BAD PEOPLE ARE PULLING MONEY OUT OF THE MARKET TO MAKE ENDS MEET!

But, as you know, your beloved Captain always likes to end of a positive note, and thus the title of this post.

For you see, if there's one good thing Barack Obama did for the young blind lemmings salivating over his pecks or his turgid speeches it's that he made the economy so bad these 20 somethings won't have the money to invest in an overpriced market in the first place.

And that is the definition of "forward."

Enjoy the decline!