> But they're not taking care of themselves, they're relying on
> valuations created from the expectations of millions of other
> "investors," ...
Oh, I didn't mean to imply they were *right* -- just that this is how they see it. This is how they've been led to see it. It's the first step in moving the expectations away from 'sure thing' entitlements to something more sustainable (at least at the Federal level). It's also the trend in things like wel/work -fare.
> most of the cash flow into U.S. stocks has come from a shifting
> allocation of existing savings - from banks to securities through
> mutual funds - not a gusher of new savings.
There is a limit to the amount of new money that can come in (but see contribution limits rising each year and the large numbers of eligible people who still haven't taken the bait for evidence that even this can grow), but it is now the case that the largest amount of the holdings comes from appreciation and not savings itself; so it's worth looking at the total amount invested.
Further, my point was that the liquidity is on-going: it's tied to paychecks, and so the decision is a constant one. You're right, it's largely replacement savings (who has a savings account anymore?), but like tax deductions it's nearly "forced" ... un-doing this will be difficult, at best.
> It's not hard imagining that process reversing, though god knows
> whether it will happen in 1998 or 2027.
There's the old joke about the guy who buys a stock on the way up until he owns it all and the price is at an all-time high; he calls his broker and instructs him to sell it and the broker asks: to who?
I think it's hard to imagine it reversing; can you share your imagination a little?
/jordan