by
Adam Taggart
Detroit
by
Chris Martenson
Executive Summary
- What Detroit tells us about continuing the status quo
- The shocking true size of the real U.S. debt
- Why time is our most valuable – but scarcest – asset
- Where your efforts need to be placed to address the big picture
If you have not yet read Part I: Why We All Lose If the Fed Wins, available free to all readers, please click here to read it first.
If we can't even have an honest conversation six years into this failed experiment about its core aspects, then it is little wonder that there's virtually no appetite for the bigger burning questions of our time, such as where do we want to be in twenty years and what do we need to do to get there?
Instead, the focus is simply on preserving the status quo and doing everything possible to maintain it. Never mind that the status quo is obviously failing in many key regards and needs some serious adjustments. All that the Fed and D.C. have in mind here is more of the same.
And this is why we will lose the war.
The Detroit Harbinger
If we want to know what happens when we ignore reality and just soldier on, we need look no further than Detroit to see how that works out. For years, that city mismanaged its finances, continually banking on the idea that eventually jobs and opportunity would return. They continued to offer – yet failed to fund – lavish pension promises to municipal employees, even though anybody with a pocket calculator could work out that the plans were not viable.
But the plans were offered, and the union reps on the other side of the table accepted the terms, even though at some point it would have made sense for someone to raise the obvious by noting that the plans were utterly insolvent and almost certain to stay that way.
Right now, the pensions in Detroit are underfunded by $3.5 billion, according to official figures. But those same officials are assuming an 8% rate of return on current pension assets, a rate that nobody is actually achieving in the pension world – thanks, in large part, to Bernanke's 0% interest rate policy.
Here's how they got to this point:
The Real Story to Focus On
PREVIEW by Chris MartensonExecutive Summary
- What Detroit tells us about continuing the status quo
- The shocking true size of the real U.S. debt
- Why time is our most valuable – but scarcest – asset
- Where your efforts need to be placed to address the big picture
If you have not yet read Part I: Why We All Lose If the Fed Wins, available free to all readers, please click here to read it first.
If we can't even have an honest conversation six years into this failed experiment about its core aspects, then it is little wonder that there's virtually no appetite for the bigger burning questions of our time, such as where do we want to be in twenty years and what do we need to do to get there?
Instead, the focus is simply on preserving the status quo and doing everything possible to maintain it. Never mind that the status quo is obviously failing in many key regards and needs some serious adjustments. All that the Fed and D.C. have in mind here is more of the same.
And this is why we will lose the war.
The Detroit Harbinger
If we want to know what happens when we ignore reality and just soldier on, we need look no further than Detroit to see how that works out. For years, that city mismanaged its finances, continually banking on the idea that eventually jobs and opportunity would return. They continued to offer – yet failed to fund – lavish pension promises to municipal employees, even though anybody with a pocket calculator could work out that the plans were not viable.
But the plans were offered, and the union reps on the other side of the table accepted the terms, even though at some point it would have made sense for someone to raise the obvious by noting that the plans were utterly insolvent and almost certain to stay that way.
Right now, the pensions in Detroit are underfunded by $3.5 billion, according to official figures. But those same officials are assuming an 8% rate of return on current pension assets, a rate that nobody is actually achieving in the pension world – thanks, in large part, to Bernanke's 0% interest rate policy.
Here's how they got to this point:
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by blaggers 
