**
Dr. Eowyn posted: "Short answer to the question is: Because America's
cities and states are in debt up to our eyebrows from unfunded pensions to
public employees -- pensions that, without exception, are based on the
expectation that whatever money that's paid into those " Respond to this
post by replying above this line
New post on *Fellowship of the Minds*
<http://fellowshipofminds.wordpress.com/author/eowyn2/> Why there will be
many more Detroits – in one
chart<http://fellowshipofminds.wordpress.com/2013/08/18/why-there-will-be-many-more-detroits-in-one-chart/>
by
Dr. Eowyn <http://fellowshipofminds.wordpress.com/author/eowyn2/>
Short answer to the question is:
Because America's cities and states are in debt up to our eyebrows
from *unfunded
pensions to public employees* -- pensions that, without exception, are
based on the expectation that whatever money that's paid into those funds
gets 7% to 8% interest.
But the reality is the Federal Reserve is artificially suppressing interest
rates because of the Godzilla-sized national debt of $16.9 trillion. That's
the official figure, according to our feral gummint. The *real* figure,
according to a U.C. San Diego economics professor, is $70
trillion<http://fellowshipofminds.wordpress.com/2013/08/15/california-economist-says-real-us-debt-70-trillion/>
.
If the Federal Reserve lets interest rates go up, then our gargantuan
national debt will balloon even quicker.
That is why the interest rates on bank savings, certificates of deposit
(CD), and U.S. Treasury bonds and notes are so anemic. The highest interest
rate being offered for a one-year CD
<http://www.bankrate.com/cd.aspx>currently is 1.05%. As for treasury
notes, rates are going up. The latest
10-year Treasury
note<http://www.reuters.com/article/2013/08/16/us-markets-global-idUSBRE96S00E20130816>has
a yield as
high as 2.866%, a level not seen since July 29, 2011. But 2.866% is still a
far cry (5.134% to be precise) from the 8% interest rate on which are based
our public pensions.
Below is a chart showing how underfunded public pensions are, compared with
private retirement funding. As Tyler Durden of
ZeroHedge<http://www.zerohedge.com/news/2013-08-16/compare-and-contrast-public-vs-private-retiree-underfunding-one-chart>puts
it:
The chart below explains, in the simplest possible terms, why there are
many more "Detroits" on deck. It shows the underfunded status of public vs
private retiree healthcare plans. It needs no commentary, although it may
deserve one question: *what happens when all those public servants who have
been promised over a trillion in healthcare benefits upon retirement,
realize it was all a lie? And then come... the pensions.*
[image:
pensions]<http://fellowshipofminds.files.wordpress.com/2013/08/pensions.jpg>
*~Eowyn*
*Dr. Eowyn <http://fellowshipofminds.wordpress.com/author/eowyn2/>* |
August 18, 2013 at 5:17 pm | Tags: 1-year Treasury
note<http://fellowshipofminds.wordpress.com/?tag=1-year-treasury-note>,
Federal Reserve<http://fellowshipofminds.wordpress.com/?tag=federal-reserve>,
Interest Rates <http://fellowshipofminds.wordpress.com/?tag=interest-rates>,
pension
underfunding<http://fellowshipofminds.wordpress.com/?tag=pension-underfunding>,
private pensions<http://fellowshipofminds.wordpress.com/?tag=private-pensions>,
public pensions<http://fellowshipofminds.wordpress.com/?tag=public-pensions>,
U.S. national
debt<http://fellowshipofminds.wordpress.com/?tag=u-s-national-debt>|
Categories:
Banks <http://fellowshipofminds.wordpress.com/?cat=19405448>,
conspiracy<http://fellowshipofminds.wordpress.com/?cat=11808>,
Economy <http://fellowshipofminds.wordpress.com/?cat=17656840>, Health
Care<http://fellowshipofminds.wordpress.com/?cat=20052>,
Obama's America <http://fellowshipofminds.wordpress.com/?cat=12285619> |
URL: http://wp.me/pKuKY-mYK
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