America’s Pension Crisis Is About To Detonate

Dr. Paul Craig Roberts sent me an article by Catherine Austin Fitts and asked if I had read it.  The article is titled, “The State of America’s Pension Funds.” The article is worth reading, though I believe Ms. Fitts underestimates significantly the degree to which political and Wall Street criminality – along with money management incompetence – has infected and destroyed the U.S. pension system – both public and private. Furthermore, I believe she errs in her believe that the pension crisis can be fixed.

I’ve re-posted below my view of the looming pension system melt-down that I shared with Dr. Roberts.

“My guestimate for the amount stolen or shifted illegally through these mechanisms is $50 trillion, although I can argue the number higher.” I agree with her assessment there.

Craig, I concluded in 2003 that the elitists would hold up the system with printed money and credit creation until they had swept every last crumb of middle class wealth off the table and into their own pockets. Back then, I said housing was next asset to be drilled and cored. Let’s review: The first bubble removed at least $5-10 trillion of wealth from the public via the bailout of the banks and the wealth lost by people who chased home prices higher and then lost those homes to foreclosure or short-sale. Most of those homes are now sitting in the rental portfolios of large Wall Street investment funds like Black Rock and Colony Capital.

I also concluded that the last remaining middle class asset was retirement funds (Pensions, 401k’s, IRAs) and that looting that asset class would be the elitists coup de grace. Retirement assets are by far the largest middle class asset in aggregate (something like $20 trillion now). Let’s review: Every dollar of under-funding is a dollar of wealth transferred away from the pension plan members to either current beneficiaries or the promoters of the fund investments. A lot of money is also paid to “professionals” who skim huge salaries and benefits to put money to work with hedge funds and private equity funds, most of which will be wiped out in the next big bear market.

I have a close friend who works at a pension fund. It’s an off-shoot of a big State pension plan which happens to be one of the more underfunded pension funds in the country. My friend has to be a member of the pension fund as an employee of the fund he helps manage. He told me that as of Jan 1 he now has to contribute 12% of his pre-tax income to the pension fund. It’s criminal. That’s in addition to the amount his employer has to match. The money helps fund current beneficiary payouts. He needs his salary/job to support his family so he does not have a choice but to keep working at his current position unless he can find something else that pays equally as well. The job market for investment fund analysts is extremely difficult right now. His wife has to work for them to make ends meet (their kids are all under 12)

Based on a detailed study he did internally, he estimates the true underfunding of all public pensions in aggregate is at least $8 trillion. Not the $3.5 trillion referenced by Catherine Austin Fitts. He’s an insider and has access to better data than the outsiders and academics who have done studies that conclude $3-5 trillion of underfunding. THAT’s with the stock AND bond markets at all-time highs. How in the hell is that possible? The difference, or funding gap, is the wealth that is being confiscated.

The under-funding device is a very subtle and brilliant mechanism of wealth transfer. No one thinks about it that way but that’s what it is. A massive wealth transfer  mechanism.

I worked for some of these insiders at Bankers Trust. I can tell you first-hand, for a fact, that these people will do ANYTHING to take money from ANYONE, legally or illegally. I saw this first-hand. They are all very bright, well-educated and completely devoid of morals or ethics.  My direct boss was like that and everyone above him was even worse. They hate nothing more than leaving, literally, even dimes and nickels on the table.

That’s why the system is doomed.

9 thoughts on “America’s Pension Crisis Is About To Detonate

  1. The system will blow up because all of the central pillars of society have become predatory. The entire system from law enforcement, the tax system, the justice system, the healthcare system, the educational system,…I mean everything that was once respected has become corrupted. There’s nothing for people to point at and say that’s worth fighting for…that’s worth saving. That’s why I believe the system will implode from within. Betrayed by a couture of selfishness, greed, and stupidity.

    1. I would love to say I disagree…… I don’t.
      I see it in most places now. Even in education where the salaries at the top are completely out of control, as are the student debts which pay for them. I guess once the stealing begins in earnest then it is rational to get as much as you can. Simply self preservation. The decay of institutions and increasing lack of trust in them will not end well. I hate being so bloody gloomy…..

      1. The college my son finished at [last 2 1/2 years] is a non-profit…and in the dozen or so years since graduation the tuition has gone up to about 35k [could be more] for 2 semesters. Lots of high salaries in that nonprofit. Lots of perks too I’m sure.

    2. Well said, couldn’t agree more. Sorry to say that even the churches have become by and large big business-everything is so corrupt.

  2. It’s sad when the reality…the facts…almost inevitably lead one to feel somewhat doom & gloom. I don’t want to be. I know it is best to approach each day as relaxed as possible, with a tinge of hope & optimism. It seems ignorance is the best ally in feeling hopium.

    I’m so stressed I’m feeling defeated by the CAPTCHA arithmetic lol

  3. Banksters are people what didn’t have enough conscience to become lawyers. Together they comprise the bottom two layers of the scum of the earth. Neither produce anything of value, they are just parasites like fleas, ticks, mosquitoes and leeches.

  4. Pensions are starting to interest me as I approach the age where I can start collecting one from a private pension–I’m a few years away. My sense of it is that it might be there, or just won’t. So I accept “might” or “won’t” as outcomes–no guarantees. And that’s what partially drove me to a position in physical gold and silver; my insurance policy. I concluded that if pensions collapse, gold and silver would retain their value while everything around them imploded. Who knows what will really happen, but I sleep much better at night.

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