Pension Scam Hits Connecticut
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  • gooch mango

    Well, of course Connecticut’s government worker pensions are in crisis; pretty much all Western pensions are in or entering crisis.

    The concept to keep in mind is this: all pensions are dependent on the earnings of your children and grandchildren. Whether you work in the public sector or private; whether your pension is defined benefit or defined contribution; whether it is funded by pay-as-you-go transfers or accumulated assets… it doesn’t really matter. Your pension checks are built upon the numbers and prosperity of your descendents. All of the promises and pieces of paper in these plans are just proxies; claims on a portion of the labor of future generations. If the future generations are smaller and/or poorer, the money simply won’t be there.

    In fact, most of these pension plans collapse in the absence of growth — simply holding-our-own is enough to push most of them over the edge.

    Retirees can rant and rave, they can rend their clothes and gnash their teeth, they can weep and wave their contracts in the air… in the end it won’t matter. The money won’t be there, and all of the paper laws of man will fall before the iron laws of math. Simple as that.

  • Johnny

    @Gooch Mango

    You can’t be more wrong as to defined contribution plans. Both your contributions and the states go into individual accounts. When you retire you take what’s in your account. It’s not dependent on future contributions.

  • LarryD

    And where does the money go? It’s invested, i.e., lent to younger people to create wealth. No wealth creation, no growth. No young, no growth, no survival, eventually.

    No, Gooch hits it on the nail head.

  • Richard Treitel

    To be strictly accurate: the money may be there, but the things you hoped you could buy with your money will either not be there, or its price will have inflated beyond your wildest nightmares.

    This was clear long ago to anyone who didn’t think of money (or gold) as a special sacred thing whose value cannot change in response to supply and demand. When the baby boomer retirees try to exchange their money for medical care, whether the money be in the form of government bonds or gold bars or anything else, the high demand for medical care will drive its price up and the low demand for money will drive its value down. No escape and no excuses, please!

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