Right when you thought our govt couldn’t get more brazen in their efforts to deceive and screw the public, out comes these two related stories. First, the govt has found a novel way to increase GDP. The govt will now count promised payments to pensions as actual contributions for the sake of GDP calculations. You read that right. Up until now, actual pension payments were counted as wages in the GDP calculation. Now, the govt will use future promises to pay pensioners as the actual number. In other words, the bigger the promise, the bigger GDP.
Why would the govt do this? Are they expecting pension payments to decline? Well, what do we have here – the govt is giving companies the ability to average out their pension liability so they can lower contributions. What a coincidence! Imagine if you could average your electric bill during the most moderate months and apply that rate to the rest of the year. During the summer months when the bill was higher than average, the electric company would just pay the difference. Well, that is exactly what companies are doing, with one small exception – pensioners are the electric company in this example. The govt’s creative accounting simply sticks the pensioner with a lower standard of living.
When interest rates are higher, the payment formula obligates the company to make smaller payments into pension fund. Since rates have been manipulated lower by the Fed to keep their banking cartel solvent, the consequence is it forces companies to increase payment contributions into the pension fund. So, what do you do when you’re a big corporation and you don’t like the rules, you get your employees in CONgress to change them, of course. To make the interest rate factor larger for their calculation, companies are now allowed to average the interest rate over the last 25 years, reducing the amount they need to pay into the fund. The other consequence of the Fed’s manipulated low interest rates is it has reduced returns for pension funds that rely on conservative interest bearing investments. This has added to pensions being unfunded. It looks like the govt has figured out, once again, how to make citizens pay for the unintended consequences of govt.
This wonderful piece of convenient accounting was naturally inserted in the transportation bill last June, and became mandatory this year. Wouldn’t it by nice if you were mandated to pay your lowest average electric bill? Naturally, CONgress is looking out for the future of the little guy. That is why the bill was called Moving Ahead for Progress in the 21st Century or MAP-21. Why don’t they just be honest and call it, Moving Backward For Government or MBG-16 (as in 2016 when our Ponzi govt starts to implode).
More of this type of CHANGE will be coming our way as long as your govt values its jobs and perks more than yours. Businesses have less for pensions because govt policies are destroying the economy and suppressing interest rates . Like algae taking over a pond and choking the life out of it, bloated western govt’s are choking the life out of the world’s economy. Why – to maintain their existence, benefits, and power, of course…and always under the guise of promises that can never be kept. Have the inner cities ever been helped by all the govt love, or has it only been the politicians in these districts that have benefited?
The simple math is western govt’s are out of money to pay for their largess. Taxing people decreases business activity, jobs, and consequently tax revenue. As the flow of blood out of the stone runs dry, broke govt’s start looking for other sources to pay their bills. Broke countries without a printing press (i.e. euro zone countries) have tried to borrow more money to repay their old debts, but these geniuses have realized that ever increasing loans only result in ever increasing debt payments – who woulda thunk it? What’s next? Retirement accounts and depositors bank accounts, of course!
The same thing that is happening to pensioners through the back door will be coming through the front door for depositors and retirement account holders. It’s happened outside the U.S., and has already occurred inside the U.S., but only to select account holders who foolishly believed their accounts were segregated from speculative bets a company was making trying to keep up with the Jones’s – or should I say the Goldman’s (i.e. MF Global). As soon as the Fed loses it’s ability to print, which will happen when rates start to rise, our govt will come for your retirement accounts and bank accounts. What else do you think the govt is going to do? Voluntarily cut their departments, power, or jobs? Do you think career politicians are going to give up their perks and actually live under the same laws they impose on everyone else? Yeah, right!
There is an alternative! My five-step plan to take back our country will be unveiled in the weeks ahead. Stay tuned!