The Pension Collapse Is Starting in Illinois

From Birch Gold Group

After degrading for decades, America’s public pension system is finally at its breaking point, and the first shoe is about to drop in Illinois. Is this the beginning of the end?

Illinois isn’t the only state underwater. New Jersey, California, and several others are close behind. And when one falls, the rest could quickly follow.

When that happens, we’re poised for a vicious chain reaction that could decimate our economy. Americans everywhere will feel it — young or old, pension holder or not. Here are the risks, and what you may want to do to prepare…

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Troubling Harbinger in Illinois

The epicenter of the U.S. public pension crisis is in Illinois. This should give you an idea of how bad things are there: On top of the state pension program being utterly insolvent, Illinois can’t even afford to pay lottery winners or feed prisoners.

Illinois legislators are grasping at straws. According to a recent report, the state has $15 billion in unpaid bills and $251 billion in unfunded liabilities. $119.1 billion of those unfunded liabilities are tied to shortfalls in the state’s failing pension program.

After months of desperate number crunching, Illinois finally passed a budget this week. But legislators employed massive tax hikes to make it happen — a 32% increase on state income tax and 33% increase on state corporate tax.

Illinois’ new budget doesn’t mean much, though. It raises a paltry $5 billion, just a drop in the bucket when you look at the state’s $15 billion deficit.

Even Illinois Governor Bruce Rauner agrees that it’s a hopeless, last-ditch effort:

“This is a two-by-four smacked across the foreheads of the people of Illinois,” Rauner said. “This tax hike will solve none of our problems and in fact, long run, it’ll just make our problems worse.”

And if all that wasn’t enough, Moody’s is putting Illinois under consideration for a credit downgrade — potentially making it the first U.S. state to receive “junk” rating status. If that comes to pass, borrowing costs for Illinois will uptick dramatically, and it could be the final nail in the coffin.

Just the Beginning…

The situation in Illinois is taking center stage right now, but several other states are poised to follow. And when Illinois does fall, it will only accelerate their demise.

Kentucky, New Jersey, Arizona, and Connecticut are at the top of the list. Their pension woes and budgetary shortfalls are nearly as big as Illinois’.

And the rest of the country? It’s only marginally better off. Bloomberg reports that just 15 states have pension funding ratios above 80%.

U.S. public pensions are underfunded by at least $1.8 trillion, possibly as high as $8 trillion, according to expert estimates. They’re paying out more money than they’re taking in, plain and simple. And they’re falling hopelessly short on their projected returns too. Most funds aim for approximately 7.5% return, but they barely broke 1.5% last year.

All this shows is that, more than ever, pensions are snowballing into insolvent oblivion. And sadly, a collapse is the only thing that will stop them.

The Threat to Your Wealth (And How to Preserve It)

America’s public pension system is nothing but a tinderbox waiting to be lit, and Illinois just struck a match. No matter what, the only way this quagmire of pension insolvency can end is in a pile of ashes.

That alone is sufficient reason for Americans to start seeking safe haven stores of wealth right now.

Consider the Fed’s most likely response to this imminent collapse, which will only make matters worse. It’s safe to assume the Fed will fall back on its old tricks from 2008: print more money and use quantitative easing to slap a band-aid over the problem.

While the Fed tries to pretend away this pension collapse with fast-and-loose, helicopter monetary policy, inflation will surge and the dollar will drop like a stone.

But one “real money” asset will do the exact opposite: gold.

See, gold’s inherent value never changes, only its price does. And that price depends on several external factors like supply, demand, and valuation of the currency used to buy it — in our case, that currency is dollars.

So when the dollar falls, what happens to gold prices? Well, it means you have to spend more dollars to buy the same quantity of gold. And that just sends gold prices higher and higher.

Birch Gold Group helps Americans protect their savings with physical gold and silver. Clients can purchase precious metals for physical possession, or move their IRA or 401(k) into a Precious Metals IRA. To learn more, request a free Info Kit on Gold – there is zero cost and zero obligation to you. All you need to do is enter your details at www.birchgold.com

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starfcker
starfcker

Very nice. Florida, with no income tax and 6% (in my county) sales tax, is better than 80% funded. How are bright blue NY, WA and OR doing so good?

Anonymous
Anonymous

What are the RE and other State taxes like?

rhs jr
rhs jr

County property taxes vary tremendously mostly depending on their FSA Welfare Loads. My 15 acres, home and outbuildings in Jefferson County are $482 but in neighboring liberal Leon County it would be about $3,000. I have no county sales tax but some counties do have very small sales surtaxes like 0.5%; the Florida sales tax is 6%. The only real problem is the 15 million liberal Blue Bellies that took over the lower half of the state; we shoulda built a damn wall.comment image

suzanna
suzanna

Wisconsin needs to build a wall…pronto.
Let us pray to God that “those who need to be fed”
travel South.

I used to imagine we would retire to Fl. Same land/acres
mass as Wisconsin, but 5X the peoples, and many tourists.
Recent reports of Nuke Power Plants leaking there and
sink holes increasing. The corexit is polluting the Gulf
Coast, (don’t eat that fish), as are the hoards of people
trying to get around in bumper to bumper traffic.

Excuse me…it is just all sour grapes with me.

Greg
Greg

Congrats..I’m in the County east of you and was/am thrilled beyond belief to have left Leon County
I won’t elaborate but suffice to say that culture is not a civic center or ball team. Nor is it an incessant celebration of diversity on all others dime
Culture is living among my people who’ve not disregarded shame, who mind their own business and don’t have to pine for the communal glue
Godspeed

ZenitFan
ZenitFan

RE taxes would have to be much higher in Leon Co. even if it wasn’t liberal. So much of the county being state govt. property, from the Capitol to the lowest-level bureaucracies. Then add in FSU & FAMU. All off the tax rolls, so private property must make up for it.

FWIW, my county near Orlando has a 1% sales tax surcharge. Not a big deal unless buying something expensive, then it pays to get it in a surcharge-free county nearby.

starfcker
starfcker

Good, really. Homestead exemption gives you a little savings on the bill, Save Our Homes limits your taxes on a homesteaded property to max 3% a year increase, regardless of value, lots of little exemptions for vets, seniors, widows, etc.. agricultural property pays next to nothing. All in all, tough to hate the tax structure here.

TampaRed
TampaRed

outrageous

Jake
Jake

Of course, all the shit for brain libs are heading there from the Northeast and will immediately begin voting Progtard and wreck the place.

Realist
Realist

Oregon is NOT doing good. The pension fund (PERS) has an unfunded liability to the tune of 22 billion. For a state of its size, that is huge. It is so bad that the normally polished Vice Chair of the Oregon Investment Council recently broke down in tears as she spoke of passing such unfunded promises to future taxpayers. It is a disaster waiting to happen and yet our Democratic leaders continue to twiddle their fingers and do nothing. Well, they did manage to pass a law making sure we can all choose “no sex” at the DMV on our drivers licenses. So there is no way Oregon is firing on all cylinders and it will go down with all the other state disasters waiting to happen.

MarshRabbit
MarshRabbit

80% is a step backward: “The Pew analysis found the Florida Retirement System pension fund jumped from being 114 percent funded in 2003 to 80 percent funded in 2009.” http://archive.naplesnews.com/news/government/analysis-florida-pension-fund-needs-money-3311c9e8-426b-1946-e053-0100007fa98e-379879461.html/

kokoda - the most deplorable
kokoda - the most deplorable

comment image

Iska Waran
Iska Waran

Gold. So should I buy pieces of paper that supposedly represent gold or bars of gold that may be 90% tungsten?

SSS

Iska

Go to a reputable coin dealer and buy modern U.S. mint double eagles, eagles, half eagles, or quarter eagles that are .999 percent pure gold. These coins are priced at the daily spot for gold plus a small dealer markup. Or try the older, common date U.S. mint gold coins that are 90% pure. Then go rent a safety deposit box or bury them in your back yard (heh).

IndenturedServant

SSS, I think Iska was being sarcastic. Given the ability of the Chinese to make very good to exceptional quality counterfeits, it’s a good idea for people to only buy from reputable dealers or use go/no-go gauges and tools if they are not familiar enough to protect themselves.

It’s also a good idea to keep ones ear to the ground with regard to the currently *hot* counterfeits. Sometime back they were even faking some of the generic silver rounds.

NickelthroweR
NickelthroweR

Greetings,

The “everything is bad, buy gold!” crowd is getting a bit tiresome. I agree that fiat currency is no store of wealth but I’m not positive gold is any better. Money that would be spent on gold may be better spent on tools and other items needed to prosper through such a mess.

If you never want to go hungry, learn how to brew beer.

llpoh
llpoh

Fuck brewing beer. Learn to distill! Tried and true means of generating income in hard times. And vastly more portable/bang for buck than beer.

Not that I know how to do that, of course. Nope. Nosirree.

Rdawg
Rdawg

Me either. You definitely cannot construct a pot still with copper tubing, some copper fittings, and a stock pot.

Can’t be done.

suzanna
suzanna

You should have 100 thumbs up Mr.s,
that would be Nickle and llpoh.

Boat Guy
Boat Guy

You should by long term food and lead & brass and an adequate dependable delivery system for lead and brass ! I am constantly criticized for my attitude towards government employees and there lavish and sometime ridiculous pension agreements promised by people who are now long gone and probably dead in many cases . I am sympathetic and wish them all well and good luck but a tax increase on private sector people who in millions of cases their jobs with pensions and benefits were thrown overboard 40 years ago and continues to this day , Obama Care Any One !
The hand writing has been finger painted on the wall by the investor class for decades and I have personally called this bank shot for decades as our industrial , dare I say high paying union jobs that supplied the tax base for you band of fools that drank that COOL AID !
I was accused of being jealous because my steel worker job hit the final shitter in 1984 and from there on the tax base struggled in my area . We even had a local politician call out the steel workers as a group and said ” We must raise taxes on you because the county is not getting the revanue needed to operate because those of you that were able to find jobs are earning a lot less so you pay less tax . I was not the only one who heard that statement and the next election he was gone never to return ! Lucky he is still alive , I worked with men who lost everything and that makes people desperate !
The point is the tax payer well is dry and I am sure if you want any more from us you will have to take it . Take it you will this I have no doubt but eventually it will come at a heavy price I doubt any local state or federal official is prepared to pay ! When you got nothing left to lose many become quite dangerous . Again GOOD LUCK !

Lulu
Lulu

Yes, I’ve never understood why it was considered reasonable that a certain percent of the public (government workers) got to retire in their 50s on the backs of their neighbors who are expected to work until death to pay for their the “public servants” gold-plated pensions and health benefits.

BB

Or you could just wait until someone like Nickel Thrower takes his boat out to sea .You jack the boat , steal everything, throw Nickel in the ocean and sell his boat ,wife and children to the Arabs.Or you could have their organs harvested .One kidney will get a 100,000 dollars on the black market .
Sorry Nickel just thinking outside the box.

NickelthroweR
NickelthroweR

Greetings,

Why pick on me ’cause I’ve got the better plan? Once you move more than a mile away from from a road or port you may as well be on the moon. I can’t do 360 defense on my home down here at the beach but a sailboat in the water is a different story. My radar can pick you up from 6 miles away and the moment I can see you or your engine then you are coming no closer. Worst case scenario is that I die in comfort.

Have fun with the zombies BB, you’ve earned it!

digitalpennmedia
digitalpennmedia

you ever tried to shoot from a boat? …on the ocean? …good luck with that. what about ammo supplies and food, how much can you haul out?
you think you are the only one with the idea to run to the sea? If you do you’re way more ill-prepared for a collapse then the folks living with the zombies. you are easily visible on the ocean or in a port…from a mile or two off. I hear tons of people believing that somehow they will get their boat out (but somehow think they are the only ones to think of this)
those exec orders that were signed 10 at a time in Obamas term also include an ocean scenario to sink any and all vessels leaving ports in a time of crisis and martial law…
…targets in a mass group have a chance in the scattering, you are a lone target. Good luck

WIP
WIP

What bullshit. The fed can bail them out without causing mass inflation. They can do this by simply filling the gaps only. Pay nothing above the shortfall.

In fact if Illinois wanted to do the best thing for their citizens (including the pensioners), they would let the pension system fail.

Nothing to see here.

BB

Nickels ,we got to open to all aspects. I probably wouldn’t jack your boat but others will.Maybe coming two or three at a time.You just don’t know.
At least you got a plan .My plan is simple .Stay put . I’m surrounded by police / military types.Mostly retired but they still know how to shoot . After the zombie apocalypse is when I figure I’ll …..?

Hondo
Hondo

It’s very difficult for me to be concerned about whether lowlife public employees will get their retirement check or not, or anything else for that matter, while looking at all the titty advertisements this site has. “Tit on guys”, worry not!

TampaRed
TampaRed

are they good uns hondo,cause if they are i’m gonna disable my ad blocker

SSS

Look, let’s be clear. This post is a “buy gold” advertisement by a buy-gold business. Gold is nothing but a hedge against a collapsing US dollar. Period. Same with silver.

I have small physical quantities of both. Emphasize the word small. If you can afford it, I’d advise you to do the same. Otherwise, if you’re an old man such as I, roll the investment dice and go for risky businesses such as Proctor&Gamble. Heh.

Unreconstructed
Unreconstructed

Oh Suzanna.
Let us pray to God that “those who need to be fed”travel South.

The South don’t need Wisconsin’s poor, tired, huddled masses. We got our own welfare problems. Louisiana’s budget is a ticking time bomb also.

Bob
Bob

Benefits can be cut…
Assets can be sold…

I wonder how much the public assets of the State of Illinois are worth in aggregate? How much land does the state own? How many buildings? What is it all worth? ETC., ETC., ETC. Enquiring minds want to know!

BUCKHED
BUCKHED

Bob…a CAFR would tell how much each state owns. They may have to sell for a low rate in order to find buyers of those assets.

I’ve got the land,water source,lead and the means to sling it. I hope I live long enough to see the final outcome. Hopefully the “South Will Rise Again ” .

LibertarianMathProf
LibertarianMathProf

The pension crisis is what you get when you make promises based on borrowed funds or money you never realistically expect to receive. It’s a Ponzi scheme pure and simple

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