The bailouts are tragic as it undermines the natural garbage collection in democracy - bankruptcy. Bankruptcy is an incredible positive because it allows for the safe and sane dismantling of bad organizations.
The question is - how do we apply a mechanism like bankruptcy to government organizations?
>> The question is - how do we apply a mechanism like bankruptcy to government organizations?
Not sure if this is an answer for every government org, but hundreds of municipalities and possibly even states are going to go bankrupt due to obscene pension liabilities. The very difficult "solution" is to let them to bankrupt, and allow them to re-negotiate liabilities.
Unfortunately many municipalities have promised the world to retirees, often with inflation adjustments and often starting at 20yrs of service (that is, age 41 until death). Add in tricks like matching final year salary (which is often packed with overtime) and you have unbearable pension obligations. It isnt the worker's fault. But the local leaders and pension managers are at fault, and citizens are on the hook. Unfortunately the decisions were made by leaders 10 or 20yrs ago, so it may not even be the current leadership.
If the municipalities are bailed out, then it gives a signal to every other municipality to overpay massively because either the state or uncle sam or PBGC will come in and bail everyone out. It is going to be a mess.
What seems that way to you has turned out to not even be as much prosperity as it should have been for those having the most effective inflation-calibrated plans.
There was no other way to even come close to what employers had intended for their people when they granted these benefits in lieu of full market pay. That's how destructive inflation was.
And of course for the vast majority of retirees it has always fallen far short of what could have been since inflation has been calibrated over the years to continually bring the buying power of gains downward the more that accrue regardless.
Exactly. Bankruptcy and insolvency is an immune response to financial illness in markets. However, instead of removing cancerous growths, we bail them out and thus they metastasize and become much larger and more lethal. This inevitably leads to the death of the host.
The host is already beyond recovery for the US dollar to ever again function as designed.
Thos. Jefferson's quote continues:
> I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”
Remember the purpose of the US Mint was to convert the silver & gold of any citizen into legal tender for a reasonable fee and return it to them as coins. Printing of bank notes was not on the agenda until politicians having a more predatory agenda got their way.
The question is - how do we apply a mechanism like bankruptcy to government organizations?