“Money is and always has been political. Our central concern should not be with [money’s] technology but with the political and legal framework with which it operates”. ~ Dr. Rebecca L. Spang

By Catherine Austin Fitts

Table of Contents

I. Introduction

II. Global Pension Fund Assets

III. US Pension Fund Assets

IV. A Comment on US Pension Fund History

V. Recent Global and US Pension Fund Performance

VI. The Pension Fund Crisis Narrative

VII. My Financial History as an Alternative Narrative

VIII. Total Economic Returns – Why Are We Financing Governments, Companies and Products and Services with Negative Returns?

IX. Other Issues

X. The Bottom Line

XI. What Can I Do?

XII. Appendix

I. INTRODUCTION

Our planetary governance and financial system currently operates significantly outside of the law. Whether the cost of war, organized crime, corruption, environmental damage, suppression of technology or secrecy, this lawlessness – and the lawlessness it encourages in the general population – represents a heavy and expensive drag on all aspects of our society, our economy and our landscape.

The underfunding of pension funds in the United States is a symptom of that drag. It is not a self-contained crisis.

We are told that we can fix the pension funds by saving more – such as by increasing the contributions from beneficiaries and/or taxpayers. As portrayed in our graphic for the cover of this 2017 Annual Wrap Up, this is the equivalent of trying to fill a milk bucket by milking more cows when the problem is that there is a hole in the bucket. Why put more milk in the bucket until the hole is fixed or the farmer gets a new bucket?

If my subscribers and clients are representative, many people in the US general population – either as beneficiaries or taxpayer – are reluctant to invest more money in the retirement system. Many do not trust it.

• They do not trust pension fund governance and management to treat beneficiaries’ interests as primary.
• They do not trust money managers to invest wisely. They believe Wall Street promotes fraudulent securities.
• They do not trust central banks,  the federal government and some state and local governments to behave responsibly.
• They are concerned that laws and regulations will be changed in an unfavorable manner – that their pension will become the financial equivalent of a “roach motel.” The money goes in, but it does not come out.
• They feel cheated by public agencies that engage in political patronage, for example, that enable workers to game their final working year or two (through overtime, extra shifts, undeserved last-minute promotions, and other manipulative gimmicks) to retire with pension payments that are as much as double what they are rightfully entitled to in the absence of such gimmicks.

Under these circumstances, the decision to avoid increased investment in pension plans or retirement vehicles may, in fact, be a wise decision, albeit it makes the underfunding “crisis” worse.

Addressing pension fund underfunding in the United States will require ensuring integrity in pension fund governance and investment policies where it has been eroded.  It likely will also require the successful return to a model of household and family wealth accumulation where individuals and families control the governance and management of their assets instead of depending on centrally controlled systems. Family wealth has the distinct advantage of returning control of investment decisions to individuals. However, this is hardly what the US establishment wants.  The centralization of power depends on the increasing control and concentration of family financial capital.

Whichever path we take, the success of our pension fund and retirement assets and their impact on financial markets and society will necessitate addressing the integrity of governmental and corporate governance in the global financial system.

This is the same point that we repeatedly make on the Solari Report. Our economy is a dynamic ecosystem. We cannot isolate one part and “fix it.” If there is a fundamental and systemic imbalance, such as corruption or lawlessness, it must be dealt with on a crosscutting basis.

If our political process delivers profits and a cheap cost of capital for insiders, while considering the general population expendable, the solution is not for everyone else to save more in the face of overwhelming fiscal, monetary and financial debasement due to demands by the first group. Indeed, the centralizers have become the financial equivalent of nymphomaniacs – kicking the capital centralization into liquidation of human and environmental capital to provide more cheap capital to the insiders. The solution is to address the fundamental corruption of the political mechanism. Over the long run the privileges afforded the few are shrinking the total pie.

I chose pension funds as the theme for the 2017 Annual Wrap Up to invest time in reviewing the current state of global and US pension plans. For a complete list of the most useful studies, book and articles I read as well as website sources I used, see our Bibliography section.

My goal in writing about the state of our pension system is to help you better understand and, where appropriate, reject parts of the official narrative – not get frozen in fear or overwhelmed by the complexity of it. My hope is that you gain a simple overview of the situation that can help you successfully navigate the specific aspects that touch you and your family, either as beneficiary or taxpayer.  Without question, the underfunding of pension funds will impact you, one way or another.

If you are a US citizen, you are going to have to deal with the failure, by our various corporate, public and governmental agencies, to fully fund pension funds and health care promises.

These failures will touch you as a taxpayer. If you live in a state where the state and local pension funds are significantly underfunded, the impact on your state and local taxes, your property taxes (not to mention the appraised and market value of your home, farm, land or other real estate) and your municipal systems and services could be significant. Pension and health care liabilities may impact or determine in which state or locality you choose to live. Certainly, if you are planning on moving or buying real estate researching unfunded liabilities should be on your due diligence list.  These failures will also impact you as a federal taxpayer for military and government employee obligations as well as for obligations assumed by the Pension Benefit Guaranty Corporation, as companies fail or shed their pension funds in bankruptcy.

If you depend on income from one or more pension funds that reduce benefits as a result of underfunding or that fail and are assumed by the Pension Benefit Guaranty Corporation, it could impact your quality of life, life expectancy and health.

This also extends to families and friends. If your parents’ pension benefits are canceled or cut, and they show up at your door wanting to live with you, you are likely not going to tell them, “Sorry, it’s not my problem.”

In addition, numerous things are happening in the world, including war, environmental degradation, significant credit problems in the fixed income markets or loss of reserve currency status for the dollar that could significantly decrease pension fund returns and asset values, thus diminishing existing funding ratios.  This is one of many reasons the health of the entire economy and financial system are important to all of us.

The state of our current pension fund systems is one of the reasons I focus on the financial coup d’etat, including trillions of dollars of bailouts and money missing from the US government. You can’t be short trillions to fund contractual and legally obligated pension promises and simply allow $50+ trillion (my estimate) walk out the monetary and fiscal doors when you have no legal obligation and/or basis for doing so.

So let’s review the current state of US and global pension funds and see if we can’t change the narrative.

There is no pension fund crisis!  The so-called pension crisis is the result of a leadership decision that financial obligations to the elderly are expendable. After buying their votes and labor with promises, the leadership is wiggling out of those promises by draining returns with an engineered housing bubble, low interest rates and not funding on a pay-as-you-go basis, then cutting benefits and throwing retirees overboard. Rather than pay for nursing homes, we prefer to expand the billionaire class and use our pension funds savings to provide low-cost capital to the national security state, automate with robotics and artificial intelligence, and invest in space and the transition to a multi-planetary civilization.  One particularly good example of this is General Electric.  By some estimates, its pension fund is underfunded to the tune of $31 billion.  However, during the time its pension fund became so underfunded, GE spent $45 billion to buy back its publicly traded common stock.  The needed funds were there at one point; it’s just that the leadership of the company decided to funnel it into stockholders’ hands rather than to the pensions of the employees who helped build the company.

This is a political choice. It is not a financial crisis. It is part of a well-executed plan.

It is a plan that has been engineered by two decades of deliberate central bank and government policies and related enforcement designed to centralize and reorganize the economy accordingly.  It is a conscious and intentional abrogation of legal obligations, just as the housing bubble represented a fraudulent inducement.

The financial crisis is what happens to the beneficiaries and their families and the federal, state and local taxpayers who face higher taxes and reduced services.