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To: businessprofessor

“The federal government has no portfolio to support federal retiree benefits. There are large unfunded liabilities (more than $1 trillion) for federal pensions.”

You forget one huge difference between Federal pensions and state/local pensions: unlike states and cities, the federal government can print money to pay its obligations.

You do allude to the danger of inflation, which is proper. But in that case, federal retirees will suffer the effects just like every other American.


17 posted on 05/20/2011 10:11:39 AM PDT by Poundstone (A recent Federal retiree and proud of it!)
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To: Poundstone

“You do allude to the danger of inflation, which is proper. But in that case, federal retirees will suffer the effects just like every other American.”

I agree with your assessment with one caveat. With CPI-W - 1 indexing, federal pensions (and Social Security) will keep pace with inflation at least conceptually. Unfortunately, COLA indexing for many types of federal programs may lead to an inflation spiral. At some point, no one will want dollars so COLAs will not matter. Massive reductions in government spending will be necessary to restore the dollar value. Without massive realignment of government spending (including pensions), individuals will hold other currency or barter.


18 posted on 05/20/2011 10:29:26 AM PDT by businessprofessor
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