There's an invisible digital revolution afoot. And the world is about to become a more prosperous, less corrupted place. Are you prepared? Well, it's time to get ready. Read on...
In 2011, one hedge fund manager bought twenty million nickels. Today, all across the U.S., Americans have stacks and stacks of nickels in their basements. What’s going on? And why should you be concerned? Chris Campbell investigates. Read on…
Ready to have your fortune told? Chris Campbell invites the Laissez Faire crew to give their most shocking predictions for 2015. Each one could affect your health, wealth, and happiness. Read on...
If hyperinflation were going to happen in the U.S., it already would have, right? Wrong. Jim Rickards explains the clear reason why the U.S. hasn’t seen hyperinflation… and why it’s still more than possible. Read on…
Something strange and unexplainable happened to Chris Campbell last night. “In the middle of the night,” he writes. “Precisely when things shouldn’t happen. Especially not things like this.” This inexplicable event led him to uncover the most lucrative wealth strategy known to man. So it wasn’t all a wash. Read on…
Everyday Americans have good reason to celebrate and fear the recent collapse in oil prices. This is the fastest, steepest decline in oil prices since the mid-1980s. Results are already showing up at the gas pump. The price of regular gasoline has collapsed from almost $4.00 a gallon to $1.99 a gallon in some places. For a driver who uses 50 gallons per week, that’s an extra $100 per week in your pocket. If that new low price sticks, the savings keep coming, and it adds up to a $5,000 per year raise. Best of all, the government can’t tax that $5,000. If you got a pay raise, they would tax it, but if the cost of things you buy is lower, they can’t tax the savings. What’s not to like? Read on to find out.
Are you a deflationist? Or an inflationist? No matter which way you believe the wind will blow, the truth is this: it’s up in the air. But, as Jim Rickards explains, there are things you can do to cover your assets, no matter which one wins the tug-of-war. Read on…
Smart meters are supposed to be our saving grace. Reduce pollution… reduce blackouts… and keep you and your family safe. The truth, though, is the exact opposite. What’s the true agenda behind smart meters? And why are you being lied to? Read on…
You hear a lot about gold these days. But what about silver? Chris Campbell speaks out about the moon metal with one shocking confession. Read on…
Markets have you spooked? You’re not the only one. In today’s Laissez Faire Today, you’ll hear from three market experts on how to stay safe, no matter what direction the overall market heads. Read on…
In December last year, a lot of people were laughing off an inept thief. Not only did Charles Jennings, a cargo worker, quickly get caught — but his $1.5 million haul was snicker-worthy. Who’d want his product? How on earth could he sell the 7,500 pieces — or move them anywhere near that $1.5 million retail price tag? How dumb could he be? Here’s the thing — all the people snickering don’t know what they’re talking about. The $1.5 million stash? On the open market, it could easily be worth twice that. Heck — it could be worth 10 times as much or more. And moving it would be easy.
Savvy investors: Two experts weigh in on why having your own personal gold standard… and betting that Ebola will get worse… could be your best investment decisions of 2014. Read on…
America has about 4% of the world’s population, yet houses 25% of the world’s incarcerated. What’s going on here? Chris Campbell digs deep into the industry to figure out the truth. While many blame the private prison industry, the real culprit, says Chris, begins right outside your door. Read on…
Bitcoin has been pretty quiet lately. But that doesn’t mean big things aren’t taking place behind-the-scenes for the digital currency. In today’s Laissez Faire Today, Chris Campbell pulls back the curtain and shows you how Bitcoin is quietly slipping into the mainstream. He also shows you why now could be the time to buy now, or forever hold your peace. Read on…
Want to get rich? Don’t listen to financial “gurus,” says Chris Campbell. In today’s Laissez Faire Today, Chris shares a Zen proverb and shows how understanding it is the only real way to get rich (and live a rich life). Read on…
Among red wines, two varietals are often latched onto by certain enthusiasts. “I only drink cabs,” or, “I only drink pinots.” Such statements are common surrounding these wines. Pinot noir and cabernet sauvignon: two wines with very different bodies, styles and flavor profiles. In my experience, those who “only” drink one usually cannot relate to those who “only” drink the other. The Hatfields and the McCoys of the wine drinking world.
Ben Franklin once said, “An ounce of prevention is worth a pound of cure.” In today’s Laissez Faire Today, you’ll learn about one FREE website that has the potential to not only keep your family safe – but also open your eyes to what’s happening in your own neighborhood. Chris Campbell has all the details. Read on…
All over the world, power is dying. The dictators and tyrants of the world are no longer able to wield it like they once used to. And they’re losing it to the “little guy.” Chris Campbell shows you how to be the king of your castle by taking advantage of this fact. Today, you’ll learn how to grab “power gaps” in the market and channel them into your product idea or project. Read on…
The fireflies along the tidal rivers of Malaysia show "feats of synchrony that occur spontaneously, almost as if nature has an eerie yearning for order." Chris Campbell tells you where else this might occur in the world. Also, new technology may revolutionize the agriculture industry and what we think of as a farm.
Jeff Davis is running for Governor in Hawaii and has an interesting campaign strategy. Also, what motivates hackers is revealed and the findings might surprise you. Finally, Ferguson is discussed in a new light. Chris Campbell has more...
Last month, when renewing our health insurance, our carrier screwed up, leaving the entire Hill family without dental coverage... Their incompetence, however, opened our eyes to burgeoning alternatives in the health care space. To be specific, we were able to save $88 on our recent dental visit despite not having insurance. And it was all thanks to a little slip of paper that took us five minutes to acquire and cost us nothing.
The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
When’s the best time to invest in something? When everyone else is trying to get their money out of it. It might go against conventional thinking, but following the crowd usually makes you miss the real opportunities. At one monetary metal conference recently, the smartest guys in the industry sat down to discuss where these real hidden gems lay.
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
Greetings from Maine! Right now, I’m writing from within foghorn distance of the sea. And this gives me an opportunity to tell you a down east tale that should serve as a warning to every investor: Maine’s Great Gold Swindle.I’m not talking about central banks, or manipulation of today’s markets. I’m talking about something from […]
What’s the single biggest health problem in America? Note that I’m not asking about the most widespread disease. Instead, I’m inquiring about the specific health problem that the largest number of Americans would most dearly love to solve.
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
Let’s head back in time…In 2004, a mere decade ago, the US national debt rang the register at $7.4 trillion. That represents “debt per citizen” of over $25,000. You, me, your neighbor, your 4-yr old grandson, you name it and they’re portion of the U.S. debt is $25k.But flash forward to today and you’ll see […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
Remember that correction we’ve been quietly talking about over the past couple of months?Well, it might be right around the corner. Stocks waited until the last day of the month to nose-dive. The S&P 500 posted its first 2% down day since April — and the Dow wasn’t far behind. Early this morning, futures continue […]
For the last few decades, virtually everyone seems to have agreed that eating beef is a bad idea: bad for the planet, bad for personal health, and bad morally. The problem? Beef haters are wrong on all counts. Beef can be a boon for the planet, extraordinarily healthful, and a highly moral choice.
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
A new assessment of state pension obligations suggests the problem is even worse than it already appears.
How much worse?
Using a more conservative method of accounting for financial gains in the marketplace, there is a $4.1 trillion gap between assets and liabilities — known as the “unfunded liability” — of all state-level pension systems in the United States, according to State Budget Solutions, a fiscally conservative think tank that deals with tax and spending issues at the state level.
On a per-capita basis, each American would have to fork over about $13,100 to fill that gap and fulfill the promises made to current and retired state workers.
The new survey makes the pension crisis look worse than in other reports because of the way State Budget Solutions calculates the plans’ unfunded liabilities.
The group uses a measure called “market value liability,” which assumes that pension funds will earn about 3.22% annually — in line with what long-term U.S. Treasury bonds pay. That measure is more accurate than often bloated assumptions that underpin most state pension plans.
“They are able to make the unfunded liability seem lower, and that means they have to put less money into the pension systems each year,” said Cory Eucalitto, who authored the State Budget Solutions report.
Many states use an assumed return of 7% or 8%, though some are beginning to adjust those expectations downward. But every time the investments miss that mark, it widens the gap between the pension fund’s assets and liabilities.
For example, in Pennsylvania, the official unfunded liability reported by the state’s two major pension systems is a combined $49 billion. That assumes pension funds will grow at a rate of 7.5% every year in perpetuity.
Using the lower, safer growth rate of 3.22%, the unfunded liability in Pennsylvania’s two pension plans grows to a combined $156 billion.
This different form of measuring liabilities produces some truly scary results. In five states, State Budget Solutions calculates pension liabilities represent more than 40% of the entire state economy. In two states — Ohio and Mississippi — the pension costs are equal to more than half the state’s gross production.
On a per-capita basis, it’s equally worrisome. There are five states where the unfunded pension liability would represent a per capita cost of more than $20,000, with Alaska leading the way, at more than $32,000 per person.
Even Tennessee, on the low end of spectrum, would have to ask each and every resident to pay $5,676 to cover the full cost of its state pension liabilities.
Many states are struggling to find the political will to deal with the tsunami of pension costs poised to wreck budgets for decades to come.
In Illinois, where the state is dealing with the nation’s highest official unfunded liability, of $100 billion — State Budget Solutions says it’s really more like $287 billion — Gov. Pat Quinn made an effort at reform this year.
The plan landed with a thud in the state legislature.
A similar effort by Pennsylvania Gov. Tom Corbett went nowhere during the spring session. He wanted to move all new state workers into a 401(k)-style pension system, but lawmakers expressed little interest in the face of surefire union opposition.
Conservative groups and state finance experts point to Wisconsin as an example of where pension reform is paying dividends. Changes to public employee benefits that were pushed by Gov. Scott Walker — resulting in massive union-led protests and an unsuccessful recall effort — have saved the state $110 million this year, according to one measure.
Kansas and Alaska have recently reformed their pension systems to include a 401(k)-style plan for new hires, helping to ease the burden of long-term pension costs.
Eucalitto said that should be the end goal, because it saves taxpayers’ money and makes the system easier for states to manage without the risk of underfunding plans.
It’s also better for employees, he said, because they have individual accounts, and if they are getting shortchanged by the state, it will be readily apparent to them.
“For public employees, they are given greater control over their own retirement and it makes it harder for states to break their promises to their retirees,” Eucalitto said.
Using a different method of accounting for unfunded state pension liabilities, a recent report from Pew Charitable Trusts estimated the gap between states’ assets and obligations at around $750 billion.
Add to that an additional $620 billion in unfunded liabilities for retiree health care coverage, which many states promise to provide to their retired workers in a separate system from traditional pensions.
“Though states have enough cash to cover retiree benefits in the short term, many of them — even with strong market returns — will not be able to keep up in the long term without some combination of higher contributions from taxpayers and employees, deep benefit cuts, and, in some cases, changes in how retirement plans are structured and benefits are distributed,” concluded researchers at Pew.
While both Pew and State Budget Solutions express concerns over higher taxes and cuts to workers’ benefits, states could have other unseen consequences from running up high levels of pension debt.
Earlier this year, Moody’s Investors Service, a bond rating agency, warned that high levels of pension debt could hurt states’ credit ratings and make it more expensive to borrow money via the bond market.
“Pension underfunding has been driven by weaker-than-expected investment results, previous benefit enhancements, and, in some states, failure to pay the annual required contribution to the pension fund,” said Moody’s analyst Ted Hampton.
Moody’s is now assessing states’ pension liabilities and their overall debt levels, he said.
Of the 50 states, those with the highest debt and pension funding needs include Connecticut, Hawaii, Massachusetts and Illinois.