This is why the Federal juggernaut is going to absorb the states and subsume what little remains of their sovereignty: The Feds can produce money out of nothing but the states can’t. The game will keep going as long as the war machine does, but even that will end when there’s no one left to bully into buying treasuries.
Jan. 20 (Bloomberg) — Everyone seems to know the current path of federal fiscal policy is a deathtrap over the long term. What’s peculiar is the relative inattention to the balance sheets of state and local governments.
Hidden behind accounting fictions, the politically unspeakable reality is that public employee pension systems are under-funded by more than $2 trillion. Add more than $1 trillion in unfunded health-care benefits for retired public employees, and state governments face protracted structural deficits ranging from challenging to insurmountable.
Read more at Bloomberg.com.