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Tuesday, August 27, 2013
For years, Detroit has been a mess. Third world countries have provided better services like police and fire support, and half the street lights haven't been on for some time. However the question we should be asking ourselves is just how did they get there?
The answer, it turns out, is actually straightforward. Once again, economics 101 enters into the real world and slaps politicians who want to ignore reality. What economists recognize that politicians don't is that if you continue to spend more money than you earn (or take in), then eventually you'll find the land of financial ruin.
In Detroit's case:
-They've promised big pension benefits that they cannot pay for.
- They continue to run a budget that represents a deficit (therefore they have to borrow money to pay for current bills)
- They've made no serious attempt through the years to alter either their spending or promises
It does not require the mind of Einstein to understand that this is not good.
Here's a great question - what other governmental entity are you aware of that is adopting the Detroit financial plan?
Answer - how about our national Congress and Senate?
All you need to do is Google us debt clock and immediately, you will see that our government is doing precisely what Detroit did before it all fell apart.
Specifically, they have:
- Promised big pension benefits that they cannot pay for.
- Continued to operate a budget that represents a deficit (so they have to borrow money to pay current bills)
- Made no serious attempt in the past to adjust either their spending or promises
We are seeing what happens when you do this (Detroit). The issue now is when will the same thing happen to America.
Chief Advisor of Aaron Matthews Financial Resources
Matt is an authority on creating innovative tax and investment solutions to help his clients succeed in their retirement years. The strategies Matt Golab has established and passed on through successful financial planning with hundreds of clients over the years has launched him into the national spotlight. Golab is often asked by national websites that focus on the education of consumers to present his knowledge on the areas of retirement and retirement income plans. Matt is frequently featured in The Wall Street Journal, CNBC, MSN Money, The San Francisco Chronicle, Newsweek, TheSmartRetiree, Burlington County Times and soon is going to be appearing nationwide on ABC, CBS, Fox, and NBC as well as USA Today.
Golab is the Author of The Consumer's Guide to Planning Your Retirement: Your Guide to Mental Peace and Financial Well Being. Matt emphatically states his mission, "I want to change the way Americans view their retirement. They can succeed (stay retired) regardless of what happens in the market". If you would like contact info for Matt Golab, please click right here. Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC. Registered Investment Advisor