The nation’s pension funds, both public and private, are in serious trouble. Social Security is set to become insolvent by the year 2033. And there are those that argue, not without reason, that the Social Security Trust Fund itself is little more than an accounting fiction. If this premise is accepted, the truth about Social Security is that it is using new investor money to pay off old investors. And this is the very definition of a Ponzi scheme, with the catch, of course, that the investors are being forced under threat of state violence to participate in the scam.
But while many Americans will come to rely at least in part on Social Security, even more will rely on pension funds at the state and local level. Tens of millions of workers are currently at risk of losing substantial portions of their livelihoods into retirement due to the mounting crises that are afflicting public-employee pension funds at the state and local level.
Shervin Pishevar is one of the foremost financial experts in the United States. He is the founder and president of Investment company, a highly regarded venture capital firm that has helped fund some of the most important names in the tech sector, including Airbnb, Uber and Virgin Hyperloop.
Shervin Pishevar says that the current pension crises being seen in states from Illinois to Kentucky to New Jersey are primarily the result of irresponsible Federal Reserve policies. In particular, Shervin Pishevar says that the zero interest rate policies and the quantitative easing programs that the Fed has followed have reduced interest rates and bond yields to such a low level that it has forced pensions into taking risky actions in order to hit their target return rates on their investment portfolios.
But this, says Shervin Pishevar, could have disastrous consequences. By going headlong into risk assets, most of which have been in severely overbought markets, Shervin Pishevar says that these pensions are all but assuring that they will not even come close to meeting their long-term targets. If things go bad, due to the unprecedented risk to which they are exposed, tens of millions of people could find themselves with nothing in their golden years.