In this day and age, the financial system we use on a daily basis is slowly starting to collapse. The Dallas Pension System has suspended all withdrawals for an undisclosed period. With US$154m in withdrawal requests pending a the time of this decision, it is evident a lot of people will be unhappy about this development. If these withdrawals had been honored, the fund would no longer have the liquid reserves required to sustain itself.
Dallas Pension System on The Brink of Collapse?
The news related to the Dallas Pension System needs to be put into perspective. Earlier this year, US$500m worth of deposits had been withdrawn, which put some financial stress on the economic reserves the fund holds. With another US$154m in withdrawal requests waiting to be paid out, there only seems one plausible solution” halt ever withdrawals for an undisclosed amount of time.
Contrary to what some people may think, Dallas citizens are quite pleased with this decision. An insolvent pension system would not benefit the city of Dallas by any means, and it would cripple the local economy. However, this withdrawal halt doesn’t solve the underlying problem, as the situation remains “critical”. With “only” US$729m in liquid assets right now, US$600m or more needs to be kept on hand at all times.
Retired police officials and fire department team members are disgruntled over not being able to withdraw their pension right now. That is only understandable, as these people worked their entire lives to obtain a somewhat comfortable retirement. Leaving people without the money the worked for is a very dangerous precedent, even when the decision is made “for the greater good”.
It has to be said; the Dallas Pension System has made life very difficult for itself from day one. It offers an 8% annual return on pension balances, which is impossible to achieve during these financial times. Some people may even claim the Dallas Pension System acts as a Ponzi Scheme in this way. In fact, the fund is valued at US$2.1bn, yet only half a third of that value in liquid assets. Very strange, to say the least.
Consumers are finding it more and more difficult to access their own funds at any given time these days. It is depressing to see how the financial system is collapsing beneath our feet and is unable to honor requests to withdraw money. Better solutions are direly needed, and Bitcoin seems to be the only viable long-term asset in existence right now. Any traditional offering, particularly those promising high annual returns, are not a viable strategy.
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