We hear success stories because they tell us only part of the story. We are instructed in how the big cities are wonderful, full of wealth and power, but in actuality, the only way they got to that state was by promising what they could not deliver and cutting corners, just like any other business that is faking its way to the top.
For example, America’s biggest cities have hidden their bankruptcy for decades by ignoring the fact that the promises of wealth they have made were all hollow:
Chicago and New York rank at the bottom of a new analysis of fiscal strength based primarily on data from 2015 financial reports issued by the cities themselves.
…For example, the cityâ€™s Municipal Employees’ Annuity and Benefit Fund (MEABF) reported $4.7 billion in assets and $14.7 billion of actuarially accrued liabilities at the end of 2015, representing a funded ratio of just 33 percent. The actuarial calculations rely on a controversial practice of discounting future benefits at a rate of 7.5 percent, which is the assumed return on the fundâ€™s portfolio return. If a more conservative assumption was employed, MEABFâ€™s liabilities would be higher and its funded ratio lower.
…New York Cityâ€™s position â€” just one step above â€” was unexpected…At the end of its 2015 fiscal year, the cityâ€™s general fund reserves amounted to just 0.67 percent of expenditures â€” well below the Government Finance Officers Association recommendation of 16.67 percent (equivalent to two months of spending).
In other words, these cities simply deferred necessary expenses and allowed the books to reflect lower costs, which made them seem attractive to business and citizens alike. They passed on the debt to the future by making fraudulent assumptions about their income and obligations. If a company did this, investors would shy away, but under the aegis of government, it is accepted.
We now must wonder how many other entities operate under this type of accounting. Amazon invests profit into the future and ignores debt; the USA does the same. Perhaps the entire modern world is a scam, designed to seem wealthy by hiding its actual obligations and re-investing that money so that others then buy into the plan, not knowing that they are being sold a hollow investment.