“Chicago teachers set April 1 for ‘showdown’ with schools” the article is titled.

CHICAGO (Reuters) – The head of the Chicago Public Schools (CPS) said on Friday that the district will hold off on a controversial cost-cutting move affecting teachers’ pension payments to allow for the labor contract process to play out.

But that move will not stop the Chicago Teachers Union from taking action that could involve a strike on April 1.

Union President Karen Lewis told reporters that everything, including a strike over unfair labor practices, was on the table for what she called an April 1 “showdown” with the nation’s third-largest public school system.

The cash-strapped district last month gave the union 30 days’ notice that it aims to save $65 million by reducing its contribution to teachers’ pension payments by 7 percent – a move condemned by the union, which in December overwhelmingly authorized a future strike.

While contending a teachers’ strike was not legally possible until mid-May, CPS Chief Executive Forrest Claypool told reporters on Friday that the plan to end the so-called pension pickup was on hold until an independent arbiter completes a fact-finding report on April 18. That report is part of a process to reach a new contract with the teachers’ union after the prior contract expired last year.

“We do not think it’s appropriate to exercise our rights right now because we’re still in negotiations,” Claypool said, referring to the pension payment plan.

CPS is struggling with a $1.1 billion structural budget deficit, caused largely by escalating annual pension payments that will reach $676 million this fiscal year.

Eduhonesty: I honestly don’t know what to think about this one. Hello, CPS? You have no money. You are trying to float a bond issue that is nearly a billion dollars that YOU DO NOT HAVE. Some concessions will have to be made.

Illinois and the Chicago Public Schools have been floating bond after bond with progressively higher interest rates in order to survive for one more day/month/year. The rates get higher as the risk gets higher. We have reached the point where Chicago Public Schools bonds are junk bonds, so risky that the schools have to guarantee a painful and disadvantageous rate of interest even in order to go to market — if they can go to market. The schools still are not sure they can float that bond issue. Governor Rauner is trying to shut the CPS bond deal down. If CPA can’t sell those bonds, as far as I can tell, they will be effectively bankrupt.

If this were a rich state, CPS could realistically appeal to the state for a rescue. But the state is broke. The state has not been paying various creditors, while social services are being shut down all over Illinois. I suspect we may be running short of bullets. I had a good laugh a couple of years ago when the state found itself unable to buy bullets for the Department of Corrections because the bullet makers refused to sell to the state of Illinois unless they were paid in advance. If readers are thinking that’s no laughing matter, they are right. I am a reader of zombie and apocalypse fiction, however, and I take my humor where I find it. If I were a naturally cheerier person, this might be a blog offering fashion tips for aging harridans instead of the education chronicle it has become.

Eduhonesty: That showdown will come. I suspect the world will be watching. Certainly, Chicago will make national news nightly for sometime. As the dialogs unfold, I will do my best to stand with the teachers, the foot soldiers of education, who give up their nights and weekends for kids, year after year. Everyone hates a pay cut. Many people are living near the edge of their paychecks as it is and they will have to scramble to manage any effective cut in pay.

But I will also remember the end of the Soviet Union. We did not bring down the Soviet Union with tanks and clever intelligence. Instead, we forced them to spend themselves into bankruptcy.

Money is real. You can’t simply print more, as people sometimes suggest. If that magic worked, the Confederacy would have been rich enough to buy all the arms and help it needed to win the Civil War. Confederate money had value at first, when people believed that the South would win the war and that their money would be the tender of a new nation. But as the South’s losses mounted, and the dream of a new country receded into blood-tinged mists, the price of bread kept rising until a loaf cost thousands of those Confederate dollars. Then that loaf could only be acquired through barter. People swapped their last turnips for bread. Once the South lost, the money had zero value, as no government stood behind those Confederate scraps of paper.

The following snippet from http://credit-help.biz/bank/139275 does a good job of explaining the issue of inflation:

Money can also lose its value when a government decides to print more of it, which can trigger inflation. In Germany during World War I. Germany borrowed heavily to pay its war costs. This led to inflation and by 1923; the inflation increased to the highest levels in history. Prices for goods and services doubled every few hours, and stampedes occurred to buy goods and services before the prices would go up again.

By late 1923 it took 200 billion marks (German dollars) to buy a loaf of bread. The German people found that their life’s savings would not buy a postage stamp. It got so bad that people would burn money to stay warm because it was cheaper to burn money than to buy firewood with the worthless money.

We can’t print money to get out of this mess. States obviously can’t print money anyway. When the bullet makers won’t take an IOU from the State of Illinois, we are in trouble. We have been in trouble for years, but various government bureaucracies just kept spending money they did not have, relying on rescues and bonds. We may be out of rescues and, at least at the moment, those school bonds remain iffy.

Wishing and hoping will not get us out this mess. Fiscal responsibility might, but fiscal responsibility will require sacrifices. Those sacrifices are inevitable now. Like the Soviet Union, we are getting close to being unable to pay the soldiers who guard the wall.

As the CPS dialogs unfold this spring, I hope that all participants will understand and remember that people cannot consume more than they produce. They can’t write checks on accounts without funds.