The Distortions of USAPonzi
Apr 20, 2015
As posted on www.usaponzi.com
The U.S. Government has been operating a massive ($100+ Trillion) Ponzi scheme since FY1969, which I have named USAPonzi, that is caused by four fundamental issues.
1) The U.S. Government is spending more than the U.S. taxpayer can afford.
2) The U.S. Government is committing to spend much more on social benefits than the U.S. taxpayer can afford.
3) The U.S. Government is intentionally undertaxing the U.S. taxpayer.
4) The U.S. Government is using an improper accounting system to assess and report its financial status in an attempt to conceal this overspending, overcommitting, and undertaxing.
In order to exit this Ponzi scheme, the U.S. Government must adopt GAAP (Generally Accepted Accounting Principles) Accounting and commit to a balanced GAAP basis budget in order to establish an equitable and sustainable fiscal policy for the Government of the United States of America.
This current fiscal policy, USAPonzi, allows the U.S. Government to spend and promise to spend unlimited amounts of money by claiming that the future U.S. taxpayer will at some point in the future be able to pay the accruing financial liabilities. GAAP Accounting assesses and reports the magnitude of the financial liabilities that have been deferred to the future U.S. taxpayer as Debt and Unfunded Liabilities.
By operating USAPonzi for the last 46 years, the U.S. Government has introduced severe distortions into the U.S. and global economy and financial system. In this commentary I will expose some of these distortions. These distortions are quantified using data from the USAPonzi Fiscal Model that I have created which is based on information sourced from www.usgovernmentspending.com and www.shadowstats.com by extending current trends.
USAPonzi has created massive public liabilities, Debt of $18.1 Trillion and Unfunded Liabilities of $83.3 Trillion.
An alternative estimate by www.usdebtclock.org puts our GAAP basis Unfunded Liabilities at $95.8 Trillion. I cannot find an official U.S. Government assessment of our Unfunded Liabilities since the U.S. Government does not yet officially assess and report its financial condition on a GAAP basis.
These massive public liabilities have been deferred to the future U.S. taxpayer, who of course can never pay, so each dollar deferred to the future U.S. taxpayer becomes a counterfeit dollar in our economy. We now have $101.4 Trillion of counterfeit money in circulation, money that has been borrowed from the future U.S. taxpayer. Some of this counterfeit money gets spent through the global economy but most of it comes to rest as artificial private wealth for U.S. upper class citizens and businesses due to dramatic undertaxing.
The U.S. Government has given the U.S. upper class citizens and businesses $101.4 Trillion as a gift simply by not balancing the budget. What did these U.S. upper class citizens and businesses do to get this gracious gift from their friends in Washington? Well, we know that a many of them have given some very nice campaign contributions to their friends in Washington with some of this windfall wealth.
The U.S. Government is making social benefit promises that are irrational and unaffordable.
The U.S. Government is not funding any future social benefit promises.
The U.S. Government has overpaid itself, its employees, and the U.S. Government related businesses.
The U.S. Government has become much "bigger" than the U.S. taxpayer can afford.
The U.S. Government is spending much more on defense and many other budget items than the U.S. taxpayer can afford.
USAPonzi has constructed much more Government use physical infrastructure around Government facilities than the U.S. taxpayer can afford with counterfeit money (see Washington DC A Coming Ghost Town).
USAPonzi is making U.S. citizens and businesses appear to be much richer (by about 10x) than they really are by dramatically undertaxing them (see Americans think we are richer and more prosperous see Buffett makes $10M a day on Government Fraud).
USAPonzi is causing the U.S. and global economy to appear much more prosperous (by nearly 2x) by dramatically undertaxing the U.S. citizens and businesses creating GAAP basis Deficit Spending (see U.S. "Real" GDP 2015). By borrowing these massive amounts from the future U.S. taxpayer each year, the U.S. Government is able to create a dramatically accelerated consumption rate.
Because USAPonzi appears to make Americans much richer and more prosperous than we really are, we are able to buy and build a lot of stuff with counterfeit money.
We buy and build bigger houses than we can afford with counterfeit money.
We buy more and bigger cars than we can afford with counterfeit money.
We buy more and bigger boats and yachts than we can afford with counterfeit money.
The future U.S. taxpayer is expected to eventually pay for most of these houses, cars, boats, and yachts.
We buy more and bigger airplanes than we can afford with counterfeit money. Boeing and Airbus have built dramatically more airplanes than we can afford and the future U.S. taxpayer is still on the hook to pay for most of the plane rides that we have already taken.
We buy much more and more expensive food, clothing, and other stuff than we can afford with counterfeit money. Starbucks, Chipotle, Shake Shack, and many other restaurant groups would not be nearly as profitable or even exist without the $100 Trillion of counterfeit money created by USAPonzi.
USAPonzi has essentially created the internet and the smartphone phenomenon on the future U.S. taxpayer's nickel (see How LBJ Financed the Smartphone Phenomenon! see Why Apple Joins the Dow!). USAPonzi has helped Apple become the most valuable company in history.
We have 1.75 billion smartphones in service worldwide today most of which have been paid for by charging them on the credit card of the future U.S. taxpayer. The future U.S. taxpayer is expected to eventually pay for smartphones, houses, cars, boats, and yachts all over the Planet.
USAPonzi is what has made equities appear to be the only place to invest your money (see Why Stocks outperform Bonds!).
USAPonzi is what has caused the Stock Market to continue to set new record highs.
USAPonzi has caused Amazon to build a massive system of warehouses, office buildings, and computer centers to sell and distribute products that we really cannot afford. We can only afford to buy most of this stuff because USAPonzi has created $100 Trillion of counterfeit money (see The $100 Trillion Counterfeit Money Machine). Amazon has appeared to become an extremely valuable company because USAPonzi has allowed us to buy a lot of stuff that we could not otherwise afford (see We need More and Bigger docks).
USAPonzi has caused Amazon, Ebay, Baidu, Google, Facebook, Twitter, Netflix, Priceline, Tesla and many other companies to appear to have viable business models only because of the $100 Trillion of counterfeit money that USAPonzi has produced by charging things to the future U.S. taxpayer. The stock prices for these companies will continue to soar as long as USAPonzi keeps spewing off counterfeit money at an exponentially increasing rate. It takes money to make money and USAPonzi is going to make more counterfeit money.
USAPonzi has caused professional sports and entertainment stars to become super wealthy only because of USAPonzi produced counterfeit money (see Oswald made Buffett, Gates, Jordan and Woods richer).
The era of $multi-million per year sports and entertainment stars will be largely over when USAPonzi implodes.
USAPonzi has built massive sports and entertainment complexes (including Las Vegas, Macau, Disneyland, Disneyworld, Jerry World, and many golf courses) all over the Planet that we could not afford without this counterfeit money.
The value of professional sports teams will plummet when USAPonzi implodes. USAPonzi has made these sport franchises look very valuable by passing out counterfeit money for people to buy tickets, sports related paraphernalia, TV subscriptions, and yes even the counterfeit money to buy these sports franchises. Just think about how many of these sports teams are now owned by faux wealthy business moguls. $100 Trillion of counterfeit money can make a lot of people appear to be filthy rich.
USAPonzi has built Las Vegas with counterfeit money (see Las Vegas A Coming Ghost Town).
USAPonzi has built luxurious skyscraper cities in the Middle East with counterfeit money.
USAPonzi has enticed China to build luxurious Ghost Cities many including adjoining airports with counterfeit money.
USAPonzi was one of the primary causes of the "Internet Bubble" by creating counterfeit money that we can use to buy stock in companies that appear to be successful because they are subsidized by counterfeit money that has been borrowed from the future U.S. taxpayer.
USAPonzi was one of the primary causes of the "Housing Bubble" by creating counterfeit money that we can use to buy more and bigger houses than we can afford.
USAPonzi is continuing to cause bubbles in real estate, the stock market, art, antique cars, etc because the U.S. Government continues to create more counterfeit money every day ($17.8 Billion a day) as measured by our GAAP basis Deficit Spending.
USAPonzi has caused a bubble in essentially all asset classes by creating counterfeit money out of "thin air" by using a simple little accounting trick (see U.S. Total Assets Bubble).
USAPonzi has caused Inflation, Joblessness, Illegal Immigration, CEO pay escalation, Financial Engineering, Stock Buybacks, Energy Independence, Ultra High Net Worth, High Profits, and has widened the Wealth Gap.
As of April 1, 2015, the Federal Reserve Bank estimated that the Private Net Worth of all U.S. households and businesses was $114.9 Trillion. This Private Net Worth is reported in real time on www.usdebtclock.org as Total National Assets. According to the USAPonzi Fiscal Model, on that date, April 1, 2015, our Debt was $18.1 Trillion and our Unfunded Liabilities were $83.3 Trillion so $101.4 Trillion of our Private Net Worth was created by the U.S. Government assuming Public Liabilities. The U.S. Government is trying to fool us into thinking we are rich by dramatically undertaxing us.
One can now routinely track this relationship between Private Net Worth and Public Liabilities in real time on www.usdebtclock.org since this website now posts our GAAP Deficit and our GAAP basis Unfunded Liabilities.
Private Net Worth is called Total National Assets on www.usdebtclock.org.
Public Liabilities are the sum of our Debt and our GAAP basis Unfunded Liabilities which are posted as US National Debt and US Unfunded Liabilities(GAAP) on www.usdebtclock.org.
See USAPonzi Financial Summary for futher explaination.
It would comsume almost all of our Private Net Worth to pay our Public Liabilities.
The Biggest Distortion!
But the biggest distortion is that this corrupt and fraudulent fiscal policy is blatantly Cheating the Common Man by not funding the social benefits trust fund so that the U.S. Government can dramatically overpay the ruling class and make the upper class filthy rich. What is it about our U.S. Government that makes them think it is okay give $100 Trillion to the upper class, overpay the ruling class by $18 Trillion, underfund social benefit promises by $88 Trillion, and leave the future U.S. taxpayer with a $100 Trillion tax bill? (see Cheating the Common Man!).
The current fiscal policy (USAPonzi) is systematically borrowing/stealing money from the future U.S. taxpayer and stuffing it into the pockets of the upper class at the rate of our GAAP basis Deficit Spending. I guess larceny is legal if it is done by the U.S. Government. My estimate puts this rate of transfer at $17.8 Billion a day. If the U.S. Government was using honest accounting (GAAP Accounting) we would know this number more precisely. The usdebtclock reports this rate of transfer at $5.6 Trillion a year our current GAAP Deficit or $15.3 Billion a day.
We live in a Ponzi Economy created by a corrupt and fraudulent fiscal policy.