Offshoring-A Byproduct of USAPonzi
November 10, 2016
Offshoring: the practice of basing some of a company's processes or services overseas, so as to take advantage of lower costs.
The U.S. Government fiscal and accounting fraud, that I call USAPonzi, is producing imaginary-counterfeit money which is causing the wealth gap, inflation, offshoring, and under employment.
The U.S. Government is producing imaginary-counterfeit money by borrowing it from the future Americans. The U.S. Government is using improper accounting to conceal this fraud by assessing and reporting its financial condition with Cash Accounting when it should be using GAAP Accounting.
The U.S. Government is operating with an unbalanced budget and is "Cooking the Books"! The U.S. Government spends more than its income and it "spends" a lot more than it is reporting to the public, by spending on a GAAP basis and reporting on a Cash basis. Spending more than your income is called deficit spending and the future Americans are left holding the bag; they get the bill for this deficit spending.
The following table quantifies on a macro level how this scheme works. The current Americans pay in Cash of $3.29T (US Federal Tax Revenue), the U.S. Government spends $8.97T (US Federal Spending (GAAP)), borrows $5.68T (GAAP Deficit) from the future Americans to cover the shortfall, overpays the benefit recipients and the government workers creating a Cash Deficit of $0.59T, underfunds the future benefit promises creating a GAAP Deficit of $5.68T, and undertaxes the current Americans by $5.68T creating imaginary-counterfeit money of $5.68T that ends up in the pockets of the current Americans but primarily in the pockets of the U.S. upper class. The U.S. Government is borrowing fake money, I call it imaginary-counterfeit money, from the future Americans and giving it to the current Americans.
|US Federal Tax Revenue (Cash)
|US Federal Spending (Cash)
|Cash Deficit in FY2017
|US Federal Spending (GAAP)
|GAAP Deficit in FY2017
|US Unfunded Future Liabilities
|US Unfunded Liabilities (GAAP)
|Total National Assets
Source: www.usdebtclock.org November 10, 2016
The money ($5.68 Trillion in FY2017) that the U.S. Government borrows from the future Americans is imaginary because the U.S. Government imagines the future Americans can pay it but it is counterfeit because the future Americans can never pay a penny of these deferred public liabilities (See The Concept of Imaginary-Counterfeit Money). The U.S. Government is borrowing imaginary-counterfeit money from the future Americans and giving it to the current Americans.
After repeating this process for the last 48 years, the future Americans now have a credit card bill of $104.1 Trillion (US Unfunded Liabilities (GAAP)) and the current Americans (primarily the U.S. upper class) have been given $104.1 Trillion of imaginary-counterfeit money.
The current Americans now appear to be rich and prosperous because the U.S. Government is creating imaginary-counterfeit money out of "thin air" with GAAP basis deficit spending. The current Americans now have private net worth of $124.0 Trillion (Total National Assets) but $104.1 Trillion of that is the imaginary-counterfeit money that has been borrowed from the future Americans with GAAP basis deficit spending.
The U.S. Government is giving most of this imaginary-counterfeit money to the U.S. upper class by undertaxing them which has created the "Wealth Gap" (See Creating the Wealth Gap).
The U.S. Government is creating imaginary-counterfeit money much faster than the global economy is producing products and services which has created inflation (See Inflation-A Byproduct of USAPonzi). Each year we have more money (by the amount of our GAAP Deficit) chasing nominally the same asset pool (Total National Assets) that we had at the start of the year. Yes, we do produce new assets every year but we also have depreciation on the old assets but now we have a lot more money ($5.68 Trillion more in FY2017) chasing those assets. This is why we have inflation of nominally 5% per year which I call the "USAPonzi asset price inflator".
Inflation in FY2017 = GAAP Deficit/Total National Assets = $5.68T/$124.0T = 0.46 = 4.6%
The U.S. Government has been doing this for 48 years so something that cost a $1 in 1969 now costs about $10.50 simply because the U.S. Government is creating imaginary-counterfeit money out of "thin air" by borrowing it from the future Americans with GAAP basis deficit spending.
USAPonzi causes offshoring and under employment
Inflation would stop if the U.S. Government used honest accounting by using GAAP Accounting and balancing the GAAP basis budget. The problem with inflation is that the U.S. upper class tends to keep up with inflation because their assets values inflate but the Common Man's wages don't automatically increase with the "USAPonzi asset price inflator" and if wages do get increased to compensate for the "USAPonzi asset price inflator" the U.S. working person gets priced out of the global market which is what has led to the offshoring of jobs to countries that offer lower cost labor. This offshoring has led to under employment in the United States. U.S. workers are uncompetitive and under employed because the U.S. Government is corrupt by operating with a Ponzi scheme fiscal policy.
This is the dilemma state governments have with increasing the minimum wage. They want to increase the minimum wage to keep up with the USAPonzi asset price inflator but if they do increase the minimum wage this makes U.S. workers more uncompetitive with the global work force. I contend that they should not increase the minimum wage until the U.S. Government starts telling the financial truth (See Raising the Minimum Wage is Foolhardy). As long as the U.S. Government is operating USAPonzi they will need to raise the minimum wage just like they must continue to raise the debt ceiling because USAPonzi is going to keep borrowing money from the future Americans.
The U.S. Government, by operating a Ponzi scheme, is producing imaginary-counterfeit money with GAAP basis deficit spending that enriches the U.S. upper class and overpays the U.S. ruling class which creates the wealth gap and causes inflation which causes offshoring which causes under employment which puts more reliance on government benefits which are unpayable because they are unfunded. This is a downward spiral that can only end badly.
This will end when investors refuse to buy more of this worthless debt from the U.S. Government. None of the U.S. National Debt can ever be paid back because the U.S. Government is spending nearly 3 times (see calculation below) its income today and the U.S. Government spending obligations are accelerating.
The U.S. Government has got to start telling the financial truth to stop this downward spiral and chain reaction. It will not be pleasant but we must face reality.
The U.S. Government has borrowed $104.1 Trillion from the future Americans, which is 31 times its income of $3.29 Trillion ($104.1T/$3.29T=31.6) and is spending $8.97 Trillion in FY2017, which is nearly 3 times its income ($8.97T/$3.29T=2.73). The U.S. Government has made financial commitments it cannot keep and is therefore technically bankrupt (See The Bankruptcy of the United States).
This fraud is explained in CliffsNotes format (USAPonzi CliffsNotes) and is also explained in much more detail on my website www.usaponzi.com and in my book “USAPonzi” which is available on Amazon in Kindle and Paperback formats and on my website in PDF format.
This is the biggest ($104.1 Trillion) financial fraud ever perpetrated; I call it “USAPonzi: The Ultimate Government Fraud” and “The Biggest Ponzi Scheme on the Planet”.