Ponzi Schemes, Positive Feedback, and Buffalo Stampedes
November 8, 2018
Emailed to WSJ/NYT/WP/DMN, the US SEC, Congressman Pete Sessions, Congressman Sam Johnson, Senator John Cornyn, Senator Ted Cruz, and Dallas Mayor Mike Rawlings 11/8/18
The following is an Op-Ed to “The Wall Street Journal”, “The New York Times”, “The Washington Post”, and “The Dallas Morning News” which explains why “Ponzi schemes exhibit positive feedback that can cause buffalo stampedes”!
The “news media” has an ethical responsibility to inform the general public of how the U.S. Government is committing fiscal and accounting fraud to cheat the general public and the rest of the planet so they can “feather their own nests” and “dramatically feather the nests of their upper-class friends”.
The “news media” is aiding and abetting the corrupt and criminal U.S. Government by refusing to report this fiscal and accounting fraud! The U.S. Government should be operating its fiscal policy with accrual accounting!
Ponzi Schemes, Positive Feedback, and Buffalo Stampedes
November 8, 2018
The U.S. Government is running a Ponzi scheme fiscal policy (USAPonzi) by promising benefits to the U.S. general public but not taxing the U.S. upper class enough to pay for these promises which is causing the U.S. upper class to get rich and the U.S. general public to get screwed! The U.S. Government is not operating it fiscal policy with proper GAAP Accounting and as a result is not properly accruing for future U.S. Government benefit promises!
This U.S. Government fiscal and accounting fraud has enriched the U.S. upper class by $115.5 Trillion (US Unfunded Liabilities (GAAP)), has overpaid the U.S. ruling class by $21.7 Trillion (National Debt), has underfunded the U.S. Government benefit promises to the U.S. general public by $93.8 Trillion (US Unfunded Future Liabilities), and has allowed Americans to buy stuff from the rest of the planet with $115.5 Trillion of monopoly money!
I have spent the last six years trying to explain and expose this U.S. Government fiscal and accounting fraud but essentially no one wants to believe me!
Rather than saying the same thing the same way for the 675th time to explain this Ponzi scheme, I will try a little different tactic!
In this commentary, I will try to explain how Ponzi schemes have a characteristic called “positive feedback” that can cause buffalo stampedes.
In the field of finance and economics, these buffalo-stampede-like activities are sometimes called “bubbles”!
A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator (Wikipedia).
Positive feedback is a process that occurs in a feedback loop in which the effects of a small disturbance on a system include an increase in the magnitude of the perturbation. That is, A produces more of B which in turn produces more of A. In contrast, a system in which the results of a change act to reduce or counteract it has negative feedback. Both concepts play an important role in science and engineering, including biology, chemistry, and cybernetics. (John White adds economics to this list)
Mathematically, positive feedback is defined as a positive loop gain around a closed loop of cause and effect. That is, positive feedback is in phase with the input, in the sense that it adds to make the input larger. Positive feedback tends to cause system instability. When the loop gain is positive and above 1, there will typically be exponential growth, increasing oscillations, chaotic behavior or other divergences from equilibrium. System parameters will typically accelerate towards extreme values, which may damage or destroy the system, or may end with the system latched into a new stable state. Positive feedback may be controlled by signals in the system being filtered, damped, or limited, or it can be cancelled or reduced by adding negative feedback(Wikipedia).
When massive numbers of buffalo used to roam the great plains, stampedes could occur when one buffalo would be startled by some disturbance such as an Indian or buffalo hunter shooting at it causing it to run making noise that would startle other buffalo causing them to run which would cause other buffalo to run making even more noise.
This is a classic example of positive feedback:
noise causes running
running causes more noise
more noise causes more running
more running causes much more noise
much more noise causes much more running.
The buffalo stampede effect would typically not end until the last buffalo was running and all of the buffalo got tired. In extreme cases, this stampede could cause the entire herd to tumble over a cliff or collide into some natural barrier causing extreme peril to the entire herd!
Ponzi schemes exhibit this characteristic of positive feedback!
USAPonzi has borrowed $115.5 Trillion of imaginary-counterfeit money from the future Americans and given it to the U.S. upper class and is borrowing $16.6 Billion more imaginary-counterfeit money every day from the future Americans with GAAP basis deficit spending to further enrich the U.S. upper class every day.
When the U.S. Government borrows money from the future Americans, the U.S. upper class gets rich.
When the U.S. Government borrows more money from the future Americans, the U.S. upper class gets richer.
Further, the GAAP deficit (this is what borrows the imaginary-counterfeit money) is increasing on an exponentially increasing trajectory since the U.S. Government must pay interest on the money that it has borrowed from the future Americans! The more the U.S. Government borrows from the future Americans the more the U.S. Government must borrow from the future Americans. The more the U.S. Government borrows from the future Americans the richer the U.S. upper class becomes!
With this exponentially increasing supply of imaginary-counterfeit money, Americans can buy an exponentially increasing amount of stuff to create an exponentially increasing amount of economic activity! This is what is making the U.S. economy look stronger and stronger!
Further, USAPonzi is creating both wealth and income for Americans by borrowing money from the future Americans which the U.S. Government can then tax to create more income for the U.S. Government so the U.S. Government can pay more to U.S. Government employees which in turn creates more economic activity, more income, and more wealth for Americans!
Economic activity (GDP) in America could be fraudulently enhanced by 2X or more because of the GAAP basis deficit spending of USAPonzi which is estimated to be $6.06 Trillion in FY2019!
Further, USAPonzi is creating inflation by printing imaginary-counterfeit money which is causing pay and inflation-indexed benefits to increase exponentially which creates more economic activity for the U.S. and global economy!
The positive feedback of USAPonzi is destined to give infinite imaginary-counterfeit wealth to the U.S. upper class by borrowing an exponentially increasing amount of imaginary-counterfeit money from the future Americans!
When USAPonzi borrows more imaginary-counterfeit money from the future Americans, the current Americans can buy more stuff from Amazon, which causes Amazon to have more revenue and the potential for huge profit, which causes the Amazon stock price to go up because Americans want to buy stock in apparently valuable companies, which causes Jeff Bezos' Amazon stock to become more valuable which has caused Jeff Bezos to become an imaginary centi-billionaire!
$115.5 Trillion of imaginary-counterfeit money that has been fraudulently borrowed from the future Americans, can buy a lot of stuff from Amazon!
The corrupt and criminal U.S. Government is fraudulently borrowing an unending and ever-increasing amount of imaginary-counterfeit money from the future Americans, money the future Americans do not have, and giving it to the current Americans so they can buy an unending and ever-increasing amount of stuff from Amazon without ever having to pay for it!
The corrupt and criminal U.S. Government has already fraudulently borrowed $115.5 Trillion of imaginary-counterfeit money from the future Americans so the current Americans can buy a lot of stuff from Amazon and make Jeff Bezos filthy but imaginary-counterfeit rich!
The positive feedback of USAPonzi, if it is allowed to continue, will give Jeff Bezos infinite imaginary-counterfeit personal wealth!
When USAPonzi implodes, Jeff Bezos will be essentially broke and Amazon will have a lot of useless warehouses and data centers sitting around doing nothing!
Amazon HQ2 is a fool's errand! Amazon, as we currently know it, will go out of business when USAPonzi implodes! Amazon has no need for a second headquarters site! Most of the current employees of Amazon will suddenly be unemployed when USAPonzi implodes!
Amazon is a hoax because the corrupt and criminal U.S. Government is printing an unlimited amount of monopoly money so we can buy an unlimited amount of stuff from Amazon and never have to spend a nickel of earned income!
The positive feedback effect of USAPonzi is what is causing the stock market to continuously go up! The stock market has been in a 49-year bull market because the U.S. Government is corrupt!
The stock market exhibits the characteristics of the buffalo stampede due to the noise about hot stocks whose value appears to go up continuously because the corrupt and criminal U.S. Government is borrowing $16.6 Billion every day so Americans can buy products and services with this unending and ever-increasing stream of imaginary-counterfeit money and investors can buy stock in these companies with this unending and ever-increasing stream of imaginary-counterfeit money!
noise causes buying
buying causes more noise
more noise causes more buying
more buying causes much more noise
much more noise causes much more buying.
When USAPonzi implodes the positive feedback of the current stock market noise will become negative feedback noise and the stock market will fall by 80-85% from its then level! I predict this stock market fall of 80-85% because about 77% of the wealth (Total National Assets) in America is the $115.5 Trillion of imaginary-counterfeit money that the corrupt and criminal U.S. Government has fraudulently borrowed from the future Americans ($115.5T/$150.2T=0.77)! I think the stock market fall could be greater than this ratio of 0.77 because of the irrational exuberance of the stock market stampede!
When USAPonzi borrows more and more imaginary-counterfeit money from the future Americans, the current Americans can buy more and more cars. That is why we have traffic jams; USAPonzi is building what would be an infinite number of cars. Jay Leno has a good head start on most Americans because he has 169 cars and 117 motorbikes because USAPonzi has made him very rich with imaginary-counterfeit money that the U.S. Government has fraudulently borrowed from the future Americans!
When USAPonzi borrows more imaginary-counterfeit money from the future Americans, the current Americans can buy more iPhones and can pay more for their new iPhones! Nearly everyone on the planet can now have a smartphone because USAPonzi is in the process of borrowing an infinite amount of imaginary-counterfeit money from the future Americans!
This is why Apple now has a market cap that is oscillating around a trillion imaginary-counterfeit dollars! The U.S. Government has fraudulently borrowed $115.5 Trillion of imaginary-counterfeit money from the future Americans so the current Americans can buy a lot of iPhones which makes Apple appear to be worth a trillion dollars!
The value of Apple stock will fall precipitously when USAPonzi implodes and Apple will have a bunch of useless material in its supply chain and a bunch of employees that it will not need! Apple and other FAANG stocks could fall more than other stocks because the source of funds to fuel the FAANG craze will almost immediately go to zero (See FANG Miracle/Debacle)!
We have bubbles/stampedes in almost every asset class because the positive feedback of USAPonzi is in the process of borrowing an infinite amount of imaginary-counterfeit money from the future Americans!
Unfortunately, the USAPonzi stampede is about to run off a cliff!
GAAP Accounting is required to provide the damping effect mentioned above in the explanation of positive feedback that would have prevented the USAPonzi stampede! GAAP Accounting simply says “don't borrow more from the future Americans than the future Americans can pay”!
The corrupt and criminal U.S. Government has created public liabilities of $115.5 Trillion by operating its fiscal policy with Cash Accounting rather than the proper GAAP Accounting!
GAAP basis deficit spending by the U.S. Government is fraudulently borrowing an unending and ever-increasing stream of imaginary-counterfeit money from the future Americans so the current Americans can buy an unending and ever-increasing amount of stuff from Amazon, cars from Germany, Japan, South Korea, GM, and Ford, airplanes from Boeing and Airbus, and smartphones from Apple, Samsung, and others! This same fraud is buying an unending and ever-increasing amount of oil and gas from Saudi Arabia and others so Americans can operate this unending and ever-increasing stream of cars and airplanes!
USAPonzi is a $115.5 Trillion fraud that is growing by $16.6 Billion a day!
The U.S. Government is borrowing money, $16.6 Billion a day, from the future Americans, money that the future Americans do not have, and giving it to the U.S. upper class!
The U.S. Government is corrupt!
The senior officials of the U.S. Government are common criminals that have committed a $115.5 Trillion criminal act by not operating the U.S. Government fiscal policy with proper accrual accounting! The senior officials of the U.S. Government are common criminals because they are direct financial beneficiaries of this massive fraud! The corrupt and criminal U.S. Government is overpaying itself with imaginary-counterfeit money!
We have 535 criminals in the U.S. Congress and an untold number of criminals in the White House!
I have sent 14 whistleblower letters to the U.S. Securities and Exchange Commission, a whistleblower letter to every member of the U.S. Congress, and 9 whistleblower letters to each member of the U.S. Supreme Court so that all three branches of the U.S. Government would be informed of this massive fraud!
I have also sent over 200 Op-Eds to the “mainstream media” in an attempt to expose this massive fraud to the citizens of Planet Earth! None of these Op-Ed candidates have been published!
This massive fraud is explained in more detail in my Open Letter to US Government, my Open Letter to Planet Earth, and my Open Letter to US General Public!
I have presented specific fraud charges against the U.S. Government in my Fraud Charges against U.S. Government commentary!
I have also explained this fraud to the International Monetary Fund in my Open Letter to the International Monetary Fund commentary!
To eliminate this massive ($115.5 Trillion) fraud, the U.S. Government must adopt GAAP Accounting and commit to a balanced GAAP basis budget.
|Cash Deficit in FY2019
|GAAP Deficit in FY2019
|US Unfunded Future Liabilities
|US Unfunded Liabilities (GAAP)
|Total National Assets
Source: www.usdebtclock.org Nov 8, 2018
This fraud/Ponzi scheme (USAPonzi) is explained in much more detail on my websites www.usaponzi.net and www.usaponzi.com and in my books “USAPonzi” 11/22/15, “USAPonzi2” 5/1/17, “USAPonzi3” 2/1/18, and “USAPonziA” 9/1/18! Each of these books have updates that I made every few days until the next book was published. I have published 675 commentaries since March 29, 2013 in an attempt to explain and expose this massive U.S. Government fraud!
This is the biggest ($115.5 Trillion) financial fraud ever perpetrated, I call it “USAPonzi: The Ultimate Government Fraud” and “The Biggest Ponzi Scheme on the Planet”.
John W White