In an effort to avoid these types of corporate fraudulent activities, the U.S. Government put into law the Sarbanes-Oxley Act that mandates that publicly traded corporations adopt GAAP Accounting (Generally Accepted Accounting Principles). Our justice system convicted and imprisoned several of the key executives that were instrumental in "cooking the books" of corporations by using corrupt and fraudulent accounting tactics for financial gain. And now the U.S. Government is doing exactly the same thing just on a much much grander scale (by more than 1000X).
State and Local Government Accounting Practices
In recent years we have also seen many instances where state and local governments have encountered financial and budgetary problems because they did not properly fund the pension plans for government employees and as a result did not have the financial capability to pay these commitments when they came due. The GASB (Government Accounting Standards Board) has recently put in place a set of financial rules and regulations that require that state and local governments more transparently assess and report their financial condition (see www.gasb.org for more information on the Government Accounting Standards Board). These rules were put in place to address the very problem that has caused USAPonzi; making future financial commitments without being willing to fund these commitments.
Unfortunately the GASB only has jurisdiction over the state and local governments and not over the Federal Government.
Letters to the Securities and Exchange Commission (SEC)
This year I have sent six "Whistleblower" letters to the Securities and Exchange Commission stressing the need for the U.S. Government to begin using proper accounting practices that would expose the financial issues that are being created by USAPonzi. My April 14, 2014 letter is, in my view, the most enlightening letter stating the reasons why the U.S. Government should be using GAAP Accounting.
Unfortunately the Securities and Exchange Commission does not have jurisdiction over the Federal Government but to whom do you go to complain when the Government of The United States of America is using corrupt and fraudulent accounting practices.
Cash Accounting, GAAP Accounting, and Fiscal Gap Accounting
There is also a third accounting methodology called Fiscal Gap Accounting that is being promoted by some in Congress (see www.theinformact.org) to provide an even more precise measure of our total fiscal commitments. I have written a commentary Fiscal Gap Accounting that attempts to explain the fundamental differences between these three accounting "measuring sticks".
USAPonzi is Stimulating the U.S. (and global) Economy.
USAPonzi is causing the U.S. Government to dramatically undertax U.S. citizens and businesses creating GAAP basis Deficit Spending, as shown in Table 1 above, that provides significant stimulus to the U.S. Economy. I estimate that 45% of FY2014 GDP was caused by USAPonzi (see U.S. "Real" GDP FY2014) and I estimate that 47% of FY2015 GDP will be caused by USAPonzi (see U.S. "Real" GDP FY2015).
The Consequences of Current U.S. Fiscal Policy-USAPonzi
By overspending, overcommitting, undertaxing, and using improper accounting the U.S. Government has:
Artificially stimulated the U.S. and global Economy as show above.
Created $17.9 Trillion of Debt and $80.8 Trillion of Unfunded liabilities.
Created $98.7 Trillion of counterfeit money.
Granted most of this counterfeit money to the rich.
Left future taxpayers with a $98.7 Trillion GAAP Obligation (Debt + Unfunded Liabilities).
Left the social benefits recipients with nothing in the social benefit trust funds.
And USAPonzi continues to operate; creating $19.0 Billion of counterfeit money every day.
American Economic Exceptionalism Explained
The United States of America has a reputation as the shining example of capitalism, productivity, and economic achievement. I contend that this apparent prosperity is an illusion created by the effects of USAPonzi with its massive GAAP basis Deficit Spending and the U.S. Government's propensity to spend whatever it wants to without consideration for how the taxpayers will pay for it.
We are headed toward a financial catastrophe of epic proportions when USAPonzi Implodes!
Next Page: Fixing Fiscal Policy