Chapter 4 USAPonzi-The Biggest Ponzi Scheme on the Planet!
November 22, 2015
The U.S. Government is operating a Ponzi scheme (USAPonzi) fiscal policy by spending and promising to spend much more than the current U.S. taxpayers can afford, dramatically and intentionally undertaxing the current U.S. taxpayers relative to this spending and promising to spend, and deferring the resulting liabilities to the future U.S. taxpayers.
This Ponzi scheme fiscal policy overpays Government workers, overpays social benefits recipients, undertaxes the current U.S. taxpayers, defers an ever increasing percentage of the cost of operating the U.S Government to the future U.S. taxpayers, and attempts to conceal this overspending, overcommitting, and undertaxing by using fraudulent accounting, using Cash Accounting rather than the proper GAAP Accounting.
This fiscal policy is a classic Ponzi scheme that pays returns to the early participants in the scheme by borrowing money when needed and promising that the future participants will be able to pay the future commitments. GAAP Accounting assesses just how much the U.S. Government should be accruing to be able to pay the pensions, veteran's benefits, and social benefits that the U.S. Government has promised to pay. When the U.S. Government does not collect the tax revenue required to fund these promises the liabilities get deferred to the future U.S. taxpayers. As of the writing of this book, Nov 22, 2015, the future U.S. taxpayers owe $99.8 Trillion of deferred liabilities which is why I say that USAPonzi is "The Biggest Ponzi Scheme on the Planet". The amount of deferred liabilities owed by the future U.S. taxpayers is reported on usdebtclock.org Nov 22, 2015 as US Unfunded Liabilities (GAAP).
These US Unfunded Liabilities (GAAP) are projected to increase by our GAAP Deficit of $5.9 Trillion in FY2016, as reported on usdebtclock.org Nov 22, 2015, and will continue to increase exponentially as long as the U.S. Government continues with this Ponzi scheme fiscal policy. The current U.S. taxpayers cannot pay for the current period expenditures so obviously the future U.S. taxpayers have no hope of ever paying these massive and exponentially increasing US Unfunded Liabilities. The U.S. Government is technically bankrupt since it cannot pay its financial commitments.
This Ponzi scheme was launched in FY1969 when LBJ proposed and got approved the "Unified Budget" and has now been operating for 47 years (See Introduction to USAPonzi).
Every tax dollar that is deferred to the future U.S. taxpayers is a counterfeit dollar in the pocket of the U.S.citizen or business that did not have to pay that tax dollar. Since we now have US Unfunded Liabilities (GAAP) of $99.8 Trillion we have $99.8 Trillion of counterfeit money that has been introduced into the U.S. and global economy
No one that lives in the U.S. wants the U.S. Government to stop this Ponzi scheme because everybody seems to benefit, at least in the short term. The Government workers get overpaid, the social benefit recipients get overpaid, and the current U.S. taxpayers get undertaxed. However, by making the false promise that the future U.S. taxpayers can pay our US Unfunded Liabilities (GAAP) the U.S. Government is propagating these unsound financial commitments throughout the U.S. and global economy. The future U.S. taxpayers are now responsible for paying for essentially everything we own; our houses, cars, planes, boats, TVs, smartphones, clothes, food, oil, gas, etc.etc. $99.8 Trillion can buy a lot of stuff!
The future U.S. taxpayers are also expected to pay for many of these same items in many other parts of the planet since we have used the counterfeit money produced by the GAAP basis deficit spending of USAPonzi to buy things from them so they can buy things from the next person etc. etc. The future U.S. taxpayers are responsible for the standard of living of many the citizens in the oil producing countries around the world and for elevating the standard of living in many countries from which we are buying products and services since we are buying these products and services with the counterfeit money produced by USAPonzi. USAPonzi has even built skyscrapers in the Middle East and Ghost Cities in China with this counterfeit money (See The Distortions of USAPonzi).
USAPonzi has introduced a rapidly accelerating consumption rate for the U.S. consumer, in fact for consumers throughout "developed world", by putting the cost of most of our purchases on the U.S. Government's "credit card" for which the future U.S. taxpayers are responsible.
The U.S. Government has implemented this Ponzi scheme fiscal policy with two actions;
1) using Cash Accounting rather than the proper GAAP Accounting and
2) overspending on a Cash basis.
GAAP Accounting, sometimes called accrual accounting, is necessary to properly assess how much the current taxpayers need to be taxed to pay for the future benefits that the U.S. Government has promised. With Cash Accounting, the U.S. Government only assesses the taxes required to pay for the expenditures that the U.S. Government will make in the current year. That is why our GAAP basis Deficit for FY2016 is projected to be $5.9 Trillion when the U.S. Government reports a projected Cash Deficit of $433 Billion. The U.S. Government is just not telling the truth!
This Ponzi scheme fiscal policy, with its massive GAAP basis deficit spending, is creating counterfeit money as the U.S. Government incurs these massive public liabilities. The following table shows the projected Income, GAAP Spending, and GAAP Deficit for FY2016 and the U.S. Government's current Credit Card Balance as of Nov 22, 2015.
Income $3.278 Trillion Ratio to Income
GAAP Spending $9.149 Trillion 2.8X GAAP basis
GAAP Deficit $5.871 Trillion 1.8X
Credit Card Balance $99.80 Trillion 30.4X US Unfunded Liabilities (GAAP)
Counterfeit Money $99.80 Trillion
Every dollar that the U.S. Government puts on its credit card becomes a counterfeit dollar in the pocket of the U.S. citizen or business that did not have to pay that tax dollar. This is how the U.S. Government is appearing to make the U.S. upper class citizens and businesses very rich. The U.S. Government is creating massive counterfeit private wealth by assuming massive but unpayable public liabilities.
The U.S. Government is projected to spend 2.8X its Income, on a GAAP basis, in FY2016.
The U.S. Government has a current credit card balance (US Unfunded Liabilities (GAAP)) that is 30.4X its projected Income for FY2016.
The U.S. Government put $5.4 Trillion on its credit card in FY2015 and is projected to put another $5.9 Trillion on its credit card in FY2016.
To correct these fiscal policy Issues, the U.S. Government must adopt GAAP 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 is why I say
USAPonzi is "The Biggest Ponzi Scheme on the Planet".
The U.S. Government is planning to distribute $5.9 Trillion more counterfeit money in FY2016 to keep this Ponzi scheme going. That is $16.1 Billion every day. That is $18,323 for every man, woman, and child this year ($5.9T/322 million citizens = $18,323). That is how the U.S. Government is stimulating the U.S. and global economy, it creates more counterfeit money every day with GAAP basis deficit spending. That is how the U.S. Government is creating The Myth of American Economic Exceptionalism.
Financial data sourced from usdebtclock.org Nov 22, 2015.
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