Chapter 8 Buffett makes $9M a day from U.S. Government Fraud
November 22, 2015
Warren Buffett has long been hailed as possibly the "greatest investor in history". The financial returns of Berkshire Hathaway have made its investors very wealthy including of course Warren Buffett himself. However these financial returns are tainted by the fact that Warren Buffett has known for more than 40 years that most (now 84%) of his apparent wealth and that of his investors has been gained because the U.S. Government is using corrupt and fraudulent accounting. The U.S. Government is running a massive Ponzi scheme (USAPonzi). This Ponzi scheme is dramatically magnifying the private net worth of the upper class U.S. citizens and businesses by undertaxing them on a GAAP basis thereby creating counterfeit money with this GAAP basis deficit spending (see Creating Counterfeit Wealth).
Warren Buffett has known, at least since 1975, that the U.S. Government was operating with a fiscal policy that is not properly comprehending the cost of the social benefit promises that the U.S. Government is making. Warren Buffett wrote a very detailed 19 page letter in 1975 to Katharine Graham, the then CEO of the Washington Post, (letter begins on page 118 of this pdf file) that explained the perils of making defined benefit pension promises and not having the management conviction to fund these promises.
However, when the U.S. Government chose this very approach by making defined benefit social benefit promises and not funding these promises, Warren Buffett chose to stay silent about this problem with the U.S. Government's fiscal policy so that he and his investors could appear to become very wealthy because of the undertaxing by $99.8 Trillion of USAPonzi.
This corrupt and fraudulent U.S. fiscal policy (USAPonzi) has appeared to make all upper class U.S. citizens and businesses very wealthy. My analysis shows that the U.S. upper class as a group has been given $99.8 Trillion of counterfeit money since USAPonzi was launched for FY1969, that Warren Buffett has been given $56.0 Billion of counterfeit money, and that Warren Buffett is being given $9.0 Million more counterfeit money every day.
Clearly, Warren Buffett is not the only person that has known about this U.S. Government fraud but has remained silent on the issue. Many people have remained silent so that they could gain financial advantage from what is either a case of deliberate and massive fraud by the U.S. Government or a massive case of financial and economic ignorance within the U.S. Government.
Donald Trump also thinks he has gotten really rich but most of his wealth, in fact that of all U.S. upper class citizens and businesses, is counterfeit wealth for this same reason.
This Ponzi scheme is what has caused the equity market (stock market) to appear to be the best place to invest for the last 5 decades, showing a 7-9 per cent annual return over that time period. The $99.8 Trillion of counterfeit money produced by the undertaxing of USAPonzi accounts for 84% of the private net worth of U.S. citizens and businesses and the stock market has continued to set new records because of this ever increasing supply of counterfeit money.
I am convinced that this is deliberate fraud that was started by LBJ with the Unified Budget he proposed for FY1969. The people in the U.S. Government are now petrified by what will happen to their political careers, their personal livelihood, and their personal wealth when this massive Ponzi scheme (USAPonzi) is exposed to the general populace of the United States and to the rest of the planet. USAPonzi is clearly the biggest fraud that has ever been perpetrated. It is also hard to imagine how it could ever be surpassed on a relative basis since it is now a $99.8 Trillion fraud, as measured by our current public liabilities and assessed and reported on usdebtclock.org Nov 22, 2015 as US Unfunded Liabilities (GAAP).
USAPonzi is a fiscal policy that is promising and, for now, paying social benefits that are not affordable by the U.S. taxpayer, is paying the U.S. Government workers and related businesses much more than is affordable by the U.S. taxpayer, is undertaxing the current U.S. taxpayer by not paying for all current period expenses and not funding the future social benefit promises, and is attempting to conceal this overspending, overcommiting, and undertaxing by reporting and assessing with Cash Accounting rather than the proper GAAP Accounting.
Warren Buffett and many others clearly know that the U.S. Government is operating this Ponzi scheme but they are willing to let the U.S. Government continue to operate USAPonzi because they appear to be getting filthy rich because of this U.S. Government fraud and corruption (see Creating Counterfeit Wealth).
According to usdebtclock.org Nov 22, 2015, the private net worth of all U.S. citizens and businesses is $118.7 Trillion and our US Unfunded Liabilities (GAAP) total $99.8 Trillion. This means that the U.S. citizens and businesses have been undertaxed on a GAAP basis by $99.8 Trillion since FY1969 when LBJ launched USAPonzi with the Unified Budget. Because the U.S. citizens and businesses did not have to pay this $99.8 Trillion in taxes they appear to be wealthier by $99.8 Trillion. Warren Buffett is a major beneficiary of this massive undertaxing of the U.S. taxpayers.
If one makes the reasonable assumption that this undertaxing should be allocated on a pro rata basis by net worth, the following table shows how much of Warren Buffett's net worth can be attributed to the corrupt and fraudulent fiscal policy of USAPonzi.
All U.S. citizens and businesses Warren Buffett's share
Net Worth $118.7 Trillion $66.7 Billion
Undertaxing $99.8 Trillion $56.0 Billion
Undertaxing%Net Worth 84.0% 84.0%
Warren Buffett has gained $56.0 Billion of his net worth because of this U.S. Government fraud simply because he did not have to pay the taxes to finance the U.S. Government's overspending and overcommitting.
Warren Buffett is also being given more counterfeit money every day because of GAAP basis deficit spending which according to usdebtclock.org Nov 22, 2015 is projected to be $5.9 Trillion this year (FY2016). Again, if one makes the reasonable assumption that this GAAP Deficit should be allocated on a pro rata basis by net worth the following table shows how much of Warren Buffett's increase in net worth this year can be attributed to the corrupt and fraudulent fiscal policy of USAPonzi.
All U.S. citizens and businesses Warren Buffett's share
Net Worth $118.7 Trillion $66.70 Billion
GAAP Deficit in FY2016 $5.87 Trillion $3.29 Billion
GAAP Deficit per day in FY2016 $16.1 Billion $9.01 Million
GAAP Deficit%Net Worth 4.94% 4.94%
Warren Buffett is making $9.01 Million more counterfeit money every day because of this corrupt and fraudulent U.S. Government fiscal policy.
By the way, this 4.94% artificial increase in net worth due to USAPonzi this year has been fairly typical of the annual increases over the last 47 years and is the reason we have seen price inflation of about 5% per year over that time period. Price inflation is a byproduct of USAPonzi. House prices have increased by more than 10X since 1969 simply because USAPonzi has created $99.8 Trillion of counterfeit money (See The American Housing Bubble).
Warren Buffett drops hints of a Fiscal Problem!
Warren Buffett clearly has known for more than 40 years that because of the current fiscal policy he and his investors could appear to become very wealthy because of the massive undertaxing of USAPonzi. Warren Buffett's net worth has been enhanced by $56.0 Billion because of this undertaxing and is continuing to be enhanced by $9.0 Million a day and by $3.29 Billion this year (FY2016). It is understandable that Buffett might be somewhat hesitant to expose this fraud and stop this gravy train for himself and his investors.
But it is also understandable that Warren Buffett might be feeling some angst because he and his investors have become very wealthy mostly because of Government fraud of which he has been fully aware but did not disclose. That is why I think that Warren Buffett has dropped a couple of hints that the current U.S. fiscal policy has a problem.
Buffett Hint #1
The first hint that Buffett has given is his statement that he feels that it is not appropriate that his secretary has a higher effective tax rate than he does.
Buffett says he's still paying lower tax rate than his secretary ...
Mar 4, 2013 - Warren Buffett says even though he and other top earners are paying higher taxes this year, he thinks he's still paying a lower rate than his secretary. In 2013, capital gains for those earning more than $400,000 ($450,000 for couples) will be taxed at 20%, up from 15%.
Warren Buffett certainly should be paying more taxes than he is currently paying since according to proper GAAP Accounting he should have paid a total of $56.0 Billion more taxes since FY1969 than he has actually paid.
Buffett Hint #2
Warren Buffett dropped his second hint by including the 1975 letter to Katharine Graham, CEO of the Washington Post in the February 28, 2014 Berkshire Hathaway shareholder report that explained the perils of making pension promises to employees but not having the management conviction to fund these promises. While Warren Buffett declines to directly call out the U.S. Government for using an improper accounting system, he includes the following comment in that report that I feel is a warning to the U.S. Government of troubles ahead because the U.S. Government has made social benefit promises that now have a present value of $81.1 Trillion and the U.S. Government has not accrued one penny to pay for these promises.
Warren Buffett: "During the next decade, you will read a lot of news – bad news – about public pension plans. I hope my memo is helpful to you in understanding the necessity for prompt remedial action where problems exist."
While Warren Buffett chooses to not directly expose the fraud and corruption of the current fiscal policy, he is telling the U.S. Government that it is not taxing the U.S. citizens and businesses enough, they are undertaxing by $99.8 Trillion, and that the U.S. Government is making social benefit promises that it is not funding. By dropping these hints, I guess Warren Buffett can feel that he has a clear conscience by having warned the U.S. Government of the troubles ahead.
The U.S. Government is filled with "Scoundrels, Liars, and Cheaters" that are willing to continue this corrupt and fraudulent fiscal policy!
And this was all made possible because Lee Harvey Oswald assassinated JFK (See The Oswald Financial Bubble).
The U.S. citizenry must demand that the U.S. Government 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.
Financial data sourced from usdebtclock.org Nov 22, 2015.
Continue to: 9 Creating Counterfeit Prosperity Table of Contents