A Nation Fooled!
"You can fool all of the people some of the time, and some of the people all of the time, but you can not fool all of the people all of the time". Attributed to Abraham Lincoln
"Mathematics, properly applied, always speaks the truth"! John W White 2013
As a nation we have been fooled by the way the U.S. Government is reporting our fiscal situation! In fact most people on the planet have been fooled by the way the U.S. and other governments are managing and reporting their respective budgets! But then a Ponzi scheme only works when you are dealing with people that do not understand what is happening. As this website details, governments in every major economy in the world are running some form of a Ponzi scheme to make their economy look better, even much better, than it really is delivering for the citizenry. And the general populous in most of the countries do not even know it is happening. But when people are "benefiting" from the Ponzi scheme they will continue to look at it with a blind eye even if they think something is fishy because they like the results. Many of the people that invested with Madoff knew or should have known that he was running a Ponzi scheme but they felt like they were getting rich so they stayed invested only to see much of their money vanish when the Ponzi scheme imploded.
The U.S. Federal Government has been running this massive Ponzi Scheme for 45 years (since 1968) but many people think they are benefiting from the scheme so they do not want to admit that it is a Ponzi scheme that the U.S. Government cooked up. The poor, the old, the disabled, the unemployed, and the unhealthy like it because the Government pays a lot of their bills, sometimes all of their bills. The middle class/working class folks can tolerate it because they have a job and an opportunity to progress to the upper/wealthy class. The upper class/wealthy class folks really like it because they can make mountains of money as a result of the artificial injection of Trillions of Qvalue dollars (currently $5-6 Trillion) into the U.S. economy every year.
So if everybody benefits why stop the gravy train?
While everybody seems to benefit to some degree I would have to say that the middle/working class is getting the raw deal. The poor/old/disabled etc. are getting something for nothing. The upper/wealthy class folks (at least most of them) are getting richer (most likely with phantom money). The middle/working class folks are working hard, paying taxes, and struggling to move up to the upper class but their pay is not progressing like the pay/wealth is for the upper class. Congress sure does not want to stop the Ponzi scheme because it helps them get elected. They can give entitlement benefits to the masses to gain votes and they can create tax loop holes to garner election contributions from the elite/wealthy and put it all on this "hidden" credit card of unfunded liabilities. What's not to like?
The problem is, Ponzi schemes implode! We are hopefully on the verge of coming to grips with fixing the basic cause of this Ponzi scheme. The business class, the media, and to some degree the general populous are telling Congress to fix the problem. People seem to think that Congress can and must wave a magic wand and solve this problem. But this problem cannot be solved in a way that leads to a happy ending. It will just have to implode as do all Ponzi schemes. The Government waved their magic wand in 1968 and solved the short term problem of the cost of the Vietnam war but created the opportunity for this monster Ponzi scheme.
Most people do not want to admit that it is a Ponzi Scheme!
Most people in the United States have no idea that the U.S. Government is running a Ponzi scheme. Many people in Congress have no idea that the U.S. Government is running a Ponzi scheme. I am even of the opinion that some of the "smartest" economists (Paul Krugman; Nobel Prize winning economist? Jeremy Siegel; professor of finance at Wharton?) may not even know that we are living in a Ponzi economy. Which is worse for these and other high profile individuals? Not knowing or knowing and not telling? But the problem is so obvious that I have got to believe that most of the "smart" folks know full well that it is a Ponzi scheme and they are leveraging this knowledge to make money and or gain power. The Housing Bubble was a classic example of scammers and schemers taking advantage of the taxpayer's piggy bank that is dramatically enhanced by this Ponzi scheme to amass ill-gotten fortunes. USAPonzi has been systematically introducing artifical ( Qvalue or questionable value) dollars into the U.S. and World economy with this massive GAAP-basis Deficit spending.
Warren Buffett must know that it is a Ponzi scheme.
Charlie Munger must know that it is a Ponzi scheme.
Berkshire Hathaway has accumulated a ton of the Qvalue that this scheme produced.
Peter Lynch must know that it is a Ponzi scheme
The Magellean Fund has accumulated a ton of the Qvalue that this scheme produced.
Every president (well almost every president) must know (have known) that it is a Ponzi scheme.
Harry Reed must know that it is a Ponzi scheme.
John Boehner must know that it is a Ponzi scheme.
Paul Krugman must know that it is a Ponzi scheme.
Jeremy Siegel must know that it is a Ponzi scheme.
Paul Volcker must know that it is a Ponzi scheme.
Alan Greenspan must know that it is a Ponzi scheme.
Ben Bernanke must know that it is a Ponzi scheme.
Janet Yellen must know that it is a Ponzi scheme.
Hank Paulson must know that it is a Ponzi scheme.
Tim Geithner must know that it is a Ponzi scheme.
Jack Lew must know that it is a Ponzi scheme.
Erskine Bowles knows it is a Ponzi scheme.
Alan Simpson knows it is a Ponzi scheme.
I feel sure that Paul Ryan knows it is a Ponzi scheme.
Tom Coburn knows it is a Ponzi scheme.
Ron Paul knows it is a Ponzi scheme.
Jim Cramer must know that it is a Ponzi scheme.
Larry Kudlow must know that it is a Ponzi scheme.
Jamie Diamond must know that it is a Ponzi scheme.
Hedge fund managers must know that it is a Ponzi scheme.
Hedge funds have accumulated a ton of the Qvalue that this scheme produced.
Major company CEOs must know that it is a Ponzi scheme.
Many companies and their executives have accumulated a ton of Qvalue that this scheme produced.
Many, many others must know that it is a Ponzi scheme.
David Walker knows it is a Ponzi scheme.
David Stockman knows it is a Ponzi scheme.
Laurence Kotlikoff knows it is a Ponzi scheme.
Standard & Poor's Rating Service must know that it is a Ponzi scheme.
Moody's Rating Service must know that it is a Ponzi scheme.
Fitch Ratings must know that it is a Ponzi scheme.
All three of these credit rating services are in an Arthur Andersen (Enron) style squeeze play. Do they expose the Ponzi Scheme and lower the U.S. credit rating to junk or do they continue to keep their mouths shut and then be accused of not knowing how to do their job when USAPonzi implodes?
But even if people know it is a Ponzi scheme it is often in their best interest to pretend like it is not since they may be making money and/or gaining/retaining power because of this Ponzi model.
Now some people that should know that it is a Ponzi scheme may in fact not know. Some people still think that we can tax the rich and make it all well. We cannot! The problem is much too massive to fix with just more taxes. The math simply does not work!! (see Cox and Archer).
Many people are in denial on this issue because the consequences of the Ponzi theory are too catastrophic to even contemplate. They pass off this whole idea of the U.S. Government promoting a Ponzi scheme as just too crazy to be possible.
But in the mean time, since we have a nation and a planet that is being fooled by the U.S. Government, USAPonzi will continue to operate for a little while longer.
Next page: Enron on Steroids!