The Biggest Ponzi Scheme on the Planet-The U.S. Government
"American Economic Exceptionalism Explained"                     USAPonzi                                      by John W. White   Mar 29, 2013

Creating Counterfeit Money, Phantom Money, and Qvalue
Aug 20, 2013
Updated Nov 1, 2014

As I began studying this Ponzi scheme I used the term Qvalue for the dollars created by the GAAP basis Deficit Spending of USAPonzi and transitioned to the term "Phantom Money" but I now feel that "Counterfeit Money" is the most appropriate terminology for this phenonom of USAPonzi.  This money is systematically created by USAPonzi by undertaxing the U.S. citizens and businesses with GAAP basis Deficit Spending and is therefore backed only by the ability to pay of the future taxpayers so it is not only of questionable value and phantom, it is surely counterfeit since this is a ballooning amount it can never be paid.


Qvalue means the "questionable value" of the massive GAAP-basis deficit spending that  USAPonzi has presented to the U.S. and global economy over the last 45 years ( estimates this to be $85.4 Trillion as of September 30, 2012).  It is questionable because it is unsustainable.  Much of this Qvalue will evaporate when USAPonzi implodes much like the value of the Madoff portfolios evaporated when Madoff Ponzi imploded.

The dramatic GAAP-basis Deficit spending that has been incurred over the last 45 years by this U.S. Government Ponzi scheme has created a Federal Debt (as of Aug 20, 2013) of $16.9 Trillion, a Federal Burden (as of Aug 20, 2013 as reported by Comeback America) of $73.6 Trillion, and a Federal Obligation (as of Sept 30, 2012 as reported by of $85.4 Trillion.  This Federal Debt and Federal Burden have created a Federal Obligation per citizen ($230,477) that is 9 times as large as the corresponding obligation for the city of Detroit (see Detroit-A lesson in Bankruptcy).  The estimate of our Federal Obligation puts this ratio even higher at 10.7 times that of the city of Detroit Obligation.

Dealing with this massive Federal Financial Obligation of more than $230,000 per citizen will require that the Federal Government take one or more of the following actions:

1) default on most of the current entitlement commitments to reduce our Federal Unfunded Liabilities.
2) default on some of the Federal Debt.
3) increase taxes dramatically (see Sequester-A Drop in the Bucket)
4) decrease spending dramatically (see Sequester-A Drop in the Bucket)
5) or print money at the rate of about $2.00 (but because of the way USAPonzi works this will increase exponentially over time) for each $1.00 of tax receipts. (see Laundering Money)

My U.S. "Real" GDP analysis predicts that if we default on some entitlement commitments, increase taxes, and decrease spending enough to balance our GAAP-basis budget it will likely cause our GDP to contract by 1/3rd or more.   If that were to happen, then the stock market would likely drop by a similar amount.   Also if GDP were to drop that much, many state and local governments would likely experience what the city of Detroit is going through and as a result many of these governments could default on some portion of their municipal debt.   My U.S. "Real" GDP analysis also shows that we have total U.S. Financial commitments that are 4.3X the level we had at the start of the Great Depression and if our GDP were to drop by the 1/3rd or more that my analysis suggests, then we would likely see defaults on much of this consumer, corporate, and financial debt similar to what happened during the Great Depression.

The TV pundits have a common suggestion that because of the risk of rising interest rates (and the risk of default) the value of much of this debt will decline and this will likely cause a portion of the money in these bonds to move into the stock market.  If that happens we could see a further melt up of the stock market similar to what occurred just before the start of the Great Depression.  If the stock market then were to crash due to the GDP contraction that my analysis suggests then the asset prices might fall for both stocks and bonds much as they did during the Great Depression.  The Qvalue wealth that is being held in bonds and in the stock market today could shrink rather dramatically i.e. a lot of the wealth could be like phantom money that vanishes when the Federal Government takes the actions required to balance our "real" GAAP-basis budget and therefore causes the GDP to shrink.

The deficit spending by the Federal Government that is disguised by inappropriate accounting policies is injecting $5-6 Trillion into our economy every year and is creating significant artificial buying power for our citizenry that is in turn allowing our corporations to recognize more revenue and more profit than would be possible absent this deficit spending.   That is why I am of the opinion that reducing spending and raising taxes as required to balance our budget will shrink the economy, lower corporate profitability, and as a result lower the stock market value of these corporations.

Stock Market Phantom Money

As a result of the juicing of our economic activity by the out of control spending by the Federal Government as a consequence of USAPonzi, the stock market is dramatically overvalued relative to the "real" economic condition of the country and as a result much of the Qvalue stock market wealth could vanish into thin air when the people in Washington start telling the truth and are forced to cut spending, raise taxes, and cut entitlements.

Bond Market Phantom Money

As a result of the out of control borrowing (and implicit borrowing) by the Federal Government, state governments, local governments, consumers, corporations, and financial institutions that USAPonzi has encouraged, much of the bond market Qvalue could also vanish into thin air when the economy contracts because many of the people that were counting on the Federal Government to keeping sending them money (one way or another) find that they cannot pay their bills or pay back their debt when Government support is taken away by the actions required to balance the GAAP-basis budget.  It is just not mathematically possible for the Federal Government to come even close to meeting the commitments that it has made as a result of this massive Ponzi scheme.

Great Depression II

The conditions are all set for what will likely be Great Depression II and the U.S. Government has to be held accountable for getting us into this situation by running "The Biggest Ponzi Scheme on the Planet".

Next page:
Living Beyond our Means