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

Open Letter to U.S. Citizens     USAPonzi Simplified!
July 15, 2015
As Posted on www.usaponzi.com 


The U.S. Government is operating a massive
Ponzi scheme (USAPonzi), by spending more than the U.S. taxpayer is paying in taxes, by committing to spend more for pensions and social benefits than the U.S. taxpayer is paying in taxes and also more than the U.S. taxpayer can afford, and by deferring the financial liabilities for this overspending and overcommitting to the future U.S. taxpayer.  This overspending, overcommitting, and undertaxing causes our economy to appear to be much more prosperous than it would be with a balanced budget and it causes the U.S. citizens to appear to be much richer and the U.S. businesses to appear to be much more profitable than they would be with a balanced budget. 


The U.S. Government is concealing just how much it is overspending and overcommitting by using Cash Accounting instead of the proper GAAP Accounting.


Whatever the U.S. Government spends it must pay for with tax revenues from the U.S. citizens and businesses.  But there are two kinds of spending that the U.S. Government does: spending that it does this year and spending that is promising to do in future years.  This future year spending is for pensions for Government employees and for social benefits for qualifying U.S. citizens.  This future year spending must be funded just like an individual's retirement account (retirement nest egg) must be funded to be able to finance the individual's retirement expenses.  This is often times referred to as a trust fund for this future spending but can also be thought of as the "national retirement nest egg".


The U.S. Government needs to collect the tax revenues to pay for our current year spending but also collect tax revenues to fund this "national retirement nest egg".   Cash Accounting tells us how much tax revenue we need to collect to pay for our current year spending.  GAAP Accounting tells us not only how much tax revenue we need to collect to pay for our current year spending but also how much additional tax revenue we need to collect to put into the "national retirement nest egg" to pay the promised pensions, Social Security, and healthcare benefits.


When we do not collect enough taxes to pay for our current year spending we incur Debt.   When we do not collect enough taxes to properly fund the "national retirement nest egg" we incur Unfunded Future Liabilities.   Cash Accounting assesses and reports our annual Cash Deficit and our resulting Cash Debt.  GAAP Accounting assesses and reports our annual GAAP Deficit and both our resulting Cash Debt and our GAAP basis Unfunded Future Liabilities.


When the U.S. citizens and businesses do not have to pay the taxes to cover our Debt and our Unfunded Future Liabilities they appear to get very rich, especially the most prosperous U.S. citizens and businesses (the upper class) since they are the only ones that would have the money to pay this massive amount of taxes.  The U.S. Government is giving the upper class a massive tax break by deferring these taxes to the future U.S. taxpayer.


According to the www.usdebtclock.org, as of July 16, 2015 we have the following:


Public Liabilities/Unfunded Liabilities: 
$97.1 Trillion  National Debt + Unfunded Future Liabilities                                               National Debt:  $18.3 Trillion
               Unfunded Future Liabilities:  $78.8 Trillion


As a result the U.S. citizens are richer and the U.S. businesses are more profitable because they did not have to pay $97.1 Trillion of taxes that would have been required to pay for what the U.S. Government is spending and committing to spend.


The most prosperous U.S. citizens and businesses end up with most of this money ($97.1 Trillion) in their pockets just because of the way the U.S. Government is doing its accounting.  The richest folks appear to get even richer and the most sucessful businesses appear to become even more successful.


And all because the U.S. Government is using a corrupt and fraudulent accounting system and is not "balancing the GAAP basis budget".


This also means that the people that are expecting to get paid their pension and social benefits cannot be paid because the U.S. Government is not funding the "national retirement nest egg".


This is what makes our fiscal policy (USAPonzi) a Ponzi scheme.   Our current fiscal policy, if continued, will create an infinite amount of Public Liabilities and an infinite amount of apparent Private Net Worth.


According to the www.usdebtclock.org, as of July 16, 2015 we have the following:


Private Net Worth/Total National Assets:  $118.7 Trillion
      Public Liabilities/Unfunded Liabilities:   $97.1 Trillion    Counterfeit Money 


This means that 82% of our apparent Private Net Worth of $118.7 Trillion has been created by deferring $97.1 Trillion of Public Liabilities to the future U.S. taxpayer which he can never pay so this is  Counterfeit Money ($97.1T/$118.7T=0.818).


The U.S. Government is using a simple little accounting trick, Cash Accounting vs. GAAP Accounting, in an attempt to conceal this Ponzi scheme.  The U.S. Government is making it look like the upper class citizens and businesses are getting rich by deferring financial liabilities (Public Liabilities) to the future U.S. taxpayer that is incapable of paying these Public Liabilities.  Most (82%) of the apparent Private Net Worth of the U.S. citizens and businesses is Counterfeit Money created by undertaxing the U.S. citizens and businesses on a GAAP basis.  


The upper class U.S. citizens and businesses appear to be getting rich, the people that are in the U.S. Government or work for the U.S. Government are getting overpaid, and the people that are expecting to get paid pensions and social benefits are getting lied to and cheated because the U.S. Government is making pensions and social benefit commitments but is not collecting enough tax revenue to fund these commitments.


The U.S. Government has misappropriated $97.1 Trillion 
to appear to make Americans much richer and more prosperous than we really are.  This overspending, overcommitting and undertaxing has caused a dramatically accelerated consumption rate for the U.S. consumer which has allowed us to live dramatically beyond our means and has caused our GDP to be nearly 1.6X what it would be with honest accounting and a balanced budget (see U.S. "Real GDP" FY2015 with $5.5T Deficit).


The ever expanding Public Liabilities that USAPonzi is producing can only lead to a technical bankruptcy of the U.S. Government (See Dealing with National Bankruptcy!).


With the current Fiscal Policy, The United States of America is on a direct path toward the condition in which Greece now finds itself (see U.S. Financial Crisis 9X Greece Crisis).


Solution


This situation can only be resolved by the U.S. Government adopting GAAP Accounting and committing to a balanced GAAP basis budget.  This will ensure an equitable and sustainable Fiscal Policy.