USAPonzi-The Biggest Ponzi Scheme on the Planet-The U.S. Government

                    Copyright Declaration                                                                                                                                       John W. White    March 29, 2013

The Powerful are Favoring the Rich and Cheating the Common Man
Oct 1, 2014
As posted on

As this website has explained in great detail, the U.S. Government has been running a massive Ponzi scheme, which I have named USAPonzi, since FY1969 when LBJ introduced the Unified Budget and continued to use Cash Accounting.  Six previous commentaries explain this Ponzi scheme:

Introduction to USAPonzi
USAPonzi Elevator Pitch with Words the elevator version without supporting numbers
USAPonzi Elevator Pitch with Numbers the elevator version with supporting numbers
USAPonzi in a Nutshell V1 the short version with harsh language
USAPonzi in a Nutshell V2 the short version with gentle language
The Anatomy of USAPonzi the more detailed version

Because of this Ponzi scheme, the U.S. Government is spending a lot more money than it takes in from taxpayers and is promising to spend a whole heck of a lot more for social benefit promises than it will ever take in from future taxpayers.  Furthermore the accounting system that the U.S. Government uses to manage its finances does not properly assess and report our financial condition.  This corrupt and fraudulent accounting system (Cash Accounting) was established by LBJ for FY1969 but has been continued by every president and every congress for the last 46 years.

The impact of this corrupt and fraudulent accounting system is that while the U.S. Government is promising to pay social benefits to a broad base of elderly and underprivileged citizens (the common man) the U.S. Government has not been preparing to meet those promises.  In theory, the U.S. Government should be setting up trust funds to finance these social benefit promises so that they can be paid when they are due.  The U.S. Government should be using GAAP (accrual) Accounting to assess the level of tax revenue required to adequately fund these trust funds.  Instead, the U.S. Government has already borrowed and spent every penny that the U.S. citizens have submitted to the Government to finance future Social Security, Medicare, and the other social benefit promises.  The U.S. Government has not set aside one penny over the last 46 years to pay for these social benefit promises.  This now amounts to $85.3 Trillion of promises ($80.3 Trillion of Unfunded Liabilities plus $5.0 Trillion of social benefit tax money that has been borrowed and spent) that the U.S. Government has made to the common man which the U.S. Government now cannot pay.

So what happened to this money?   Because of this corrupt and fraudulent accounting, the U.S. Government has chosen not to tax the U.S. citizenry and U.S. businesses to finance the social benefit trust funds.  With our current tax system most of our taxes are paid by the wealthy, and as a result the wealthy are primarily the taxpayers that have been under taxed by now $98.1 Trillion (as of Oct 1, 2014).  The bottom line is that over the last 46 years the wealthy citizens and businesses have appeared to become $98.1 Trillion richer than proper accounting and a balanced budget would indicate, the common man does not have the $85.3 Trillion in trust funds to finance the social benefit promises that the U.S. Government has made, and the future taxpayer also owes $12.7 Trillion to the investors in our Federal debt.

The U.S. citizenry should be outraged with a U.S. Government that shows favoritism to the very wealthy while ignoring the promises that it has made to the common man.  It is easy to not tax the U.S. citizens and businesses; who in their right mind would not accept an offer of paying less taxes.  But it will be very hard for the U.S. Government to explain to the common man that they do not have the money to fulfill the social benefit promises that they have made.   They are only short by $85.3 Trillion!!!!

The U.S. citizens must demand (at the ballot box) that anyone they elect as President or to Congress take a pledge to fix the U.S. Government's accounting system so that it stops favoring the "ruling class" and the "1%ers" and offers a level playing field for the "99%ers" and the rest of the world.

The voters must demand that the Government officials stop using this corrupt and fraudulent Cash Accounting and start using an accounting system that can give assurances that "promises made can be promises kept".

This means adopting GAAP Accounting principles (accrual accounting) and requiring that the U.S. Government adopt a balanced budget amendment to the Constitution. 

The current accounting system has created $98.1 Trillion of counterfeit money (this money is backed only by the future taxpayer who will never be able to pay it back) that has been largely given to the wealthy but it is also paying the salaries of more direct and indirect government employees than we can afford and paying many Government officials and Government employees more than we can afford to be paying them.

The U.S. Government is the culprit in this Ponzi scheme.  It is not the wealthy that is creating the problem even though they do lobby for more tax breaks and they will often use a portion of their counterfeit gains to support the election of their favorite Government officials.  It is the U.S. Government that is setting the fiscal policy that uses this corrupt and fraudulent accounting system that undertaxes the wealthy and refuses to fund the social benefit promises.

The wealthy, which by the way includes many of the government officials themselves, are the major beneficiaries of USAPonzi since they do not have to pay the taxes.   For example, Warren Buffett has a net worth of $65.2 Billion and $55.9 Billion of that is because he did not have to pay the taxes over the last 46 years that GAAP Accounting would have stipulated (see
The Buffett Investing Genius Magnified).  Yes, that's what I meant to say; 86% of Warren Buffett's net worth comes from counterfeit money that was created out of thin air by USAPonzi.  That's why he agrees that he should be paying more taxes.  That's why he has agreed to give away half of his net worth.

Warren Buffett did not cause this distortion, he just benefited from the corrupt and fraudulent accounting by the U.S. Government.  However, Warren Buffett has known exactly what was happening with this improper accounting since 1975 when he sent a 21 page letter to the CEO of "The Washington Post" explaining, in great detail, the consequences of this very problem (see Buffett on Pensions).   Many, maybe even most, of the "1%ers" know about this Ponzi scheme but they, like Warren Buffett, choose to keep quiet about the scheme because it appears to make them 7X richer, at least for now.

The Government officials and employees like the current policy since they are getting handsomely paid by the counterfeit money that USAPonzi is creating.

The wealthy citizens and businesses like the current policy because it is appearing to make them rich because they do not have to pay the taxes to finance the social benefits and as a result they appear to be 7X richer than they would be with proper accounting and a balanced budget.

And the common man gets left holding a bag full of empty promises.

The U.S. Government officials, by operating USAPonzi, are taking care of themselves and their rich friends while financially ignoring the common man, the very people that they are purporting to help with these social benefit programs.

USAPonzi's $98.1 Trillion of Counterfeit Money

But the real problem is that USAPonzi is only appearing to make the wealthy this wealthy.  We now have $98.1 Trillion of counterfeit money that has been created "out of thin air" by USAPonzi that is now floating around the planet.  This counterfeit money will evaporate when USAPonzi implodes and everybody will be caught up in a financial crisis of epic proportions.  This USAPonzi counterfeit money will vanish "into the thin air from whence it came" much like the equity in Enron vanished when the Enron Fraud was exposed (see Enron on Steroids!).

Next Page: Happy New Year USA! You just got a pay raise!






















































































The U.S. Government, with its current fiscal policy, has given massive tax breaks ($98.0 Trillion) to the U.S. citizens and businesses, primarily the wealthy, by not financing the social benefit promises ($85.3 Trillion) it has made to the common man and also leaving the future taxpayer with $12.7 Trillion of debt.   Since the current and previous taxpayers have not paid these taxes the $85.3 Trillion of social benefit promises have also been passed forward to the future taxpayer as well, leaving the future taxpayer with the responsibility for the entire GAAP Obligation of $98.0 Trillion.