February 24, 2014
To: Mary Jo White Chairwoman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
From: John W. White
2804 Fenwick Lane
Plano, TX 75093
On January 8, 2014 I submitted a "Whistleblower" letter to the SEC expressing my deep concerns regarding the use of an improper (even fraudulent) accounting methodology by the U.S. Government; using Cash Accounting rather than the appropriate GAAP Accounting and Fiscal Gap Accounting.
On January 27, 2014 I submitted a followup letter to the SEC along with some further documentation that described the "devastating distortion" that has occurred in our U.S. Financial System by the use of inappropriate accounting. This commentary, titled "Chaos in the U.S. Financial System" quantifies the distortion caused by the use of Cash Accounting versus the more appropriate GAAP Accounting and Fiscal Gap Accounting. On January 28, 2014 I recieved a response back from the Inspector General of the SEC acknowledging the receipt of this January 27, 2014 letter and accepting my complaint.
My letters to the SEC, my commentary "Chaos in the U.S. Financial System", and the response from the Inspector General of the SEC are all posted on my website www.usaponzi.com.
Today I submit a further commentary that explains how USAPonzi is fooling both the poor and the rich by this use of inappropriate accounting.
Washington is Taking from the Poor and Giving to the Rich
The U.S. Government has been running a massive Ponzi scheme for 46 years by using Cash Accounting when they should be using GAAP Accounting and everyone in Washington should be well aware of this by now. But they choose to ignore it because this Ponzi scheme is benefitting everyone in Washington as it conceals the magnitude of the Government's GAAP basis deficit spending and fiscal irresponsibility.
Washington is promising significant social benefits to the poor, the disabled, the unhealthy, and the unemployed that earns them favor with this community when it comes time to get elected. But what this same electorate does not realize is that while Washington makes the promise of helping the underprivileged, Washington is taking money from the collection plate and gifting it to the wealthy. Yes for the last 46 years the people in Washington have been taking every penny of the tax revenues earmarked to fund the ongoing payments for these promised social benefits and spending it to finance our current life style and at the same time is not taxing the wealthy nearly enough to finance the level of promises that they have made to the underprivileged. As a result the future social benefits are today totally unfunded yeilding unfunded liabilities of more than $76 Trillion over and above our national debt of over $17 Trillion. Isn't it ironic that Washington is doing exactly what Bernie Madoff did when he lived an extravagent lifestyle at the expense of his investors/victims.
This is at the core of USAPonzi. Make promises to the poor and underprivileged to get elected. Act like you are collecting taxes to finance these promises. Spend the money that is collected for these promises to finance an extravagent life style for the country. Dramatically under tax the wealthy. End up with no money in the Trust Funds to support the ongoing promised social benefits. Make the rich uber rich. Leave the poor with nothing. And conceal how this scheme works with fraudulent accounting.
When the U.S. citizenry finds out that they have been ripped off they are not going to be happy. This scheme has clearly left the poor, the elderly, the disabled, the unhealthy, the unemployed, the government retirees, and the direct and indirect government employees, in a desperate situation. And at the same time it has made the 1%ers filthy rich at least on paper. The only reason that businesses look massively profitable today is because this same Ponzi scheme, for now, gives the U.S. citizenry enough money and promises of money to buy the products and services of these businesses and then does not tax these businesses and the wealthy households at the level required to fund the ongoing social benefit payments.
And at the same time the wealthy have been living high on the hog for the last 46 years and that includes the people in Washington. So far this scheme has taken $93.8 Trillion that was, for the most part, intended to provide social benefits to the underprivilged and has given it to the uber rich.
This scheme, according to my calculation, is currently siphoning off $535B a month to make the uber rich uber richer. FY2014 GAAP deficit of $6,422B/12=$535B/month.
The continued use of Cash Accounting is causing devastating distortion to our financial system.
The poor are going to be mad as hell when they find out the Govermment has not been preparing for the promises they are counting on and the rich are going to be mad as hell when they find out that they really owe the Government $93.8 Trillion. And the big problem is that most of the net worth of the private sectors of the U.S. economy ($106.2 Trillion as of the end of FY2013) will evaporate when the Government takes the actions necessary to balance the GAAP basis budget as our GDP will be reduced by one third to one half.
After netting off the $93.8 Trillion that the rich owe the Government from their $106.2 Trillion of apparent net worth it would appear, as a first order estimate, that their "real net worth" is only about 12 cents on the dollar.
So Bill Gates and Warren Buffet (and all of their wealthy friends) are still really rich but not nearly as rich as USAPonzi indicates.
I respectfully request that the SEC take action to insure that we start using an appropriate accounting methodology for our Federal Government financial reporting so that this devastating distortion can be eliminated.
John W. White
2804 Fenwick Lane
Plano, TX 75093