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

June 29, 2015

TO:   Mary Jo White Chairwoman
         U.S. Securities and Exchange Commission
         100 F Street, NE
         Washington, DC 20549


CC:  The Wall Street Journal
        The New York Times
        The Dallas Morning News


FR:  John W. White
        Plano, TX

I am a Whistleblower!  This is my ninth letter to the U.S. Securities and Exchange Commission expressing this same complaint.


I contend that the Fiscal Policy of the Government of the United States of America is corrupt and fraudulent!


The Fiscal Policy of the U.S. Government is a Ponzi scheme, which I have named USAPonzi, and all of these letters have been written to expose this fraud.  I hope that each successive letter provides better clarity into this fraud, its cause, its distortions, and the inequity it is creating for the citizens of the United States of America and in fact the entire Planet.  This fraud has inflated a financial bubble in our economy and our financial system that can be precisely measured with GAAP Accounting.  The size of the USAPonzi financial bubble is measured by our GAAP basis Unfunded Liabilities ($115.2 Trillion) and the rate at which the bubble is expanding is measured by our GAAP basis Deficit ($5.5 Trillion in FY2015).  


USAPonzi becomes larger and more acute with each passing day.  I am concerned that the implosion of this Ponzi scheme will cause a massive discontinuity in the global economy and the global financial system.  If my analysis is correct, $115.2 Trillion of apparent U.S. Private Net Worth will evaporate essentially overnight when USAPonzi implodes.


Note:  The real time financial data used in this letter to support my contention was sourced from  www.usdebtclock.org as of June 29, 2015.


The following are the two primary Fiscal Policy actions that are causing USAPonzi:


1) The U.S. Government is using Cash Accounting rather than the proper GAAP Accounting.


2) The U.S. Government is dramatically overspending its income.


By not using GAAP Accounting to assess its tax revenue requirements, the U.S. Government is not funding the social benefit trust fund which means that the U.S. Government is making false social benefit promises to U.S. citizens.  The U.S. Government is making social benefit promises that it has no financial capability or intention to fulfill.  By undertaxing the U.S. citizens and businesses due to only assessing the taxes required to meet current period expenditures, the U.S. Government has created Unfunded Liabilities of $96.9 Trillion.


The U.S. Government routinely reports the financial impact of its overspending on a cash basis, creating $18.3 Trillion of Debt, but does not report the impact of using Cash Accounting vs. proper GAAP Accounting.   As a result of these two issues with current Fiscal Policy, the U.S. Government is operating a massive (Debt + Unfunded Liabilities = $115.2 Trillion) Ponzi scheme which I have named USAPonzi.  The U.S. Government has been incurring unreported but massive GAAP basis Deficit Spending since FY1969 when LBJ introduced the "Unified Budget" which has produced this $115.2 Trillion of Public Liabilities.


This Ponzi scheme Fiscal Policy has therefore introduced $115.2 Trillion of counterfeit money into the U.S. and global financial system by undertaxing U.S. citizens and businesses.  This money is counterfeit because these deferred taxes are to be paid by the future U.S. taxpayer and of course can never be paid.  The fact that these Public Liabilities can never be paid is what produces the Ponzi scheme.  These Public Liabilities, which are passed forward to the future U.S. taxpayer, will continue to expand exponentially until the U.S. Government adopts a policy of a balanced GAAP basis budget.


USAPonzi makes the current U.S. economy appear to be nearly twice as large as it would be with honest accounting (See U.S. "Real" GDP FY2015) because of this Deficit Spending.


If you spend more than your income you appear more prosperous than you really are and the same is true for the U.S. Government.  The U.S. Government has been overspending and overcommitting its income at an exponentially increasing rate since FY1969 which creates more and more artificial stimulus to the U.S. and global economy.


USAPonzi has created $18.3 Trillion of Debt and $96.9 Trillion of Unfunded Liabilities.  Our Public Liabilities (Debt + Unfunded Liabilities) quantify the amount of counterfeit money that USAPonzi has introduced into the U.S. and global economy ($115.2 Trillion).


USAPonzi has produced a GAAP Deficit of $5.5 Trillion in FY2015 when the U.S. Government only reports a Cash Deficit of $0.5 Trillion.


USAPonzi has produced Public Liabilities of $115.2 Trillion when the U.S. Government only reports a Cash Debt of $18.3 Trillion.


USAPonzi has paid U.S. Government direct and indirect employees and U.S. Government related businesses $18.3 Trillion more than the U.S. taxpayer can afford.  This overpayment is actually much more than this $18.3 Trillion of Cash Debt since our economic activity is overstated by nearly 2X so our sustainable tax revenues are also dramatically overstated by the artificial U.S. Government stimulus of USAPonzi.


USAPonzi has undertaxed the prosperous U.S. citizens and businesses by $115.2 Trillion making the upper class appear to be $115.2 Trillion richer.


USAPonzi has caused the Stock Market to go up dramatically because of this $115.2 Trillion of counterfeit money that USAPonzi has created out of "thin air".  We can buy both stuff and the stock in the companies that produce that stuff with this counterfeit money.  We are playing with monopoly money.  The U. S. Government will create more counterfeit money tomorrow.  $15.1 Billion more.   The more stuff we buy with counterfeit money the more profitable and valuable the companies appear to be but we also have more counterfeit money to buy the stock in these companies.  This is called a "virtuous cycle".  But it is really just a plain vanilla Ponzi scheme.


USAPonzi has left those that are expecting to receive, in many cases totally relying on, social benefits in a desperate situation because the U.S. Government has nothing in the social benefit trust fund to pay $96.9 Trillion worth of social benefit promises.


This Fiscal Policy (USAPonzi) is grossly unfair to the middle and lower classes while dramatically favoring the ruling and upper classes (See Cheating the Common Man!).


Massive Civil Unrest


This will lead to massive civil unrest when the U.S. general populace realizes that they have been hornswoggled by the U.S. Government so that the ruling class can live comfortable to opulent lifestyles and so that the upper class can live opulent to super opulent lifestyles and can also appear to become wealthy even super wealthy.


USAPonzi has given the upper class $115.2 Trillion of counterfeit money and as an example has given Warren Buffett about $57 Billion.  Warren Buffett gets paid $10 Million every day because of this fraudulent Fiscal Policy (See Buffett makes $10M a day on U.S. Government Corruption).  The upper class as a whole gets paid $15.1 Billion every day even though this counterfeit money passes through the U.S. and global economy producing the economic stimulus of the GAAP basis Deficit Spending, but for the most part it comes to rest as increased but counterfeit wealth for the upper class U.S citizens and businesses.


USAPonzi has appeared to make Donald Trump very rich (see Donald Trump: "I'm really rich") to the point that he intends to use some of his counterfeit wealth to fund his run for President of a corrupt and fraudulent U.S. Government that has appeared to make him super wealthy.  Just how ironic is that?  Why should we elect one of the major beneficiaries of this U.S. Government fraud and corruption and expect him to take the action required to clean up this fraud and corruption?   If he eliminates this Government fraud, his apparent wealth will drop from $9 Billion to about $220 Million since 97.5% of his Net Worth was produced by the U.S. Government fraud of USAPonzi by dramatically undertaxing the U.S. citizens and businesses.


It is never good to have the fox guarding the henhouse!


If Donald Trump is such a shrewd business man, he should realize that he is appearing to get rich on U.S. Government fraud.  That is the scary part, Donald Trump may not even know why he appears to be so rich!


USAPonzi
simply appears to make the U.S. citizens and businesses wealthy, primarily the upper class, by assuming massive Public Liabilities.  USAPonzi is just a giant shell game that has shifted $115.2 Trillion from the virtual pockets of the future U.S. taxpayer to the pockets of the current U.S. citizens and businesses.  I hate to tell you this but the future U.S. taxpayer does not have the money to pay these Public Liabilities, therefore most of our apparent wealth is counterfeit wealth.


USAPonzi simply appears to make the ruling class prosperous and some of them wealthy and the upper class super prosperous and super wealthy by Cheating the Common Man!


USAPonzi is a Ponzi scheme of the same ilk as Madoff Ponzi only 2,000 times bigger and it has the same result for its victims.  The early participants get paid their social benefits as promised, the perpetrators and operators (the ruling class and the upper class) live opulent to super opulent lifestyles while it is operating, and the late participants get ripped off because the ruling class is not funding the social benefit trust fund and is overpaying U.S. Government workers and Government supporting businesses.


The current Fiscal Policy is consciously and unfairly allocating $115.2 Trillion of counterfeit money to the ruling class and the upper class by a simple little accounting trick and by openly spending money that we do not have to overpay Government workers and Government supporting businesses and taking this money away from social benefit promises to the middle and lower class citizens.  It is unconscionable that the U.S. Government would collect employment taxes under the pretense that these funds will be used to pay current social benefits and fund future social benefits and then immediately spend every penny that is collected to help overpay the ruling class.  It is unconscionable that the U.S. Government would purposefully under tax the upper class to avoid funding the social benefit trust fund so that the upper class can appear to become wealthier by $115.2 Trillion.


I realize that the upper class will quickly respond and say they cannot afford to pay that much in taxes to pay for those social benefit promises.  And they of course are right but until the U.S. Government begins using an accounting system that systematically makes an accurate assessment of what is affordable by the U.S. taxpayer and what is not we will have major inequities.  Right now the U.S. Government is essentially flying blind with its current (cash basis) budgeting, assessing and reporting process and is erring on the side of dramatically favoring the upper class and the ruling class to the severe detriment of the middle and lower classes.  Misallocation of $115.2 Trillion is a massive problem.


The current fiscal policy (USAPonzi) is creating the illusion of economic recovery and economic prosperity for the ruling class and the upper class by "printing" imaginary money (counterfeit money) that it is borrowing from the future U.S. taxpayer while setting the rest of the U.S. population on a path toward financial devastation.


The www.usaponzi.com website includes a series of commentaries that further explain the issues and distortions that this Ponzi scheme has created and is creating.


See The Distortions of USAPonzi!

See The Implosion of USAPonzi!


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


John W. White
Retired Information Technology Executive
Plano, TX