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

Take Away the Punch Barrel (GAAP basis deficit spending)
Mar 31, 2014

The U.S. Government is overcommitting, overspending, undertaxing, lying, and bankrupt. 

And because of this fiscal irresponsibility the U.S. Government has been running a massive Ponzi scheme since FY1969. "The Biggest Ponzi Scheme on the Planet"  aka USAPonzi

The following table shows how the size of USAPonzi compares to the size of two other famous frauds.

USAPonzi     $94.8 Trillion   GAAP Obligation as of April 1, 2014
Madoff Ponzi    $50 Billion            as estimated by Bernie Madoff in Dec 2008
Enron Fraud     $66 Billion            peak market cap of Enron in 2000

USAPonzi is 3 orders of magnitude (more than a thousand times) larger than the Madoff and Enron frauds.  As you will see below USAPonzi is growing by $17.6 Billion a day so USAPonzi is growing by more than a Madoff Ponzi or an Enron Fraud every 4 days.  But that is what can happen when a financial cancer (Warren Buffett calls it a tapeworm) grows exponentially for 46 years.

The financial experts and media pundits make a big deal of the Federal Reserve's "punch bowl" ($1 Trillion a year of Quantitative Easing; the purchasing of treasury bonds and mortgage backed securities) and how it is causing excessive liquidity in our financial system.  I contend that they are missing the real problem and that is the Federal Government's "punch barrel" of more than $6 Trillion a year of GAAP basis deficit spending (FY2012=$6.6T, FY2013=$6.2T, FY2014e=$6.4T).  By using fraudulent accounting (Cash Accounting vs. GAAP Accounting) the Federal Government is deliberately not taxing the U.S. citizenry at the rate that would be required to fund the social benefit promises that the Federal Government is making to the underprivileged.  This has caused the wealthy to now appear to be $94.8 Trillion more wealthy than proper accounting would indicate while the underprivileged still expect to get their promised benefits when in fact these social benefit promises are totally unfunded.  

The U.S. Government is telling the U.S. (and the world) Citizenry about their Cash basis overspending ($514 Trillion in FY2014) and the resulting Federal Debt of $17.5 Trillion (as of April 1, 2014) but the U.S. Government is not disclosing the magnitude of the GAAP basis overspending and overcommitting ($6.4T in FY2014) and the resulting Federal Obligation ($94.8T as of April 1, 2014).  This is the lying part.  This GAAP basis deficit spending is the Federal Government's "punch barrel" of $6.4 Trillion per year.  This GAAP basis deficit spending leads to a dual claim on this virtual money; the wealthy think that they are getting that GAAP deficit money, and today they are, since the Government does not tax them by that amount and the underprivileged think that this money is being set aside to finance their future social benefit promises.  The Government cannot have it both ways.  This is like taking out two loans backed by the same collateral and in this case the collateral is the ability to tax future taxpayers.

This means that the Federal Government's fraudulent accounting is creating $6.4 Trillion out of thin air in FY2014 and furthermore this annual GAAP basis deficit spending is growing exponentially.  Scoping a Grand Bargain demonstrates a proposed strawman approach as to how we might settle the conflict that arises because of this dual commitment for the same $82.4 Trillion that should be in our social benefits trust fund; Intragovernmental Debt Holdings of $5.0T plus Unfunded Liabilities of $77.4T.

Whatever approach is taken for settling this dual commitment conflict, the Federal Government must stop creating this $6.4 Trillion per year (and growing) out of thin air and this can only be done by adopting an appropriate accounting methodology and then balancing the budget.  This $6.4 Trillion of new money that is being created in FY2014 means that the Federal Government is currently creating $535 Billion of new money every month and $17.6 Billion every day and giving it to the wealthy.

The Federal Government must "Take away the Punch Barrel"!!!   That is the Government must stop this $6.4 Trillion per year of GAAP basis deficit spending.


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