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

The Impact of Deficit Spending!
$98.7 Trillion of Counterfeit Money Today!
$104.4 Trillion of Counterfeit Money by EOY FY2016!
Congress should raise the Debt Limit to $104.4 Trillion!

Oct 10, 2015     Emailed to SEC WSJ NYC DMN Oct 16, 2015
As posted on www.usaponzi.com


The U.S. Government is operating a Ponzi scheme (USAPonzi) Fiscal Policy by spending and promising to spend much more than the current U.S. taxpayers can afford, dramatically and intentionally undertaxing the current U.S. taxpayers relative to this spending and promising to spend, and deferring the resulting liabilities to the future U.S. taxpayers.


The fundamental issue that creates this Ponzi scheme Fiscal Policy is that the U.S. Government is using Cash Accounting in its budgeting and tax assessing processes and as a result is attempting to conceal the magnitude of our financial commitments.  When making commitments for future spending, any financial entity should use accrual accounting.  That is to say, if the entity is promising to make future payments it must accrue for these commitments by setting aside the money necessary to pay these future commitments at the time the commitment is made.  In the United States, the terminology for accrual accounting is GAAP Accounting (Generally Accepted Accounting Principles).


The U.S. Government stopped accruing for our social benefit commitments in FY1969 when LBJ convinced the 90th Congress that we should adopt the Unified Budget.  This is what launched USAPonzi, "The Biggest Ponzi Scheme on the Planet".  This Ponzi scheme has been artificially and dramatically stimulating the U.S. and global economy for 47 years with massive GAAP basis Deficit Spending.


We now have $98.7 Trillion of US Unfunded Liabilities (GAAP basis) financial commitments that the future U.S. taxpayers are expected to pay which of course they cannot.  But since the current (and previous) U.S. taxpayers did not have to pay this $98.7 Trillion in taxes they appear to be very wealthy but with counterfeit wealth since the future U.S. taxpayers cannot pay these deferred tax liabilities.  Further, because this GAAP basis Deficit Spending continues and will continue to expand exponentially our Government workers are getting overpaid, our social benefit recipients are getting overpaid, and the current U.S. taxpayers continue to appear to be getting richer every day with counterfeit money.


The following Chart depicts what the U.S. Government reports when they assess our financial situation with Cash Accounting.  It shows that our National Debt is continuing to increase, that we now have  National Debt of $18.4 Trillion, and that our Cash Deficit in FY2015 was $532 Billion.

However, the U.S. Government should be using GAAP Accounting to report our financial status to appropriately account for the impact of our future financial commitments especially for the social benefit promises that the U.S. Government has made and is currently paying which are much more than the U.S. taxpayers can afford.


The U.S. Government does not formally report on a GAAP basis but does prepare income statements that accurately reflect our true financial condition.  A couple of years ago I found a very informative website, www.shadowstats.com, written by John Williams, that does an annual comparison of our GAAP based Deficit and our Cash based Deficit starting in FY2000 (see Shadow Government Statistics--No. 692 Commentary, February 2, 2015 page 42).


This commentary from Shadowstats.com covers the period from FY2000 through FY2014 and in the following chart I have added the most recent results for the just completed FY2015 and the projections for FY2016 as reported by www.usdebtclock.org which now reports our Unfunded Liabilities and our Deficit on a GAAP basis.  I have also adjusted the GAAP Deficit estimates from Shadowstats to align with the current US Unfunded Liabilities (GAAP) as reported by www.usdebtclock.org.


The following chart compares the GAAP and Cash Deficits with the difference being the fact that the U.S. Government is not collecting the taxes that are necessary to pay for the social benefits, pensions, and veterans' benefits that the U.S. Government has promised.  This undertaxing of the U.S. citizens and businesses has appeared to make a lot of people very wealthy and has allowed the U.S. Government to overpay itself and overpay the social benefit recipients.  This Deficit Spending is introducing counterfeit money into U.S. and global economy at the rate of our GAAP basis Deficit Spending.  As this chart shows, our GAAP basis Deficit is currently about 10X our reported Cash Deficit!


The U.S. Government is not telling the truth!


The following chart shows the amount of our US Unfunded Liabilities (GAAP) to be $98.5 Trillion, as of September 30, 2015, which is also the amount of counterfeit money that we have floating around in our U.S. and Global Economy.  This money is counterfeit because it was gained by deferring these tax liabilities to the future U.S. taxpayers who cannot pay these liabilities.  These US Unfunded Liabilities (GAAP) are projected to increase by $5.9 Trillion in 2016 to $104.4 Trillion according to www.usdebtclock.org.




The following chart compares our Unfunded Liabilities with our National Debt.  It should be noted that our National Debt is included in these UnFunded Liabilities.  These UnFunded Liabilities tell us just how much the U.S. Government will have to eventually borrow to meet the financial commitments that the U.S. Government has made.


Congress should raise the Debt Limit to $104.4 Trillion!


When the U.S. Congress votes in a few weeks to raise our debt limit, they will agree to raise the Debt Limit because they claim that they are only raising it to pay for commitments that have already been approved.   On that basis they should raise the debt limit to $104.4 Trillion because that is projected to be the size of our Unfunded Liabilities at the end of FY2016 after our projected GAAP basis Deficit Spending of $5.9 Trillion this fiscal year for the commitments that the U.S. Government has already approved.  As this chart shows, our Unfunded Liabilities are about 5X our reported National Debt!




The U.S. Government is dramatically and intentionally undertaxing the U.S. citizens and businesses, producing GAAP basis Deficit Spending, $5.9 Trillion as projected for FY2016, and making the U.S. upper class citizens and businesses appear to be filthy rich by creating $98.7 Trillion of counterfeit money and counterfeit wealth since USAPonzi was launched in FY1969.


The U.S. Government has deferred Public Liabilities of $98.7 Trillion to the future U.S. taxpayers with this GAAP basis Deficit Spending.  These Public Liabilities can never be paid.


This Ponzi scheme Fiscal Policy, with its massive GAAP basis Deficit Spending, is creating counterfeit money as the U.S. Government incurs these massive Public Liabilities.  The following table shows the projected Income, GAAP Spending, and GAAP Deficit for FY2016 and the U.S. Government's current Credit Card Balance.


                     Income      $3.259 Trillion      Ratio to Income
       GAAP Spending      $9.153 Trillion            2.8X               GAAP basis
            GAAP Deficit      $5.894 Trillion            1.8X  
 Credit Card Balance    $98.656 Trillion          30.3X               US Unfunded Liabilities (GAAP)
  Counterfeit Money    $98.656 Trillion


Every dollar that the U.S. Government puts on its Credit Card becomes a counterfeit dollar in the pocket of the U.S. citizen or business that did not have to pay that tax dollar.  This is how the U.S. Government is appearing to make the U.S. upper class citizens and businesses filthy rich.  The U.S. Government is creating massive counterfeit private wealth by assuming massive but unpayable public liabilities.


The U.S. Government is projected to spend 2.8X its Income, on a GAAP basis, in FY2016.


The U.S. Government has a current Credit Card Balance (US Unfunded Liabilities (GAAP)) that is 30.3X its projected Income for FY2016.


The U.S. Government put $5.4 Trillion on its Credit Card in FY2015 and is projected to put another $5.9 Trillion on its Credit Card in FY2016.


The U.S. Government is using fraudulent accounting and making unaffordable, false, and unfunded social benefit promises to the U.S. citizenry, so that it can overpay itself, its employees and its related businesses and make the U.S. upper class appear to be super wealthy.  Ponzi schemes can cause severe distortions and USAPonzi is no exception.


The U.S. Government is not telling the truth!


To correct these Fiscal Policy Issues, the U.S. Government must adopt GAAP Accounting and commit to a balanced GAAP basis budget in order to establish an equitable and sustainable fiscal policy for the Government of the United States of America.


This is why I say


USAPonzi is "The Biggest Ponzi Scheme on the Planet".


The U.S. Government is planning to distribute $5.9 Trillion more counterfeit money, our GAAP Deficit, in FY2016 to keep this Ponzi scheme going.  That is $16.2 Billion every day.  That is $18,323 for every man, woman, and child in the U.S. this year ($5.9T/322 million citizens = $18,323).  That is how the U.S. Government is stimulating the U.S. and global economy, it just creates more counterfeit money with GAAP basis Deficit Spending every day.  That is how the U.S. Government is creating The Myth of American Economic Exceptionalism.


Because of this corrupt and fraudulent Fiscal Policy, I predict that we are headed toward a global financial system meltdown because the U.S. Government will be forced to declare bankruptcy.


See The Implosion of USAPonzi for an explanation of what I predict will happen when USAPonzi implodes and this global financial system meltdown occurs.


Financial data presented in this commentary was sourced from www.usdebtclock.org as of October 10, 2015.


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