USA Corrupt and Fraudulent Accounting Letter
July 21, 2014
Open Letter to:
President Barack Obama
Speaker of the House John Boehner
Senate Majority Leader Harry Reid
Secretary of the Treasury Jack Lew
Congressional Budget Office Director Douglas Elmendorf
Comptroller General Gene Dodaro
Chairman of the Securities and Exchange Commission Mary Jo White
Federal Reserve Chairman Janet Yellen
Former Federal Reserve Chairman Ben Bernanke
Former Federal Reserve Chairman Alan Greenspan
Former Federal Reserve Chairman Paul Volcker
Berkshire Hathaway Chairman Warren Buffett
From: John W. White
2804 Fenwick Lane
The U.S. Government is using a corrupt and fraudulent accounting system!
This is an open letter to the leadership of Government of the United States of America asserting that the financial planning and budgeting processes for the most important financial entity on the planet, the Government of the United States of America, are totally inadequate and in fact are patently absurd, corrupt, and fraudulent. The current financial accounting system (Cash Accounting) does not recognize future financial liabilities when they are incurred and as a result makes an implicit assumption that the future taxpayers can eventually pay for whatever the President and the Congress agree to spend now or commit to spend in the future. There can be no plausible explaination for why or how the U.S. Government can totally ignore the now $79 Trillion of Unfunded Liabilities that have been incurred but go unreported due to this use of corrupt and fraudulent accounting.
The Government must begin using an accounting system that systematically and accurately assesses and reports the affordability of all of the expenditures approved by the U.S. Government. Our current Cash Accounting system is incapable of achieving this objective and therefore we must begin using GAAP Accounting, the same accounting system that the U.S. Government requires (as re-enforced by the Sarbanes-Oxley Act of 2002) that public corporations use for accurately assessing and reporting their financial condition.
Because our current financial planning and budgeting process does not give accurate feedback as to the affordability of our financial commitments, the Government of The United States of America has been running a massive Ponzi Scheme since FY1969 which I have named USAPonzi. This Ponzi Scheme has been concealed from the U.S. citizenry and the world by using this corrupt and fraudulent Cash Accounting system rather than the appropriate GAAP (Generally Accepted Accounting Principles) Accounting. While the U.S. Government has been incurring and reporting outrageous Cash Deficits ($514 Billion in FY2014) and creating an outrageous Cash Debt of $17.5 Trillion as of July 2014, the U.S. Government has been covertly incurring super outrageous GAAP Deficits ($6.4 Trillion in FY2014) and creating a super outrageous GAAP Obligation of $96.5 Trillion as of July 2014.
By using this corrupt and fraudulent accounting system, the U.S. Government has been able to covertly undertax the U.S. citizenry and U.S. businesses by the amount of this $96.5 Trillion GAAP Obligation and as a result has incurred, in addition to the Cash Debt of $17.5 Trillion, Unfunded Liabilities of $79 Trillion. Since the U.S. Government has not put one penny aside to pay for the social benefit promises that the U.S. Government has made to the elderly and underprivileged, this portion of the U.S. Citizenry (now nearly 150 million people) are now at great financial risk since the Government does not have the funds to pay those promises and instead has given that money to the rich citizens and businesses in the form of unpaid taxes.
Further, this unreported GAAP basis deficit spending has allowed the U.S. Government, for years, to better conceal other outrageous spending creating a "fat cat" society within the Government with too many government workers, government pay schedules that are too high, bailouts of "too big to fail" financial entities, a bailout of the automotive industry, a massive subsidy to the prescription drug industry, a massive subsidy to the overall healthcare industry, and funding for a multitude of pork barrel projects to special interest groups. Much of this Government spending for these items has been paid for with borrowed money, our debt is now $17.5 Trillion, or is supposedly to be paid for by the $79 Trillion of Unfunded social benefit promises.
The politicians do not want to acknowledge that this is a Ponzi Scheme since that would put a stop to this dramatic overspending by the Federal Government and would also stop what is a gravy train for anyone that can get elected to a power position in the U.S. Government. The bureaucrats in Washington are also willing to go along with the Ponzi scheme because it also has created more government jobs than we can afford and high paying jobs at that.
The rich and powerful in the private sector also do not want to acknowledge that this is a Ponzi Scheme since it is providing them with tax breaks in FY2014 of $6.4 Trillion ($535 Billion a month and $17.6 Billion a day) and a total of $96.5 Trillion in tax breaks over the last 46 years. This makes the rich and powerful in the private sector "appear" to be $96.5 Trillion richer than they really are. (see U.S. Total Assets Bubble).
Warren Buffett has known about this Ponzi Scheme at least since 1975 when he wrote his now famous letter to Katherine Graham of "The Washington Post Company" which included the following statement:
"Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them."
The U.S. Government has now made $79 Trillion (present value) of social benefit promises and has not been willing to fund a single penny of this Obligation. The future taxpayer is left with this massive liability and as The Anatomy of USAPonzi demonstrates these future taxpayers do not have the money to make good on these promises since these promises are growing at a rate that is more than twice the current U.S. Government Income and we are already overspending that current income with current year cash outlays.
This Ponzi scheme has magnified the investing genius of Warren Buffett. Many other financial experts have also been taking advantage of this glaring weakness in the U.S. Government's accounting system which now makes many people appear to be much more wealthy than proper accounting and a balanced GAAP basis budget by the U.S Government would affirm. These massive tax breaks are simply a massive (and phantom) "wealth transfer" from future taxpayers to current taxpayers. These tax breaks have created 1,426 Billionaires, millions of millionaires, 287 Billion dollar hedge funds, and hundreds of Billion dollar companies. $96.5 Trillion of Phantom Money can make a lot of people look very wealthy and a lot of companies look very profitable.
The rich and the powerful in both the public and private sectors are willing to let the "Government" run this Ponzi Scheme since it presents both groups with the opportunity to accumulate political power, personal wealth, and business wealth. They can all take advantage of this $96.5 Trillion of Phantom Money at least for now but since it is a Ponzi Scheme much of that $96.5 Trillion will vanish when USAPonzi implodes.
I find it ironic that the U.S. Government was totally outraged when Bernie Madoff announced that he was running a $50 Billion Ponzi scheme and yet they sit quietly by while they themselves are running what will soon be (in just 7 more months) a $100 Trillion USAPonzi scheme. The U.S. Government officials, along with their passive co-conspirators in the private sector, are living "high on the hog" by virtue of the mountains of Phantom Money that USAPonzi is spinning off every day ($17.6 Billion a day).
To learn more about this Ponzi Scheme I recommend that you visit my website www.usaponzi.com. I would especially encourage reading my fifth letter to the Securities and Exchange Commission dated April 14, 2014 and my July 10, 2014 commentary: The Anatomy of USAPonzi.
Next Page: USAPonzi Long Term Projection