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

USAPonzi Financial Summary
The Truth about the U.S. Financial Condition!
May 15, 2015
Updated July 9, 2015 to correct Debt double count.  After further research of the usdebtclock GAAP Unfunded Liabilities, I have determined that this number includes the National Debt.  In my prior commentaries I had separated money spent (debt) from money promised to be spent (unfunded liabilities).  I will maintain that terminology on this website but recognize that the usdebtclock Unfunded Liabilities = Debt + Unfunded Future Liabilities.
As posted on www.usaponzi.com 


The U.S. Government is Bankrupt!  The Fiscal Policy of the U.S. Government is creating unbounded Public Liabilities that as
Table1 shows are currently in the range of $95.9-S102.4 and are increasing by our GAAP Deficit of $5.6-6.5 Trillion in FY2015.


The Fiscal Policy of the U.S. Government is a massive Ponzi scheme that is creating Public Liabilities/counterfeit money and giving this counterfeit money to the U.S. citizens and businesses at an exponentially increasing rate.  The U.S. Government is simply not collecting the tax revenue, our GAAP Deficit, required to pay for its overspending and overcommitting and is using a corrupt and fraudulent accounting system, Cash Accounting vs. the proper GAAP Accounting, to understate just how much it is undertaxing the U.S. citizens and businesses.


To date the U.S. Government has given nominally $100 Trillion to the U.S. citizens and businesses by undertaxing them on a GAAP basis thereby creating Debt of $18.2 Trillion and Other Unfunded Liabilities of $77.7-$84.2 Trillion as shown in Table 1 below.  This table has two estimates of our GAAP Deficit and our GAAP Unfunded Liabilities rather than definitive amounts because the U.S. Government does not yet formally report an official assessment of these GAAP basis numbers because it is planning, assessing and budgeting on a Cash basis.


This nominally  
$100 Trillion has been given primarily to the upper class citizens and business since they are the only U.S. citizens and businesses that appear to have the money to pay this much tax.  This Fiscal Policy is therefore inappropriately enriching the most prosperous U.S. citizens and businesses.  This inappropriate enrichment of the upper class citizens and businesses is the major contributor to the pay disparity and the wealth gap in the United States.


Most of the ruling class (the people in the U.S. Government) and most the upper class have known about this fraud for years but they have chosen to stay quiet about it so they could continue to enjoy the faux benefits of this corrupt and fraudulent Fiscal Policy just like Bernie Madoff and his cohorts did with Madoff Ponzi.  


By not using GAAP Accounting in the budgeting and tax assessing process, the U.S. Government is not only creating Cash Debt, which the U.S. Government reports, it is also creating massive Unfunded Liabilities for social benefits which are being deferred to the future U.S. taxpayer who can never pay these Public Liabilities.  This means that every dollar of financial liabilities, either Debt or Unfunded Liabilities, deferred to the future U.S. taxpayer is a counterfeit dollar and every dollar deferred to the future U.S. taxpayer is a counterfeit dollar gained as apparent Private Net Worth by the U.S. citizens and businesses that did not have to pay that tax dollar.  This is what is causing the upper class citizens to appear to be super wealthy and the upper class businesses to appear to be super profitable.


The U.S. Government is appearing to create massive Private Net Worth by assuming massive Public Liabilities.  Table 1 shows how Private Net Worth and Public Liabilities compare as of May 1, 2015 according to my estimates from the USAPonzi Fiscal Model and the estimates posted on www.usdebtclock.org.


                                                                                             ($Trillion)
                                                                                               USAPonzi       usdebtclock
                                                         Cash Debt          $18.2               $18.2
                               Unfunded Future Liabilities           $84.2              $77.7
                Public Liabilities/Counterfeit Money         $102.4              $95.9
          Private Net Worth/Total National Assets         $115.6            $115.6
                                    "Net" Private Net Worth           $13.2              $19.7
          Counterfeit Money%Private Net Worth           88.6%             83.0%

                                        FY2015 Cash Deficit              $0.5                $0.5
                                      FY2015 GAAP Deficit              $6.5                $5.6

                                         Table 1: Private Net Worth vs. Public Liabilities
                                                       Estimates as of May 1, 2015


Public Liabilities = Cash Debt + Unfunded Future Liabilities.


USAPonzi
Unfunded Future Liabilities and GAAP Deficit were derived from my USAPonzi Fiscal Model.


Usdebtclock Unfunded Future Liabilities and GAAP Deficit were sourced from the www.usdebtclock.org website.


Private Net Worth was sourced from the
www.usdebtclock.org website (Total National Assets) which in turn is sourced from the estimates of the Federal Reserve Bank.


"Net" Private Net Worth = Private Net Worth - Public Liabilities/Counterfeit Money


Public Liabilities (Debt + Unfunded Future Liabilities) have been created by "borrowing" from the future U.S. taxpayer who can never pay these liabilities therefore this is
counterfeit money.  Deferring these massive liabilities to the future U.S. taxpayer, who can never pay, is what makes our Fiscal Policy a Ponzi scheme.


Table 1
shows that 83-89% of our apparent Private Net Worth is created by our current Fiscal Policy and largely due to corrupt and fraudulent accounting. (Americans think we are richer and more prosperous)


The United States of America appears to be a successful and prosperous country solely because the U.S. Government is creating counterfeit money, by GAAP basis undertaxing, to give to the U.S. citizens and businesses and is distributing it in a manner that not even close to equitable.  While essentially everyone in the United States is getting some of this counterfeit money, that is why I say we are Cheating the Planet, the upper class citizens and businesses have appeared to become super rich with this corrupt and fraudulent Fiscal Policy (see How "The Rich" got rich!).


With the current Fiscal Policy, the U.S. Government is systematically transferring counterfeit money from the future U.S. taxpayer to U.S. citizens and businesses at the rate of our GAAP basis Deficit Spending.  The U.S. Government is "printing counterfeit money" and giving most of it to the most prosperous U.S. citizens and businesses.  This is why we now appear to have hundreds of billionaires and millions of millionaires in the United States.  $100 Trillion of counterfeit money can appear to make a lot of people really rich.  This is why U.S. companies appear to be so profitable.  This is why the stock market continues to go up.  This is why the price of gold, real estate and art are going up.


But the problem is that this is counterfeit money so most upper class U.S. citizens are faux wealthy and most upper class U.S. companies are faux profitable.  And worse yet, the U.S. Government has been lying to and cheating the general population by committing to pay them social benefits but has not been funding these commitments so it can overpay itself and inappropriately enrich the upper class citizens and businesses (See Open Letter to U.S. Citizens May 11, 2015).


When USAPonzi implodes this counterfeit money will evaporate into the "thin air" whence it came.


USAPonz
i is causing severe distortions in our economy and in our financial system (see The Distortions of USAPonzi).


The ever expanding, by our GAAP Deficit, Public Liabilities that USAPonzi is producing can only lead to a technical bankruptcy of the U.S. Government (See Dealing with National Bankruptcy).
 

Solution


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