Washington is Taking from the Poor
(and Giving to the Rich)
Feb 22, 2014
The U.S. Government has been running a massive Ponzi scheme for 46 years by using Cash Accounting when they should be using GAAP Accounting and everyone in Washington should be well aware of this by now. But they choose to ignore it because this Ponzi scheme is benefiting everyone in Washington as it conceals the magnitude of the Government's GAAP basis deficit spending and fiscal irresponsibility.
Washington is promising significant social benefits to the poor, the disabled, the unhealthy, and the unemployed that earns them favor with this community when it comes time to get elected. But what this same electorate does not realize is that while Washington makes the promise of helping the underprivileged, Washington is taking money from the collection plate and gifting it to the wealthy. Yes for the last 46 years the people in Washington have been taking every penny of the tax revenues earmarked to fund the ongoing payments for these promised social benefits and spending it to finance our current life style and at the same time is not taxing the wealthy nearly enough to finance the level of promises that they have made to the underprivileged. As a result the future social benefits are today totally unfunded yielding unfunded liabilities of more than $76 Trillion, over, and above our national debt of over $17 Trillion. Isn't it ironic that Washington is doing exactly what Bernie Madoff did when he lived an extravagant lifestyle at the expense of his investors/victims.
This is at the core of USAPonzi. Make promises to the poor and underprivileged to get elected. Act like you are collecting taxes to finance these promises. Spend the money that is collected for these promises to finance an extravagant life style for the country. Dramatically under tax the wealthy. End up with no money in the Trust Funds to support the ongoing promised social benefits. Make the rich uber rich. Leave the poor with nothing. And conceal how this scheme works with fraudulent accounting.
When the U.S. citizenry finds out that they have been ripped off they are not going to be happy. This scheme has clearly left the poor, the elderly, the disabled, the unhealthy, the unemployed, the government retirees, and the direct and indirect government employees, in a desperate situation. And at the same time it has made the 1%ers filthy rich at least on paper. The only reason that businesses look massively profitable today is because this same Ponzi scheme, for now, gives the U.S. citizenry enough money and promises of money to buy the products and services of these businesses and then does not tax these businesses and the wealthy households at the level required to fund the ongoing social benefit payments.
And at the same time the wealthy have been living high on the hog for the last 46 years and that includes the people in Washington. So far this scheme has taken $93.8 Trillion that was, for the most part, intended to provide social benefits to the underprivileged and has given it to the uber rich.
This scheme, according to my calculation, is currently siphoning off $535B a month to make the uber rich uber richer. FY2014 GAAP deficit of $6,422B/12=$535B/month.
The continued use of Cash Accounting is causing devastating distortion to our financial system.
The poor are going to be mad as hell when they find out the Government has not been preparing for the promises they are counting on and the rich are going to be mad as hell when they find out that they really owe the Government $91.7 Trillion. And the big problem is that most of the net worth of the private sectors of the U.S. economy ($106.2 Trillion as of the end of FY2013) will evaporate when the Government takes the actions necessary to balance the GAAP basis budget as our GDP will be reduced by one third to one half. (see U.S. "Real" GDP).
After netting off the $91.7 Trillion that the rich owe the Government from their $106.2 Trillion of apparent net worth it would appear, as a first order estimate, that their "real net worth" is only about 14 cents on the dollar.
So Bill Gates and Warren Buffet (and all of their wealthy friends) are still really rich but not nearly as rich as USAPonzi indicates.
(see Rich get Richer/Poor get Poorer)
Author's Note: The original release of this commentary had an error. I was using the February 2014 GAAP Obligation ($93.8 T) for the above calculation rather than the GAAP Obligation at the end of FY2013 ($91.7T). Since our Obligation is going up at the rate of over $0.5T per month this makes a big difference in this calculation by being off only 4 months. The magnitude of this error, in and of itself, demonstrates the distortion that USAPonzi is causing.
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