Chapter 24 The Implosion of USAPonzi
November 22, 2015
The fiscal policy of the U.S. Government (USAPonzi) is a classic Ponzi Scheme that is deferring public liabilities (Debt and Unfunded Future Liabilities) to the future U.S. taxpayers with GAAP basis deficit spending. This fiscal policy is creating an artificially accelerated consumption rate for the U.S. economy and in fact the global economy and is creating counterfeit wealth for U.S. citizens and businesses and also for global citizens and businesses.
The artificially accelerated consumption rate is created by GAAP basis deficit spending and the counterfeit wealth is created by the cumulative effect of this GAAP basis undertaxing of the U.S. citizens and businesses and expecting the future U.S. taxpayers to eventually pay these ever expanding public liabilities. The fact that the future U.S. taxpayers can never pay these public liabilities is what makes this apparent new wealth, counterfeit wealth, and makes our fiscal policy a Ponzi scheme.
According to usdebtclock.org Nov 22, 2015 (GAAP basis Unfunded Liabilities), as of November 22, 2015 USAPonzi has created public liabilities/counterfeit money of $99.8 Trillion and these public liabilities are increasing by our GAAP Deficit of $5.9 Trillion in FY2016.
The U.S. Government has simply given the U.S. citizens and businesses a gift of $99.8 Trillion of counterfeit money by not collecting the tax revenue required to pay for the U.S. Government's overspending and overcommitting and claiming that the next generations(s) of U.S. taxpayers will pay for it. This year (FY2016) the U.S. Government is giving out $5.9 Trillion more counterfeit money and the amount that is being gifted each year is increasing exponentially.
Most U.S. citizens do not have to work for a living since the U.S. Government is now producing enough counterfeit money, with this corrupt and fraudulent fiscal policy (USAPonzi), to pay their bills. And every year it appears to get better and better for U.S. citizens and businesses because our GAAP Deficit, as time goes on, tends to increase exponentially (See The Infinite Counterfeit Money Machine).
USAPonzi will implode when one or more of the following three things happen:
1) the U.S. Government finally admits to operating this Ponzi scheme/fraud,
2) the general population of the U.S. finally realizes that they have been hoodwinked by the U.S. Government making false social benefit promises and not funding these promises, or
3) the investing community finally realizes that they are only appearing to get rich because most (84%) of their perceived wealth is counterfeit money.
When USAPonzi implodes I predict that the following will occur:
Social benefit promises will have to be dramatically reduced.
Government spending will have to be significantly reduced.
Tax rates will have to be increased.
Economic activity (GDP) will be reduced by about 39% (see Creating Counterfeit Prosperity).
Many direct and indirect Government employees will lose their jobs or have their pay reduced.
Many individuals will suffer personal financial crises.
Many businesses will fail.
Most banks will fail.
The stock market will crash losing 84+% of its value.
The real estate market will crash losing 84+% of its value.
Much of the U.S. Total Debt (all types) will fall into default losing 84+% of its value.
Since our U.S. Total Financial leverage is 4.2X what it was in 1929, the resulting Depression will likely be even more severe than "The Great Depression".
The U.S. economy and in fact the global economy is operating under the fundamental assumption that the future U.S. taxpayers are going to come up with the money to pay our public liabilities (Debt + Unfunded Future Liabilities) of $99.8 Trillion and these public liabilities are increasing at an exponentially increasing rate.
This is "A Pipe Dream"!
This is "The Biggest Ponzi Scheme on the Planet"!
We now have $99.8 Trillion of counterfeit money in our financial system and are adding $16.1 Billion more every day!
Financial data sourced from usdebtclock.org Nov 22, 2015.
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