USAPonzi-The Great American Fraud

                                                 Copyright Declaration       PEMMA-Planet Earth Man-Made Apocalypse    John W. White   March 29, 2013

Americans think we are 10X richer and nearly 2X more prosperous than we really are!
Mar 16, 2015
As posted on

We as Americans think that we are richer and more prosperous than we really are!  We think this because the U.S. Government is using corrupt and fraudulent accounting. The U.S. Government is spending and committing to spend a lot more than the U.S. taxpayer can afford to pay. The U.S. Government acknowledges its overspending but conceals its overcommitting for social benefits by using an inappropriate accounting system, by using Cash Accounting vs. the proper GAAP Accounting. By using Cash Accounting the U.S. Government is only assessing the amount of tax revenue required to cover current year expenditures and is therefore not collecting the tax revenue required to pay for future year social benefit commitments.

Because of this corrupt and fraudulent accounting the U.S. Government is assuming a lot more public liabilities than it is telling us about. When the U.S. Government assumes public liabilities, the private sector appears to get a corresponding benefit. The U.S. Government assumes these public liabilities by undertaxing the U.S. citizens and businesses and since 1969 the U.S. Government has incurred $18.1 Trillion of Debt and $82.8 Trillion of Unfunded Liabilities for a total GAAP Obligation of $100.9 Trillion.

According to Federal Reserve Bank estimates; as of March 1, 2015 the U.S. private sector (Households, Corporations, and Small Businesses) had private wealth of $111.5 Trillion but $100.9 Trillion of that is counterfeit money that the private sector owes the U.S. Government for these public liabilities. This $100.9 Trillion is expected to be paid by the future U.S. taxpayer who of course can never pay it. Therefore 90% of our private wealth is counterfeit money created by the U.S. Government simply undertaxing the U.S. citizens and businesses ($100.9T/$111.5T=0.9049).

The U.S. Government is using smoke and mirrors to make us feel like we are wealthy.

Warren Buffett, Bill Gates, Larry Ellison, the Waltons of Walmart, and all other wealthy Americans appear to be ten times wealthier than they really are due to the corrupt and fraudulent accounting of the U.S. Government. Warren Buffett appears to be worth $63.3 Billion but he gained $57 Billion of that wealth because the U.S. Government did not tax him enough to pay for his part of the overspending of the U.S. Government and for the cost of the social benefit promises that U.S. Government has made. This is why the rich citizens and prosperous business appear to be so rich. This is also why pro athletes and entertainers can earn multi-million dollar incomes.

I contend that the entire concept of super lucrative professional sports is an illusion created by USAPonzi.

It pays to be rich in the United States!

This is also why the stock market continues to go up and to set new records!

The U.S. Government conceals the fact that it is assuming most of these public liabilities by not taxing the prosperous U.S. citizens and businesses to pay for the social benefits that it is promising to pay U.S. citizens. GAAP Accounting determines the amount of tax revenue required in the current year to meet these future social benefit promises.  This year, Fiscal Year 2015, the U.S. Government reports a Cash Deficit of $0.5 Trillion when our GAAP Deficit is $6.5 Trillion. This means that our GDP, our economic activity, is nearly twice what it would be if the U.S. Government was operating with a proper GAAP basis balanced budget (see U.S. "Real" GDP FY2015). 44% of our economic activity is created by the U.S. Government undertaxing us.

The U.S. Government is paying Government workers and Government related businesses a lot more than the U.S. taxpayer can afford, the U.S. Government is paying social benefits to U.S. citizens that are a lot more than we can afford, and the U.S. Government is not collecting the money to pay our current bills or to pay for future social benefits promise.

We have spent or committed to spend $100.9 Trillion that we do not have and will never have and in the process have made it look like we have a lot more money to spend now than we can afford to be spending and we have made the rich folks and rich businesses appear to be a whole lot richer by under taxing them by this $100.9 Trillion.

That is why we Americans just think we are richer and more prosperous than we really are. It is because of smoke and mirrors by the U.S. Government. We will not know just how rich and prosperous we really are until the U.S. Government starts using honest accounting. What we should know now is that we are only about 1/10th as rich as we think we are and that we are only about half as prosperous as we think we are.

The world also thinks we are rich so they accept our counterfeit money, phantom money that we are borrowing from the future U.S. taxpayer, to buy whatever we want. The U.S. Government creates $17.8 Billion more of this counterfeit money every day.  USAPonzi is creating counterfeit money at the rate of our GAAP basis Deficit Spending and essentially stuffing it into the pockets of the upper class U.S. citizens and businesses.

The U.S. Government only gives the "Common Man" enough money to buy stuff from the rich businesses so the rich people can get really rich.  But the U.S. Government is considering raising the minimum wage so the "Common Man" can have more money to buy more stuff from the rich businesses so the the rich people can get even richer. Ponzi schemes grow faster when the perpetrator/operator guarantees a higher rate of return.  When it is counterfeit money, we can make the minimum wage whatever we want it to be.

The best way and the honest way to neutralize the "wealth gap" is to balance the GAAP basis budget. Make the rich citizens and businesses pay their fair share of the U.S. Government's outrageous spending and promises to spend.

Herbalife's pyramid scheme can't hold a candle to USAPonzi. In fact Herbalife's pyramid scheme is surfing on USAPonzi just like all other businesses.

In theory, this Fiscal Policy (USAPonzi) will create an infinite amount of counterfeit money, an infinite amount of public liabilities, and an infinite amount of private wealth. Warren Buffett could soon become really rich since he is raking in $10M a day because of this fraud, as if $63.3 Billion is not enough to keep him in hamburgers and cherry coke. begins to report GAAP numbers

In researching various data sources for this commentary, I found that the "U.S. Debt Clock" is now reporting both the GAAP basis Deficit and the GAAP basis Unfunded Liabilities. I find this very useful in validating my analysis. Their numbers differ fairly significantly from my numbers but both the GAAP Deficit and the GAAP Unfunded Liabilities are highly influenced by the assumption that one makes for the long term interest rate. The following table compares my (USAPonzi) estimates for Net Private Networth and our "Real" GDP with those of the "U.S. Debt Clock".

                                                   USAPonzi       U.S. Debt Clock
                                                   Mar 1, 2015          Mar 15, 2015

US Total Assets/Private Networth   $111.5T                 $114.5T
Debt                                                  $18.1T                   $18.1T
Unfunded Liabilities                          $82.8T                   $95.6T
GAAP Obligation                             $100.9T                 $113.7T
Net Private Networth(1)                    $10.6T                     $0.8T
Obligation%US Total Assets(2)         90.5%                     99.3%

CBO Projected GDP (FY2015)          $18.0T                   $18.0T
GAAP basis Deficit                              $6.5T                     $5.6T
"Real" GDP W/O Stimulus                 $10.1T                   $11.2T
GAAP Defict Spending Stimulus(3)     $7.9T                     $6.8T
Stimulus%GDP(4)                                  44%                      38%

(1) Net Private Networth=U.S. Total Assets/Private Networth-GAAP Obligation.
(2) Percentage of Private Networth it takes to pay the U.S. Government's Obligations.
(3) See U.S. "Real" GDP FY2015 for how this Deficit Spending Stimulus is calculated.
(4) Percentage of our FY2015 GDP that is created by GAAP basis Deficit Spending Stimulus. 

Author's Note: When I created the USAPonzi Fiscal Model in December of 2013, I made the model sensitive to the interest rate on the long bond but set the default to the then current interest rate of 3.9%. When I plug in today's interest rate of 2.7%, the USAPonzi Fiscal Model predicts a GAAP Deficit of $5.55 Trillion for FY2015 as compared to the $5.62 Trillion that U.S. Debt Clock currently predicts.