Chapter 22 The Distortions of USAPonzi
November 22, 2015
This current fiscal policy, USAPonzi, allows the U.S. Government to spend and promise to spend unlimited amounts of money by claiming that the future U.S. taxpayers will, at some point in the future, be able to pay the accruing financial liabilities. GAAP Accounting assesses and reports the magnitude of the financial liabilities that have been deferred to the future U.S. taxpayers as Debt and Unfunded Future Liabilities.
By operating USAPonzi for the last 47 years, the U.S. Government has introduced severe distortions into the U.S. and global economy and financial system. In this chapter I will expose some of these distortions. These distortions are quantified in this book using data from usdebtclock.org Nov 22, 2015 which reports that as of that date we had public liabilities (US Unfunded Liabilities (GAAP)) of $99.8 Trillion with Debt of $18.7 Trillion and Unfunded Future Liabilities of $81.1 Trillion.
These massive public liabilities have been deferred to the future U.S. taxpayers, who of course can never pay them, so each dollar deferred to the future U.S. taxpayer becomes a counterfeit dollar in our economy. We now have $99.8 Trillion of counterfeit money in circulation, money that has been borrowed from the future U.S. taxpayers. Some of this counterfeit money gets spent through the global economy but most of it comes to rest as counterfeit private wealth for U.S. upper class citizens and businesses due to dramatic undertaxing.
The U.S. Government has given the U.S. upper class citizens and businesses $99.8 Trillion as a gift simply by not balancing the budget. What did these U.S. upper class citizens and businesses do to get this gracious gift from their friends in Washington? We know that many of them have given some very nice campaign contributions to their friends in Washington with some of this windfall wealth.
The U.S. Government is making social benefit promises that are irrational and unaffordable.
The U.S. Government is not funding any future social benefit promises.
The U.S. Government has overpaid itself, its employees, and the U.S. Government related businesses.
The U.S. Government has become much "bigger" than the U.S. taxpayer can afford.
The U.S. Government is spending much more on defense and many other budget items than the U.S. taxpayer can afford.
USAPonzi has constructed much more Government use physical infrastructure around Government facilities than the U.S. taxpayer can afford with counterfeit money (See Washington DC A Coming Ghost Town).
USAPonzi is making U.S. citizens and businesses appear to be much richer (by about 5x) than they really are by dramatically undertaxing them (See Creating Counterfeit Wealth and Buffett makes $9M a day from Government Fraud).
USAPonzi is causing the U.S. and global economy to appear much more prosperous (by nearly 1.6x) by dramatically undertaxing the U.S. citizens and businesses creating GAAP basis deficit spending (See Creating Counterfeit Prosperity). By borrowing these massive amounts from the future U.S. taxpayers each year, the U.S. Government is able to create a dramatically accelerated consumption rate for the U.S. consumer.
Because USAPonzi appears to make Americans much richer and more prosperous than we really are, we are able to buy and build a lot of stuff with counterfeit money.
We buy and build bigger houses than we can afford with counterfeit money.
We buy more and bigger cars than we can afford with counterfeit money.
We buy more and bigger boats and yachts than we can afford with counterfeit money.
The future U.S. taxpayers are expected to eventually pay for these houses, cars, boats, and yachts.
We buy more and bigger airplanes than we can afford with counterfeit money. Boeing and Airbus have built dramatically more airplanes than we can afford and the future U.S. taxpayers are on the hook to pay for most of these planes and the plane rides that we have already taken.
We buy much more and more expensive food, clothing, and other stuff than we can afford with counterfeit money. Starbucks, Chipotle, Shake Shack, and many other restaurant groups would not be nearly as profitable or even exist without the $99.8 Trillion of counterfeit money created by USAPonzi.
USAPonzi has essentially created the internet and the smartphone phenomenon on the future U.S. taxpayer's nickel (See How LBJ Financed the Smartphone Phenomenon and Why Apple Joined the Dow). USAPonzi has caused Apple to become the most valuable company in history with counterfeit money.
We have 1.75 billion smartphones in service worldwide today most of which have been paid for by charging them on the credit card of the future U.S. taxpayers. The future U.S. taxpayers are expected to eventually pay for smartphones, houses, cars, boats, yachts, planes, and many other things all over the Planet.
USAPonzi is what has made equities appear to be the only place to invest your money.
USAPonzi is what has caused the Stock Market to continue to set new record highs.
USAPonzi has caused Amazon to build a massive system of warehouses, office buildings, and computer centers to sell and distribute products that we really cannot afford. We can only afford to buy most of this stuff because USAPonzi has created $99.8 Trillion of counterfeit money (See The Infinite Counterfeit Money Machine). Amazon has appeared to become an extremely valuable company because USAPonzi has allowed us to buy a lot of stuff that we could not otherwise afford (See We need more and bigger docks).
USAPonzi has caused Amazon, Ebay, Baidu, Google, Facebook, Twitter, Netflix, Priceline, Tesla, and many other companies to appear to have viable business models only because of the $99.8 Trillion of counterfeit money that USAPonzi has produced by charging things to the future U.S. taxpayers. The stock prices for these companies will continue to soar as long as USAPonzi keeps spewing off counterfeit money at an exponentially increasing rate. It takes money to make money and USAPonzi is going to make more counterfeit money. Many of these companies will become much smaller, if they survive at all, when USAPonzi implodes.
USAPonzi has caused professional sports and entertainment stars to become super wealthy only because of USAPonzi produced counterfeit money (See Why Pro Athletes make $Millions). The era of $multi-million per year sports and entertainment stars will be largely over when USAPonzi implodes.
USAPonzi has built massive sports and entertainment complexes (including Las Vegas, Macau, Disneyland, Disneyworld, Jerry World, and many golf courses) all over the planet that we could not afford without this counterfeit money.
The value of professional sports teams will plummet when USAPonzi implodes. USAPonzi has made these sport franchises look very valuable by passing out counterfeit money for people to buy tickets, sports related paraphernalia, TV subscriptions, and yes even the counterfeit money to buy these sports franchises. Just think about how many of these sports teams are now owned by faux wealthy business moguls. $99.8 Trillion of counterfeit money can make a lot of people appear to be filthy rich.
USAPonzi has built Las Vegas with counterfeit money (See Las Vegas A Coming Ghost Town).
USAPonzi has built luxurious skyscraper cities in the Middle East with counterfeit money.
USAPonzi has enticed China to build luxurious Ghost Cities many including adjoining airports with counterfeit money.
USAPonzi was the primary cause of the "Internet Bubble" by creating counterfeit money that we can use to buy stock in companies that appear to be successful because they are subsidized by counterfeit money that has been borrowed from the future U.S. taxpayer.
USAPonzi was the primary cause of the "Housing Bubble" by creating counterfeit money that we can use to buy more and bigger houses than we can afford (See The American Housing Bubble).
USAPonzi is continuing to cause bubbles in real estate, the stock market, art, gold, antique cars, etc because the U.S. Government continues to create more counterfeit money every day ($16.1 Billion a day) as measured by our GAAP basis Deficit Spending.
USAPonzi has caused a bubble in essentially all asset classes by creating counterfeit money out of "thin air" by using a simple little accounting trick (See The Oswald Financial Bubble).
USAPonzi has caused Inflation, Joblessness, Illegal Immigration, CEO pay escalation, Financial Engineering, Stock buybacks, Energy Independence, Ultra High Net Worth, High corporate profits, and has widened the Wealth Gap. Each of these byproducts of USAPonzi can be explored on usaponzi.com/The Distortions of USAPonzi.
As of November 22, 2015, the Federal Reserve Bank estimated that the private net worth of all U.S. households and businesses was $118.7 Trillion and our public liabilities were $99.8 Trillion. Private net worth is posted on usdebtclock.org as US Total Assets and public liabilities are posted as US Unfunded Liabilities (GAAP). The U.S. Government is trying to fool us into thinking we are rich and prosperous by dramatically undertaxing us.
The Biggest Distortion!
But the biggest distortion is that this corrupt and fraudulent fiscal policy is blatantly Cheating the Common Man by not funding the social benefits trust fund so that the U.S. Government can dramatically overpay the ruling class and make the upper class filthy rich. What is it about our U.S. Government that makes them think it is okay give $99.8 Trillion to the upper class, overpay the ruling class by $18.7 Trillion, underfund social benefit promises by $81.1 Trillion, and leave the future U.S. taxpayers with a $99.8 Trillion tax bill? (See Cheating the Common Man).
The current fiscal policy (USAPonzi) is systematically borrowing/stealing money from the future U.S. taxpayer and stuffing it into the pockets of the upper class at the rate of our GAAP basis Deficit Spending. I guess larceny is legal if it is done by the U.S. Government. Usdebtclock.org Nov 22, 2015 reports this rate of transfer at $5.9 Trillion in FY2016 (our projected GAAP Deficit) or $16.1 Billion a day.
We live in a Ponzi Economy created by a corrupt and fraudulent fiscal policy.
Financial data sourced from usdebtclock.org Nov 22, 2015.
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