Previously by Jeff Berwick: I Promise I Will Rob You a Little Less Than the Others
In the December issue of TDV we took a brief look back at 2012. What a year. From the NDAA, to SOPA (which was defeated by one man in particular, anarchist, Aaron Swartz, who killed himself last week after being hounded by the US government and being extorted with threats of a million dollars and 30 years in a cage) to claims by media propaganda mouthpiece, Paul Krugman, of the US needing to fake an alien attack to get the economy on track. And then, in an encore, recently, coming up with a plan, Robert Mugabe style, to coin a platinum coin with a $1 trillion value to help pay off the US government debt… it was, and continues to be, a year of absolute insanity.
This is how systems fail. Especially, violent, thieving systems that are based on confidence.
As we look forward, in this January issue of TDV, to the year ahead we will start with some charts from the past that still hold true today and update a few charts to show the continuing death spiral that the US and most Western governments are in.
First, a chart we have used in the past but it needs to be re-asserted. This chart, all by itself, all but explains how out of control are the US government’s financial affairs.
Things appear to have gotten a little bit out of control since August 15, 1971 when the last vestige of gold backing was removed from the dollar and the US government defaulted on its obligations.
This chart of US government deficits shows the extremity of the situation relative to the past as well.
Worse than that though is that most of the actual money owed by the US government is not properly accounted for. As just one example, Socialist Insecurity extortion payments are taken off of US subject’s cheques and included as income of the US government. Then, part of that money is paid out to current pensioners and the surplus is immediately absconded and spent on other things with an IOU left in the Socialist Insecurity dropbox. Besides being a Ponzi scheme, this, obviously, if done by any private company would be obviously fraudulent. Taking money from employees, telling them it is for their retirement, including that income as revenue and profit on your financial statements and spending it all on other things would be the height of fraud.
When done by the government, however, it is fine. It does many things like this. If the US government were to actually properly account for its criminal activities and adhere to Generally Accepted Accounting Principles (GAAP), something that every company in the US must adhere to, then the fiscal situation looks much worse.
We updated this chart this year, which we’ve been doing since 2009 and total GAAP debt and obligations in 2011 added up to approximately $5 trillion (data provided by Shadowstats.com).
Assuming that the trajectory continued in 2012, which it almost certainly did as there was a recorded $1.1 trillion deficit in 2012 while Socialist Insecurity and other government Ponzi scheme payouts likely continued at the same rate or higher, then for 2012 the total debt and liabilities of the US government is approximately $85 trillion.
Divided by the population of 305 million, that is $278,688 for every US subject or well over $1 million per family of four in money that has already been borrowed and spent by the US government.
And, even that is in doubt and likely higher as once again, the Government Accounting Office (GAO) stated in 2011 that they could not render an opinion on the consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.
To quote the GAO:
“As was the case in 2010, the main obstacles to a GAO opinion on the accrual- based consolidated financial statements were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.”
The Department of Offense has been totally unaccounted for since at least September 10, 2001, when Donald Rumsfeld announced that $2.3 trillion had gone missing. The next day a cruise missile hit the accounting office of the Pentagon and no one has asked any questions since.
Forgetting for the moment whether or not the US government’s financial statements are even real or not, and assuming they are, the recent “fiscal cliff” debacle shows that the US government is working itself into a corner more by the day.
Jeff Berwick [send him mail] is an anarcho-capitalist freedom fighter and Chief Editor of the libertarian, Austrian economics grounded newsletter, The Dollar Vigilante. The Dollar Vigilante focuses on strategies, investments and expatriation opportunities to survive & prosper during and after the US dollar collapse.