The Gifts That Keep On Giving

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The U.S. Colossus is a double-edged sword. The money-creating machine known as the Federal Reserve comprises one of the razor sharp edges. And the other consists of the massive worldwide military empire.

Each blade looks out for the other side. They are a tag-team. The Fed finances the Military Empire. On the other side of the equation, the Military Empire makes sure everyone uses and accepts the Feds dollars. Should a country (any country) even think of using anything else as money, they will have bombs dropped on them immediately.

Both edges of the sword have carte blanche. “The people” and their “representatives” are not allowed to know what goes on, and chances are excellent that they never will…..At least not until it all crumbles under its own weight, and like archaeologists, future generations put together the pieces on what went on.

By now, you’ve surely heard of calls to “Audit The Fed”. But what about the other edge of the sword? What about “Audit The Pentagon?”.

Reuters provides a nice Q&A on this subject:

Question: Is the Pentagon required to be audited?Answer: Yes. Congress passed a law in 1990 requiring all federal agencies to be audited annually. The law required the Defense Department to comply by 1996. The Pentagon missed that deadline and has remained in violation ever since.

Q: What’s preventing the Pentagon from being audited?A: The Defense Department has had no working accounting system. In recent years, it has relied on at least 2,100 (estimates range up to 5,000) separate systems spread throughout the military services and other defense organizations, almost all developed independently over the years with little thought to sharing data or preparing accurate financial statements.

5,000 separate systems? Chances of ever getting an audit? Zero.

Q: How much taxpayer money has the Defense Department spent that has never been audited since the 1996 deadline?A: About $8.5 trillion.

And there you have it…The gift that keeps on giving for the bureaucrats. Trillions and Trillions handed over. No one knows where it goes.Well, that’s not entirely true. The people who receive the Trillions know where the money went.

Q: What are the consequences?A: It is impossible for the Pentagon or any auditor to determine how much of the annual defense budget is spent as Congress directed and how much is diverted for other uses.

Q: What is happening now to improve the situation?A: After the Pentagon for years continually extended its own deadline for becoming audit-ready, Congress in 2009 cracked down. It set a legal deadline of fiscal 2017 for the entire department to be ready for an audit.

2017?…Ha!…They can put all the legal limits that they want. By the time 2017 comes around, the legal limit will be pushed to 2027….Rinse & Repeat.

Q: Why is the effort faltering?  A: Many of the costly new systems don’t work. Several were canceled outright as failures after amounts exceeding $1 billion were spent on each.

See my post from yesterday for more on that.

Q: Are there consequences for failing to meet the 2017 deadline?A: There are no legal consequences if the Defense Department isn’t audit-ready by 2017.

There are no consequences because there will be no audit.

Put yourself in the Fed & Pentagon’s shoes. A real audit (i.e., not a ‘you can see what you’re allowed to see’ audit) on either one is equivalent to a game over. Even our wildest imaginations can’t fathom what happens to those Trillions.

There’s no way the greatest (criminal) game in the history of the world is going to come to an end because the victims (us) want to know what’s going on. We have Miley Cyrus and Duck Dynasty to focus on.

Only economics will stop the double-edged sword now. Empires ultimately hit the economic wall. Thank goodness for that wall, otherwise humanity would be toast.

Has the wall been hit? None of us are smart enough to know that. But one thing is for sure. We are going through one vicious financial crisis after another. They’re definitely occurring more often, and each time they happen, the powers-that-be act like they are more frazzled and desperate than ever.

So it’s not all bad. Yes, the bureaucrats scam us out of Trillions every year. But we also have gifts that keep on giving…and our gifts are permanent. They never go away. They include: Supply & Demand, Marginal Utility, No Free Lunches, Human Action, and the most important one of them all — Truth.

Reprinted with permission from Economic Policy Journal.

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