Sketchy Government Accounting

22 Apr

Sketchy Government Accounting

As we write this commentary, the Treasury Department reports that the US national debt is $28.168 trillion.  

That’s a lot of wampum!

A year ago, it was $24.461 trillion.

A year earlier, in April 2019, in was $22.027 trillion.  

The debt has been growing fast, up by more than $6 trillion in two years!  If only that were the whole story.  

Sorry, but it is not the whole story.  The real debt is much, much larger.  The real national debt now exceeds $123 trillion, more than four times the officially reported number. 

And that works out to about $800,000 per taxpayer.

The non-profit organization Truth in Accounting (TIA) takes a dim view of sketchy government accounting.  That is because the government does not account for its promises and obligations in the same manner that federal law requires of public companies.  So, TIA looks at promises that government has made, promises upon which people depend, but which are not funded.  Things like Social Security and Medicare benefits and federal employee retirement provisions.

If you think that the US economy can keep functioning at today’s level if peoples’ Social Security benefits fail – benefits they count on to pay their mortgages, power bills, and for groceries – then read no further.

But in fact, 64 million people receive Social Security benefits.  All the people they do business with and all the people who do business with those who do business with them depend to one degree or another on those payments.  

It’s like the game Jenga where you pull out one block at a time until the whole thing topples over.  Truth in Accounting President Sheila Weinberg puts it into perspective with this anecdote paralleling the problem of politicians and unfunded government liabilities:

“For years you have hired people to do work around your house. Instead of paying them in full every year, you use the money to buy holiday gifts, so that you are popular with your friends. Each year you tell your household workers that your children will pay the balance you owe, when they grow up. 

“Have your budgets been truly balanced?”

The choices the government has to deal with its debt are painfully few.  Most are utterly inadequate.  In 2012 presidential candidate Mitt Romney thought he could make a dent in the problem by getting rid of public TV and Big Bird.  

There is really only one alternative:  painful, slow-motion debt repudiation through inflation.  Recipients will still get their Social Security automatic deposits… which they can spend on cat food.

Of course, none of this had to happen, but the political classes thought they could replace honest accounting with sketchy accounting, and real money with unbacked paper money.  

It fooled some of the people some of the time.  But you can’t fool all of the people all of the time.  

If you have had enough of them trying to fool you with fake accounting and fake money, speak to a Republic Monetary Exchange specialist about how to protect yourself with gold and silver.

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