U.S. Government Prepares Mass Pension-Rape
How has the bankrupt United States of America kept its entire (paper) house-of-cards from crumbling all around it? Two words: fraudulent accounting.
As many readers know, following the Crash of ’08 U.S. Big Banks were hopelessly bankrupt. They were leveraged well in excess of (the legal) 30:1, with the vast majority of that leverage tied directly to the (fraud-saturated ) U.S. housing market – and house prices.
The effect of this leverage was that (as a matter of arithmetic) only a 3% decline in U.S. house prices would render all these banks insolvent (3% X 30). In fact the U.S. housing market plummeted lower by roughly ten times that amount (in just its first down-leg). The mere $15+ trillion in hand-outs/loans/guarantees from the Bush regime was only a band-aid which would keep these fraud-factories afloat for a few months, barring other equally extreme action. And so Mark-to-Fantasy accounting was born.
Beginning in February 2009, U.S. Big Banks weren’t required to account for their assets (or liabilities) at “market value” (i.e. what people were willing to pay for them in the real world). Instead, the Banksters were allowed to do their accounting on the basis of what they thought their own assets should be worth.
Suddenly, the same corporations which had just all been bankrupted ten times over were able to pass a “stress test.” Of course that Cinderella Stress Test proved nothing about the solvency of U.S. banks. However simply being instantly able to cobble-together a façade of solvency did illustrate the magnitude of the fraud in this Mark-to-Fantasy accounting.
But for decades prior to this the U.S. federal government had already been engaging in its own Mark-to-Fantasy accounting. Unlike U.S. corporations, which are (accept for the Big Banks) still required by law to acknowledge all debts and liabilities in their accounting; the federal government only acknowledges the liabilities it wants to acknowledge – the small ones.
The remainder of these obligations are simply shoved to the side, and permanently ignored by all of the U.S.’s elected representatives, of both parties. But other people do keep track of these “unfunded liabilities”. A former Reagan economic advisor, and now economics professor estimated this mountain of Unfunded Obligations at more than $200 trillion.
The U.S. government has $15+ trillion of “official debt”, and $200+ trillion of ignored liabilities. Now that is “creative accounting”!
U.S. state and local governments were so impressed by the federal government’s financial gymnastics that (one by one) they began copying these accounting practices themselves, and creating their own mountains of Unfunded Liabilities.
How big are these state/local mountains of hidden-and-ignored liabilities? No one really knows. As CNBC tells us:
…Thanks to a patchwork of accounting practices and rosy investment assumptions, it’s not even clear just how big a financial hole many states and cities have dug for themselves.
But it looks like we’re all about to find out. How? The U.S. federal government has just created new “standards” for the financial accounting of state/local governments – but (of course) not for itself:
…That may soon change, thanks to a new set of government accounting standards that could serve as a nasty wake-up call to states and cities relying on rosy scenarios and head-in-the-sand accounting.
Why has the U.S. government suddenly targeted only one segment of its accounting-fraud economy for “clean up”? We can be certain that the motive was not “financial accountability.” How so?
The federal government is the accounting template upon which all the accounting-fraud of state/local governments is based. Yet it is only forcing the Imitators of this fraud to clean up their act, and not the Originator – itself. Thus clearly the motive here is a purely sadistic one.
Again, we know what is not intended. The U.S. federal government is not trying to force city/state governments into open bankruptcy (like Detroit), since ultimately these lower governments are dependents of the federal governments. Torpedoing countless state/local governments into bankrupty would only create a gigantic problem for itself.
The “targets” here (as always) are the Serfs. The dynamics are painfully obvious.
Step One: “new accounting rules” force state/local governments to divulge at least some of the fraud in their own Mark-to-Fantasy accounting, and acknowledge their mass-insolvency.
Step Two: These state/local governments quickly assemble into a choir and sing (in perfect unison) “We Can’t Afford This”, almost as if it was a perfectly scripted choreography. And what do you think all of these governments “can’t afford”? Why the peoples’ pensions, of course.
Step Three: Tens of millions of Serfs wake up the next morning and discover they are destitute. Crime complete.
What happens when the Serfs whine and mildly protest? The federal/state/local governments will “explain” (accompanied by a few crocodile tears) that they had to slash all these pensions to next-to-nothing – or there wouldn’t be enough money to continue making interest payments to the One Bank (forever, in ever-increasing amounts).
Parasites before People; the new American motto. Note the title of the propaganda from CNBC (previously quoted):
Pandemic of pension woes is plaguing the nation
There isn’t enough money for various levels of government in the U.S. to keep making their pension payments to pensioners and their interest payments to the One Bank. So why isn’t the article entitled “bond woes plaguing nation”, given that these bond debts now exceed total pension obligations?
Because the U.S. government, the Corporate Media, and (of course) the One Bank are only planning on tearing up one set of these contracts.
What is the difference between the legal contracts which all these people had with their state or local governments to provide a certain pension in return for (many years of) services rendered, and the legal contracts which the Bond Parasites have to compel these state/local governments to pay interest on fraudulent debts? In the (One Bank-controlled) United States of America, only one set of contracts actually counts.
The state/local governments will point to Detroit and all sing (again in perfect unison): “Look, the precedent has been set.” Indeed, the ink isn’t even dry yet on the “fleecing of Detroit pensioners”, and now the federal government is set to take this Pension-Rape nation-wide.
Let me remind readers (yet again) that all these bond debts which the U.S. federal/state/local governments (and other Western governments) insist “must be paid” – ahead of their legal obligations to their own people – are fraudulent debts. They have all been grossly inflated by the fraud and/or malicious lies of the One Bank. They are legally unenforceable.
Just ask Larry Summers, one of the candidates to take over management of the Federal Reserve. Summers “borrowed money” just a few years ago from the One Bank (while president of Harvard University), and when the dust had settled he had managed to lose $1 billion in financing only $2 billion of debt.
There are only two possibilities here. Larry Summers is one of the most incompetent boobs to ever stuff a suit, and couldn’t “manage” a lemonade stand – let alone the Federal Reserve. Larry Summers was swindled by Wall Street, and thus the debt is not enforceable. Presumably the fact that Summers is being considered to be the new Chairman of the Federal Reserve conclusively indicates which of these possibilities is true.
There is no need to cheat tens of millions of Americans out of the pensions they earned over decades of their own hard work. Just tear-up all the Fraud Bonds of the One Bank and there will be plenty of money (once again) to provide for the people.
Perpetual debt-slavery or economic liberty? It’s time for the Serfs of America to make their choice. Continuing to sit on their asses and stare at the idiot-box is my own “prediction” as to what that choice will be.
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.