by Karen Kwiatkowski, Lew Rockwell:
The current US government has become “a form of fraud that … pays profits to earlier investors with funds from more recent investors” – in other words, a Ponzi scheme. No doubt the social security, Medicare/Medicaid and government retirement systems meet this definition of fraud directly. But we may also apply it to other sectors of the federal government, including how the government funds defense, conducts a vast system of student loans, or pays the interest on the federal debt.
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Consider the cost of the Pentagon, and the related cost of the CIA and the federal intelligence apparatus. These agencies spend over a trillion dollars each year, with annual built-in increases – all without a single declared war being conducted since 1941, nor any of the numerous executive-directed and illegal “war-like” activities being won, or even remotely paying a dividend to taxpayers.
Homeland Defense is no different – trillions spent since 2001, and borders wide open, literally uncontrolled in a way unimaginable even 20 years ago.
Payable federal student loans constitute $1.7 trillion. The US taxpayer via Congressional authorization made this money available, and as it is paid back (or not), more tax-funded loans go out. For most people, time in college and degrees don’t substantially increase real inflation-adjusted income; yet Congress continually authorizes this spending program.
New money flows to all these programs every year, just as the USG seamlessly rolls over old debt for new, with no measurable value is created for anyone except for the government and banking elites running the scam.
I don’t mean to complain about the various Ponzi schemes conducted by the US government, or even to suggest that we – the taxpayers – have little choice in where or how our government spends its annual haul, and its unlimited borrowing in our name. This situation has existed and grown worse for my entire lifetime. I may not intellectually accept it, or even understand it, but I bear it along with every other American alive today.
But I am curious. What happens when a Ponzi scheme is exposed – generally by “investors” who suddenly, or gradually, realize their “investment” is gone, wasted, unavailable, for naught?
Legally, in dealing with an exposed Ponzi, the first thing the courts do is work up a clawback. Government agencies and companies have rules outlining the use of clawbacks, “provisions whereby money already paid to an employee must be returned to an employer or benefactor, sometimes with a penalty.”
When dealing with corrupt and intentional Ponzi schemes, it is the courts and bankruptcy trustees who must determine the clawback – literally a clawing back of resources paid out to more recent recipients of dividends or payments in order to “level the playing field” and to restore a small portion of the “investment” to all investors. Investors, at least the more recent ones, will pay twice for the crimes of others.
Most investors in your typical Ponzi are blissfully ignorant until the Ponzi scheme collapses. Most investors are also innocent of major crimes, and are truly considered victims. In the case of the American taxpayer, long engaged in supporting the federal Ponzi schemes, he or she is ignorant, innocent, and victimized. Astonishingly, the American taxpayer is, and always has been, unable to opt out of the fraud.
When the several interrelated USG Ponzi schemes collapse, and they are moving in that direction rapidly, how will it be resolved? Who will see a clawback from their more recent dividends and payouts from the schemes? What will be left to distribute?
Will the bankruptcy trustees go after the major corporations surrounding the beltway for their overpriced contracts for things we never needed and can’t use, and cancel current contracts abruptly? Will they go after people in their 80s and 90s who have collected far more in social security and Medicare than they ever paid for? Will the vast array of recipients of government spending and grants and subsidies face a clawback for what they’ve received in the past five years in order to create a larger pot from which to pay all 200 million Americans their nickel on the dollar?
