Media Needs to Start Questioning Government Data


By Charles Biderman


I was on Fox Business News on Tuesday’s market close show and left upset. The co-host David Asman ended the chat by implying that I must be a kook for saying that the US government is committing financial fraud. He did not ask, and apparently was not interested in any facts about what why I say that.


So to repeat myself again here is evidence that the US government is committing financial fraud. Again there are a lot of numbers ahead and I will try and make this understandable even if you flunked accounting 101.


First, let us start with the balance of the US, which includes all the assets and liabilities of households. The Federal Reserve’s quarterly Flow of Funds, the Z1, says the US net worth is about $65 trillion. That includes total assets of $78 trillion made up of homes, stocks, cash, bonds, everything. All debts are $13 trillion, about $10 trillion of that mortgages. Subtracting debts from assets and the US net worth sounds like a healthy $65 trillion.


But that does not include existing government debt of $16 trillion and an overwhelming $87 trillion in the present value of future Social Security, Medicare and Pension entitlements. So the truth is that actual US government total debt is more than $100 trillion, an amount greater than the $78 trillion in all assets owned by US households.


This information comes from former Clinton economists, Chris Cox and Bill Archer, in a November 26 Wall Street Journal op-ed. The economists stated that if the federal government were interested in full disclosure, which it isn’t in their words, it would add to the $16 trillion another $87 trillion in obligations. That is the present value of unfunded future Social Security, Medicare and federal government workers future entitlements. The two found that data buried in the April 2012 Medicare Trustees Report.


It is even bleaker when looking at income. After tax income for everyone who pays taxes is about $6.6 trillion a year right now. Compare that $6.6 trillion with the fact that future entitlement expenses grew by $7 trillion this year. That is right. $7 trillion is the amount the US should put aside this year to have enough money to pay future entitlements.


So in other words, if the US government told the truth about its expenses, the actual deficit is not $1+ trillion a year, but $8+ trillion a year, an obviously unsustainable amount since it is greater then the $6.6 trillion in after tax income for all taxpayers. Is it not fraud for our government to hide and bury in unreadable reports such as the Medicare Trustees report that there will no money available for the Social Security and Medicare benefits we are being promised.


My second proof of US government financial fraud is the Census Bureau Advance Monthly Retail Sales report. Each month the Census Bureau economists survey 3,000 retailers and then guess at total retail sales in the entire country, then divided by type. Which do you think is more accurate, that survey of 3,000 retailers or real time data on aggregate sales from Master Card, Visa and the like, that is already being sold to the public. The only reason I can think of why Census Bureau economists ignore Master Card and Visa, is to keep their jobs. To me they are committing fraud against us.


Similarly, both the monthly jobs report by the Bureau of Labor Statistics and the income and savings data from the Bureau of Economic Analysis both avoid and ignore real time data on total employment and incomes embedded within the withheld income and employment tax payments made daily by all employers to the US Treasury. Instead the economists at the BLS and the BEA to come up with their numbers use surveys, six month old historic data and then guesses at seasonal adjustments. This is an antiquated methodology that goes back to the 1960s.


Why would the government economists ignore the truth about jobs and incomes at this critical moment in our economic history? Perhaps to save their own jobs.


Unless financial media types such as Fox Business Dave Asman stop implying that anyone accusing the US government of committing financial fraud has to be a conspiracy theory wackoo, the US government will be able to get away with hiding the truth from us.



13 Responses to Media Needs to Start Questioning Government Data

  1. Guest on December 12, 2012 at 10:51 pm


    Nice overview to reschool media sockpoppets. You may want to include links for your viewers to see. Once their investigation is complete, your message will gain more exposure via interweb. Sometimes solving complex problems can be done with hyperlinks. Educating your audience will have a larger impact. Keep up the great work.

  2. Chuck Szkalak on December 12, 2012 at 11:50 pm

    Charles, your only mistake is assuming that the fraudsters in Washington along with their masters in Banking and Media serve the best interests of the American Taxpayer. Bad assumption! The reason for using bogus government data appears self evident, it supports the fraud and keeps the fraudsters in power. Bernie Madoff learned all he practiced from the sociopaths in Washington.

  3. Kochvilledi on December 13, 2012 at 12:10 am

    Mr. Biderman – don’t give up trying to spread the word. I don’t have any fancy degree, but I can add. And there are a lot of us “regular” folks that aren’t buying their numbers.

    Of course, it’s not the majority, and maybe it will never be. All know is I’ve never seen so much BS in the markets, banking system, and government in my life.

    I voted, I write my representatives, we have our finances in order. Other than that, I’ve resigned myself to sitting back and waiting for the whole ponzi scheme to implode. I just don’t see how it does anything else, because the politicians will never have the guts to be honest with us and fix this mess. They’ll just keep kicking the can down the road for as long as they can.

    I appreciate your honest assessments and sharing your thoughts with us.

  4. JLM on December 13, 2012 at 12:28 am

    Agreed! If you allow someone to lie to you, and get away with it, they will only get worse. Good for you to take a stand on this.

  5. cathy on December 13, 2012 at 4:20 am

    Keep the faith, Charles. The msm whores are trying to keep their jobs by laughing at you. You’ll have the last laugh when they turn the lights out on the msm. It’s coming, never fear.

  6. PT on December 13, 2012 at 4:48 am

    The government has long needed to update the way they track and report the economy for every one’s benefit. It’s a travesty that they haven’t done it yet, but it’s just one more for the list. Please don’t allow one ignorant Fox News puppet to discourage you. I greatly appreciate your pointing out where to look for the truth! With people like you and the power of the internet, we just might put it back together in this country one day!

  7. AndyB on December 13, 2012 at 12:46 pm

    It is sad to see fraud and corruption dominate in the governments and banks in the world today. Iceland, however, deviated from what the rest of the world is doing and took a positive stand. Read the following link for more.

    So don’t give up on your crusade Charles. I would love to see the US government and bankers responsible for fraud and corruption prosecuted someday, and your work could be extremely valuable!

    Warmest Regards


  8. Charles Longfellow on December 13, 2012 at 6:44 pm

    If I am seeking entertainment, I watch broadcast news.
    I do not seek reliable information about the market from comedians, clowns, acrobats or fashion models. There is no debate here. Thank goodness we have Biderman to provide useful info.

  9. Ed_B on December 13, 2012 at 8:34 pm

    Re: David Asman

    Allow me to suggest that not all of the sheeple out there are in the audience and that Mr. Asman is a prime example of the “I don’t know and I don’t want to know crowd. Bringing up the facts of our financial and economic situation would surely have disoriented and confused him. This is easily done to those of minimal IQ and great appreciation of themselves.

  10. David henderson on December 15, 2012 at 4:44 pm

    The present value of future obligations is $87T. Boggles the mind.

    From that should be subtracted the present value of future taxes.

    That is the net present value of future cashflow.

    By commenting only on the future obligations, you are only looking at an incomplete picture.

    • cbiderman on December 16, 2012 at 2:45 am

      It is correct that I have not commented on the present value of future entitlement related taxes. However, with a current budget deficit of 1/3 current obligations, there is no point in counting future taxes as any kind of offset to future liabilities.

  11. Tom Sullivan on December 20, 2012 at 4:14 pm

    The calculation future cost of pension programs ought to be explained. It is probably based on an assumed heavy investment in government bonds, which pay very little (and will crash when interest rates go back up). What would be the future cost of pensions if one assumed investment in stocks only, or some kind of mix of stocks and bonds?

    Social security and Medicare are Ponzi schemes, “investments” with no genuine, growing asset base designed to pay off pensioners at retirement. The solution is to create an invested social security and system, like they have in Chile. We must do the same for Medicare, and for all government employee pensions. In other words, outlaw Ponzi schemes run by government.

  12. Ed_B on December 21, 2012 at 12:44 am

    “In other words, outlaw Ponzi schemes run by government.”

    I don’t know if that is even possible at this late date, Tom. They are so intertwined by now that we may as well outlaw government. Say… that’s not a bad idea, now that I think of it! At the very LEAST, we need about 1/2 of the government meddling in our lives as we now have. Given that, perhaps reducing the US federal budget from about $3.8T to about $1.9T would be an excellent start. The $500B or so that we collect in annual federal taxes could be applied to the $16T and growing federal debt. Who knows? At this rate of repayment, we just might be able to pay it off in 40-50 years, depending on what interest rates do between now and then.

    We definitely need to make heroes of those who actually save tax-payer money as opposed to those who blow it as quickly as possible and then look around for even more of our money to squander.

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Charles BidermanCharles Biderman is the Chairman of TrimTabs Investment Research and Portfolio Manager of the TrimTabs Float Shrink ETF (TTFS)

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