The Dust Bowl and GAAP
I would like to take the opportunity to challenge the generally accepted principles that most people use to govern their lives in respect to the world they live in and those that we have for years put our trust in. My wife is in her second to last semester in her Master of Accounting program and is in the process of completing a paper for her Government Accounting class.
There are three very interesting things that I have learned from her about the way our various governments keep their records.
1. The Federal Government doesn’t hold itself to the same accounting standards that it holds state and local governments and businesses too. 2. The Budget that is made so public is cash based budget that does not include debts owed in the future as any other entity would be required to keep.3. The treasury department publishes a GAAP financial statement each year that would make anybody with a pulse sick to their stomach.
These three items alone are tough but here are a few numbers to chew on.
1. The Federal Deficit of 2008 using GAAP (Generally Accepted Accounting Principles), without Social Security or Medicare, is actually $1.009 Trillion, not the $454.8 billion you hear in the news today.2. If add in Social Security and Medicare the deficit of 2008 was actually $5.1 Trillion.
But wait that’s not all!
3. Using GAAP the Federal Governments Net Worth is -$59.3 Trillion. 4. If you take into account all of the obligations we owe, that’s like taking all your car debt and house debt and credit card debt and totaling it, the good old US of A owes a staggering $65.5 Trillion. This includes things like interest, promised Social Security and Medicare payments.
Sixty Five and half Trillion dollars! Say that really fast five times. It’s amazing. This all came up after watching a show on the great dust bowl. It seemed all too familiar.
The government wanted the US to become the breadbasket to the world so they started giving land away as long as it was plowed and planted. A great race for the mid west was started. When they wanted more people to move to the mid west they doubled the amount of land they were giving away. As the world’s population grew so did the price of wheat. The US passed Russia for the first time in the production of what just before the depression. Farmers were receiving record high prices for their wheat. Then it all came crashing down. Wheat fell from close to $.70 a bushel to less than $.20. This broke most farmers and as the rain ceased, the dust bowl ensued. It all sounds to familiar.
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