ANOTHER $35 TRILLION: AN ACCOUNTING ERROR?January 29, 2020
Yesterday I blogged about the new logo for the USA's new "Space Force," a logo that to my and many other people's eyes looks all-too-suspiciously like the "Starfleet" logo from Star Trek. Well, I suspect today's article, shared by G.P., may have something to do with yesterday's story. And it may contain another hint of that hidden system of finance and its practices as well. The story concerns yet more trillions of dollars, in this case, $35,000,000,000,000 worth of accounting errors:
The story is simple enough, and sadly, it's a measure of how accustomed we've become to astronomical amounts of missing money, that at best it only raises an eyebrow. Yet, there's a detail in this article that caught my eye, and that fuels today's high octane speculation. It seems that once again the Pentagram has mislaid a few trillions and has had to make accounting adjustments:
The Pentagon made $35 trillion in accounting adjustments last year alone -- a total that’s larger than the entire U.S. economy and underscores the Defense Department’s continuing difficulty in balancing its books.
The latest estimate is up from $30.7 trillion in 2018 and $29 trillion in 2017, the first year adjustments were tracked in a concerted way, according to Pentagon figures and a lawmaker who’s pursued the accounting morass.
In other words, we're already far afield of former Defense Secretary Donald Rumsfeld's September 10, 2001 admission that the Pentagram had about $2 trillion it couldn't account for. But, says the article, you can breathe easy, because the money isn't really lost, it's just all poor accounting:
The military services make adjustments, some automatic and some manual, on a monthly and quarterly basis, and those actions are consolidated by the Pentagon’s primary finance and accounting service and submitted to the Treasury.
There were 546,433 adjustments in fiscal 2017 and 562,568 in 2018, according to figures provided by Representative Jackie Speier, who asked the Government Accountability Office to investigate. The watchdog agency will release a report on the subject Wednesday after reviewing more than 200,000 fourth-quarter 2018 adjustments totaling $15 trillion.
The “combined errors, shorthand, and sloppy record-keeping by DoD accountants do add up to a number nearly 1.5 times the size of the U.S. economy,” said Speier, a California Democrat. The report shows the Pentagon “employs accounting adjustments like a contractor paints over mold. Their priority is making the situation look manageable, not solving the underlying problem,” she said.
The GAO estimated based on a sample that at least 96% of 181,947 automatic adjustments made in the fourth quarter of fiscal 2018 “didn’t have adequate supporting documentation.”
“In layman’s terms, this means that the DoD made adjustments to accounting records without having documentation to support the need or amount for the adjustment,” said Dwrena Allen, spokeswoman for the Pentagon’s inspector general. “The size and scope of unsupported adjustments is deeply concerning because it tells a story of poor internal controls and lack of financial data integrity.”
But not so fast. There's something that caught my eye and I hope that caught yours, and it's this little detail:
“Within that $30 trillion is a lot of double, triple, and quadruple counting of the same money as it got moved between accounts,” said Todd Harrison, a Pentagon budget expert with the Center for Strategic and International Studies.
The Defense Department acknowledged that it failed its first-ever audit in 2018 and then again last year, when it reviewed $2.7 trillion in assets and $2.6 trillion in liabilities. While auditors found no evidence of fraud in the review of finances that Congress required, they flagged a laundry list of problems, including accounting adjustments.
Now, there's two ways to count money two, or three, or several times: one is to do so inadvertently and by mistake, which is what we're being asked to believe here. But the other is to do it deliberately. In the banking world, where the same pile of assets are assigned to several different accounts all at the same time, it's not only fraudulent, but there is actually a word for it: re-hypothecation.
It's that term, plus the admission that "things" are being counted "more than once" in these accounting "adjustments", that bring me to today's high octane speculation: What if we've just been given another profound clue into the nature of the hidden system of finance? What if the practice of rehypothecation is not confined to the world of banking, but has in fact become a modus operandi of government agencies themselves, in this case, of the Department of Defense? In my original model of this hidden system, articulated in various books and at the first Secret Space Program conference in San Mateo, California in 2014, rehypothecation formed one of the techniques by which I speculated vast amounts of fraudulent liquidity could be created and kept from the public by a kind of double-bookkeeping. This, as I suspected then, was confined to banking and to the presence in the system of hidden and undisclosed bullion acting as a secret reserve on the ledgers. Since the reserve was secret, I reasoned that it could be rehypothecated over and over again, and generate the vast amounts of liquidity that a large secret research program would require.
But that liquidity in its turn could itself become a reserve and be rehypothecated by the agencies receiving it, and with the FASAB 56 regulations, the climate of secrecy is created to allow that to be done.
In my original speculations I pointed out that President Truman's decision to secretly recover looted Japanese gold and to turn it over to the National Security Council as a top secret slush fund for covert operations and secret research put the intelligence agencies and the military into the banking business.
Perhaps, with this story, we've been given a little confirmation of that hypothesis.
See you on the flip side...