Edward Siedle, an independent pension investigator, claims that the state-run Teachers Retirement Association (TRA) has only disclosed less than 10% of the $2.9 billion in fees it spent over the past decade. He also criticized the TRA for reporting gains that barely exceed its own benchmarks by 0.2%, which he described as “virtually impossible.”

“Even Bernie Madoff didn’t claim to beat the market every single year — and certainly not by the exact same percentage,” Siedle said, and referred to the TRA performance as a “Madoff miracle under Walz’s watch.”

The late financier Madoff orchestrated the largest investment fraud in Wall Street history, pleading guilty in 2009 to running a Ponzi scheme that swindled thousands out of their life savings.

Walz, who has been serving as chairman of the Minnesota State Retirement System since January 2019, oversees $140 billion in state employee funds, including $28.2 billion for teachers, the outlet reported.

“I don’t know if the man had any pre-existing knowledge of finance or pensions, but as chairman, he should have educated himself,” Siedle said. “Pension board members have a fiduciary duty to monitor fees, and to ensure that the investments’ performance is accurately disclosed.”

Katie Dickerson, a teacher nearing retirement, testified in February that despite high contribution rates, there have been no improvements to the retirement system, leading to extended work years and significant penalties for early retirement.

“Not only do we have a high contribution rate to TRA, but we . . . are forced to work many more years unless we are willing to be hit with huge penalties,” Dickerson reportedly told the Minnesota’s Legislative Commission on Pensions and Retirement.

For FY 2023, the TRA reported an 8.9% return and $24.19 million in management fees. But Siedle estimates actual fees to be between $334 million and $467 million, or 5% to 7% of TRA’s private assets. Even a 1% fee would total $280 million — over 10 times the reported amount. Siedle’s requests for investment documents have not yet been fulfilled by the TRA or state agencies.

Siedle’s report notes that the Minnesota attorney general and state auditors, who typically investigate such issues, are on the same state pension board chaired by Walz. Consequently, Siedle filed a whistleblower complaint with the SEC and FBI in July, according to The Post.

The Harris-Walz campaign did not immediately respond to Fox News Digital’s request for comment.

Article generated from corporate media reports.

A Ponzi scheme is an unsustainable scam that relies on a continuous influx of new money to keep it going. The scheme collapses if the flow of new money slows down or tapers. Many believe the Federal Reserve is running what amounts to a giant Ponzi scheme.

That’s because the US government’s obscene spending and skyrocketing debt have reached an inflection point where the whole system will collapse unless the Fed pumps an ever-increasing amount of new fake money into the system.

Government spending is the leading cause of the problem. However, the government cannot even slow the growth rate of spending, let alone cut it. Here’s why.

The biggest expenditures for the US government are so-called entitlements. It’s unlikely any politician will cut these. On the contrary, I expect them to continue growing as the last Baby Boomers enter retirement in 2031.

With the most precarious geopolitical situation since World War 2, so-called defense spending seems unlikely to be cut. Instead, it is all but certain to increase. Income Security is a catch-all category for different types of welfare. That’s unlikely to be cut too.

Efforts to reduce expenditures will be meaningless unless it becomes politically acceptable to cut entitlements, national defense, and welfare. Further, interest expense is exploding higher.

The federal interest expense recently exceeded $1 trillion for the first time and is shooting higher. That means the interest expense is already bigger than defense spending and everything else in the budget except for Social Security, which it will also likely exceed soon.

The cost of debt service (interest expense) is taking up a larger portion of the budget, leaving less for other expenditures. That means the government has to borrow increasingly larger amounts to maintain basic functions.

The situation is compounded by the fact that the more the US government borrows, the larger the interest expense on the federal debt, which causes it to borrow even more.

Borrowing money to pay debt service is the inflection point in the debt spiral, and the US is at that point. Here’s the bottom line with the budget. Expenditures have nowhere to go but up.

But don’t count on increased revenue to offset these increases in expenditures. Even if tax rates went to 100%, it would not be enough to stop the deficits—and the debt needed to finance them—from growing.

The truth is, no matter what happens, the debt will not stop growing. It’s not even going to slow down. The debt is increasing exponentially.

The only way the US government can continue to finance itself is for the Fed to create ever-increasing amounts of fake money.

If the Fed doesn’t provide more monetary accommodation to lower interest rates, the growing interest expense will bankrupt the US government… and bring down the entire debt-based economy with it. In short, the Fed must print ever-increasing quantities of fake money, or the system will collapse.

Ludwig von Mises, the godfather of free-market Austrian economics, summed up the Fed’s dilemma:

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

The US government will not voluntarily “abandon credit expansion,” as Mises puts it because Washington is dependent on issuing increasing amounts of debt to pay for the ever-growing costs of Social Security, national defense, welfare, and interest on the federal debt.

As Max Keiser succinctly said, “You can’t taper a Ponzi scheme.”

That means their only choice is to debase the US dollar by ever-increasing amounts until, as Mises puts it, the “final and total catastrophe of the currency system involved.”

That’s why I am convinced extreme currency debasement is the inevitable outcome of the debt spiral. All the rest is noise.

Michael Saylor captured the essence of the situation when he said, “The road to serfdom consists of working exponentially harder to earn a currency that is growing exponentially weaker.”

I believe rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.

The worst of it could go down soon… and it won’t be pretty. It will result in an enormous wealth transfer from savers and regular people to the parasitic class—politicians, central bankers, and those connected to them.

Countless millions throughout history were wiped out financially—or worse—because they failed to see the correct Big Picture as their governments went bankrupt.

Don’t be one of them. That’s exactly why I just released an urgent new report with all the details, including what you must do to prepare.

It’s called The Most Dangerous Economic Crisis in 100 Years… the Top 3 Strategies You Need Right Now.

Click here to download the PDF now.

Figure 1: Ten-year US Treasury bond yield with constant maturity from January 1981 to October 11, 2023 (percent)

Initially, financial markets expected only a relatively short phase of increased interest rates. At the beginning of March 2022, the US long-term interest rate fell below the short-term yield—so the yield curve became “inverted,” a clear indication that investors expected short-term interest rates to be cut sooner rather than later.

However, since July 2023 at the latest, long-term interest rates have been rising strongly and unabatedly. Something very fundamental has presumably happened—investors are no longer willing to hold US government debt at ultra-low yields as before. Where did the change of heart come from?

Investors may have become increasingly aware of the enormous debt problem in the US, which investors had taken lightly for so long: Uncle Sam is sitting on a mountain of debt worth more than thirty-three trillion US dollars, which is equivalent to around 123 percent of US gross domestic product (GDP). Plus, the debt dynamic is relentless: by the end of the decade, the debt could reach fifty trillion US dollars. Previous large buyers of US debt—such as Japan, China, Brazil, Russia, and Saudi Arabia—are no longer interested. Who will buy the huge flood of new US government bonds intended to finance deficits of around 6 percent of GDP in the coming years?

It appears that the US administration has squandered a lot of investor confidence, not least by freezing Russia’s foreign reserves at the beginning of 2020. It has since become abundantly clear to many investors from non-Western countries that US investments carry a political risk for them. Therefore, anyone who holds US dollars or invests in US debt securities demands a higher interest rate. It’s not just the US feeling the effects of this interest rate shock; the rest of the world isn’t spared either. The increased credit costs will make life difficult or even unaffordable for many debtors—consumers and producers.

The result will be an economic slowdown, more likely even a recession because loan defaults are already increasing again and will likely dry up the credit market. The flow of new credit and money into the system will dwindle, and the demand for goods will decline. This will be particularly problematic for many highly indebted countries. The mountains of debt they have accumulated and continue to increase are the result of a so-called Ponzi scheme—named after its “inventor” Charles Ponzi, probably the greatest fraudster of his time.

The state Ponzi scheme goes like this: States go into debt, and when the debt comes due years later, the states pay it off by taking on new debt—increasing the existing debt load. Investors buy the government bonds because they assume that there will be investors in the future who will buy the newly issued government bonds. In turn, these future investors assume that, in the even more remote future, there will also be investors who will buy the new debt that will be issued then. So on and so forth. Of course, no one here expects actual repayment, and to be true, repayment of the debt is impossible.

Now, interest rates have fallen over the last four decades, and the fraudulent game has worked quite well—for the states and the special interest groups that seek to harness this game for their own purposes. States could easily accumulate more and more debt, and the debt that became due could be refinanced with loans at ever-lower interest rates. Now, however, the situation has changed dramatically.

As I said, interest rates are rising while debt is already very high, and there will probably be a rude awakening soon. Investors have to fear a deterioration in the debt sustainability of many countries—especially since the probability that any country will abandon their debt-accumulating spending is fairly low. So, the expectation that there will be investors willing to subscribe to newly issued bonds at relatively low interest rates will be disappointed in the future.

Then, it won’t be long before investors start to worry and panic—because they understand that the foreseeable increase in debt-related interest payments will crush many states’ finances. The painful truth is that there is no easy way out of a Ponzi scheme—at least none that would not demystify the national debt and all the lies and deception that go with it.

Maybe the bond markets will calm down again before things get explosive? Will US long-term interest rates find a new footing at, say, 5.5 to 6.0 percent? Will interest rates like in the 1980s—bond yields of more than 10 percent—return? The correct answer to these questions is of utmost importance for investment success.

In my opinion, an imminent end to the rise in interest rates on both sides of the Atlantic is rather likely. After all, officially measured inflation is already falling noticeably, and banks are putting the brakes on lending. The money supply in the major economies is already shrinking as a result of central bank interest rate increases, and the consequences of this shrinking will force economic activity to its knees. Then, once the economy contracts and mass unemployment hits like a tidal wave, it is very likely that interest rate increases will be reversed soon.

Moreover, it should also be borne in mind that the powerful “fiat money system”—the collusion of states, banks, major institutional investors, and large companies—will not be so easy to upset. Should the rise in interest rates become too strong from a political point of view, yet another deep dive into the bag of tricks can be expected. Central banks, for example, will start buying government bonds again, thereby fixing long-term and short-term interest rates at “reasonable” levels. Of course, all of these monetary policy tricks basically amount to one thing: paying off the outstanding bills with newly created money—or in other words, inflation policy.

That is the big lesson that can be drawn from the interest rate shock resulting from the Ponzi scheme in the debt markets: the systematic decline in the purchasing power of money, even if short-term relief is granted, is almost certain.

About the Author

Dr. Thorsten Polleit is Chief Economist of Degussa and Honorary Professor at the University of Bayreuth. He also acts as an investment advisor.

As economist Herbert Stein once said, “If something cannot go on forever, it has a tendency to stop.” Case in point: fiat money political regimes. Interventionist economies of the West are in a fatal downward spiral, comparable to that of the Roman Empire in the second century, burdened with unsustainable debt and the antiprosperity policies of governments, especially the Green New Deal.

In the global Ponzi scheme, thin air and deceit substitute for sound money. As hedge-fund manager Mitch Feierstein wrote in Planet Ponzi, “You don’t solve a Ponzi scheme; you end it.”

Charles Ponzi and Bernie Madoff made some of their investors a whole lot poorer, but the world didn’t come crashing down as a result.

For that‌—‌for a Ponzi scheme that would threaten to bankrupt capitalism across the entire Western world‌—‌you need people much smarter than Ponzi or Madoff. You need time, you need energy, you need motivation. In a word, you need Wall Street.

But Wall Street alone doesn’t have the strength to deliver a truly cataclysmic outcome. If your ambition is to create havoc on the largest possible scale, you need access to a balance sheet running into the tens of trillions. You need power. You need prestige. You need a remarkable willingness to deceive. In a word, you need Washington.

As Gary North wrote in a brief review of Feierstein’s book, “The central banks have colluded with the national governments in order to fund huge increases of national debt, beyond what can ever be paid off. In other words, [Feierstein] has described government promises as part of a gigantic international Ponzi scheme.”

In a recent interview, Peter Schiff, who was laughed at when he predicted the economic meltdown of 2007–9, said interest on the federal debt alone “will be about a trillion by the end of this year. By the end of next year [it will reach] two trillion dollars—and that’s if interest rates don’t go up. . . . This is a huge debt bomb that’s going to explode.”

Ultra-high corporate and credit card debt, along with bank insolvency sustains his argument for a coming collapse, the polar opposite of Biden’s economic dream.

Along with this, Reuters notes that the spread between two- and ten-year Treasurys is at the deepest inversion since 1981. Rarely has an inverted yield curve not signaled a recession.

Can Jerome Powell and his advisors steer the economy into a soft landing? Not this time. “The only landing possible is a crash, where everyone on board dies,” Schiff recently tweeted.

Ponzi and Madoff went to jail for their schemes, but how do you prosecute governments for theirs? Prosecution implies being a part of government. And with rare exceptions such as Ron Paul, those who go into government believe gold is a barbarous relic and the Fed is a good thing that just needs a little government tinkering. So, the guilty will go unpunished, unless public outrage misguidedly turns to nonjudicial violence. The rest will be too busy trying to survive and protect those they care about.

The War on Being Human

A study of history, including US monetary history, makes clear that the state is not in the business of securing our liberty. As the previous nine hundred plus days have made clear, any defense of “liberty” would likely be regarded as hate speech. Instead, we are inundated with the feel-good words of diversity, equity, and inclusion along with the fear-driven campaigns of climate change and killer covid. Challenge any of it and you’re demonized—or worse.

But the state can’t do anything significant without monopolizing money, and the Orwellian central bank digital currencies (CBDCs) will be the latest installment to control the monetary system. The new FedNow payment system with its emphasis on user convenience is providing the framework and psychological grooming for CBDCs.

The Shadow Superpower

We can stop this from happening. Two states, Florida and Indiana, have effectively banned CBDCs as money in those states. Other states will likely follow. The government will outlaw cash at some point, but those who use it now are casting a vote against CBDCs.

Many people will turn to barter, some using barter metals, and to the shadow economy. If this sounds desperate, consider how the global black market in 2011 was the world’s fastest-growing economy. Sometimes referred to as System D, it features both the usual, small transactions of flea market trades or workers looking for employment in the parking lots of home improvement stores and also larger, international trades. David Obi, a Nigerian, relying on his cell phone and his own initiative, contacted a Chinese firm to have small diesel-powered generators shipped to his home country, where electric power is often scarce: “Like almost all the transactions between Nigerian traders and Chinese manufacturers, it was also sub rosa: under the radar, outside of the view or control of government, part of the unheralded alternative economic universe of System D.”

Friedrich Schneider, research fellow at Johannes Kepler University Linz, Austria, whose expertise is in off-government economies and who coauthored The Shadow Economy, found that System D is growing faster in many countries than the officially recognized gross domestic product. If System D were an independent nation, it would be the second-largest economy in the world.

Conclusion

The future is undecided, but we can help determine the outcome if we take responsibility for it. Wikipedia defines System D as “a manner of responding to challenges that require one to have the ability to think quickly, to adapt, and to improvise when getting a job done.” In this sense success has always depended on System D, with or without government.

The American term for it is life hack, “any trick, shortcut, skill, or novelty method that increases productivity and efficiency, in all walks of life.” Whatever you call it, it describes a spirit all of humanity needs to adopt if we are to survive the coming collapse of government Ponzi schemes.

About the Author

George Ford is a former mainframe and PC programmer and technology instructor and the author of eight books and welcomes speaking engagements. Article cross-posted from Mises.