Yesterday, the mainstream media whooped and shrieked over the tough sentence handed down to swindler Bernie Madoff. “Madoff got what he deserved,” wrote the columnists. “Mr Madoff’s crimes were extraordinarily evil,” said Judge Denny Chin, who also told the jury that Madoff’s pyramid scheme was “staggering” and “off the chart.”

Nobody seemed particularly interested in the far greater scam being pulled off on a daily basis by the US government (a scam that, incidentally, pays for Judge Chin’s salary and Madoff’s stay in the “big house”).

But it’s clear to us here at Notes at least that the government’s $15 billion a day borrowing habit dwarfs Madoff’s $65 billion Ponzi scheme.

As of June 18 2009, total US federal debt was $11,342,734,351,973 –  or about $36,989 for every American. This represents 82.5% of one year’s worth of US economic output as measured by GDP. President Obama’s 2010 budget estimates that total debt relative to GDP will rise to 97% by 2010 and stabilize at approximately 100% thereafter.

In other words, this borrowed money cannot be paid back. It is mathematically impossible – even if income taxes rose to 100%, which itself is impossible. Just paying the $260 billion in interest owed on the national debt (just over half what the government spent on defense last year) requires further borrowing. And the more the government borrows, the more it needs to borrow to pay off the interest owed.

It’s a generational Ponzi scheme of truly epic proportions. And one as sure to end in tears as poor old Bernie Madoff’s.

We’d also love to hear from Team Obama what the difference  is between the Madoff fraud and Social Security is. The answer, of course, is coercion. This from Paul Kasriel of Northern Trust (Hat tip, The Business Insider):

Both depend, or in the case of Madoff, depended, on being able to get new contributors into the scheme in order to pay off the previous contributors. The Social Security Administration has the power of the law to force new contributors into its scheme. Madoff did not have the power of the law to force new contributors into his scheme, therefore, he has been accused of breaking the law. Just another example of how it’s good to be the king.

The mainstream media was also strangely silent yesterday on the role Wall Street insiders played in legitimizing Madoff’s scam.

Many big finance insiders knew all too well that Madoff was a crook. Madoff’s returns were simply too good to be true. That’s why they invested in him. Problem is they thought he was inside trading, not a Ponzi scheme. This from ClusterStock.com:

For years and years I’ve heard people say that [Bernie's] investment performance was too good to be true. The returns were too steady – like GE earnings under Welch – and too high given the supposed strategy.

One Madoff investor, himself a legend, told me that Madoff’s performance “just doesn’t make sense. The numbers can’t be straight.” Another sophisticated Madoff investor actually went through trade confirms in order to reverse-engineer the strategy and said, “It doesn’t add up.”

So why did these smart and skeptical investors keep investing? They, like many Madoff investors, assumed Madoff was somehow illegally trading on information from his market-making business for their benefit. They didn’t consider the possibility that he was clean on that score but running a good old-fashioned Ponzi scheme.

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