Volume 82, no. 6 June 2026
Headlines announce an “unprecedented” FBI effort to target government program abuse. The FBI is launching its new Most Wanted Fraudsters list (https://tinyurl.com/3awh2fxw).
If there is an enormous pool of “free” money, obtainable by filing a claim, thieves will inevitably descend on it. Since the very beginning of the Medicare program, government has periodically “cracked down.” Powerful new enforcement tools were created by Republicans after the proposed Clinton takeover of medicine, the Health Security Act, failed to pass Congress.
The “laboratories of democracy” began state programs incorporating many of its features (AAPS News, January 1996). Then, the brief, modest Kassebaum-Kennedy Health Insurance Portability and Accountability Act (HIPAA), advertised as a means to help employees who were changing jobs, expanded dramatically, incorporating many of the worst features proposed by Clinton. The “privacy” (access) portion has gotten the most attention, but the first part was 100 pages of “anti-fraud and abuse” provisions (AAPS News, June 1996), described by AAPS executive director Jane Orient, M.D., in the Wall Street Journal (https://tinyurl.com/4rt7v7aj).
Over the years, a few physicians were made examples and had their finances, careers, and marriages destroyed, and even spent years in prison over what might be considered a minor coding or billing dispute. All who accept insurance pay tribute to a massive compliance industry and risk being treated as a fraudster.
While physicians can be severely penalized for charging a dollar too much, even if they don’t receive it, the threshold for investigating Medicare fraud at the carrier level was $200 million in the 1980s and 90s, and there was no meaningful accountability for gross malfeasance, stated the late Theresa Burr, a former Blue Cross Blue Shield claims examiner and whistleblower (https://tinyurl.com/4ap8265x and https://tinyurl.com/4hw4urp4).
The Medicaid system, the “cash cow for managed care,” may carefully monitor doctors to be sure they don’t overcharge or treat patients without a proper referral. But all the money first passes through a contractor. In a preliminary look at Arizona’s Medicaid system, which is 100% managed care, Charles Kroll, CPA, found that over 5 years nearly $400 million that was supposed to provide medical care to the poor was funding state agencies, and contractors cleared $228 million in pre-tax profits in one year. Acknowledged administrative expenses over 5 years were about $1 billion by the state agency plus $1 billion at the contractor level (http://tinyurl.com/y768nzlc and http://tinyurl.com/y9oecq82).
The Government Accountability Office’s (GAO) investigation of Medicaid Program Integrity, checking for overpayments to providers and adherence to eligibility requirements, found that 60% of previously recommended corrective actions were incomplete or ineffective (tinyurl.com/ynznen45). Total Medicaid expenditures are around $850 billion for 70 million enrollees (tinyurl.com/ywwxzpef). How much of this pays for goods or services directly rendered to patients is an unanswerable question.
As impending doom is predicted periodically, removing waste, fraud, and abuse is touted as the remedy. However, it cannot begin to close the gap of $73 trillion in unfunded liabilities of Medicare and Social Security (https://tinyurl.com/bde6a6vu): promises made that could not be kept. A Ponzi scheme. A fraud. (See AAPS News, June 2011).
Medicare and Medicaid fraud auditors burst into doctors’ offices, disrupt care, and pore over piles of documents seeking ways to incriminate doctors. But recent news features blatant, obvious fraud, as with Somali social services in Minnesota and fake hospices in California (AAPS News, February 2026). No forensic accountant needed. Just look at the large checks and have a staffer visit the address. No SWAT team needed. Is the place open? Does it have staff? Is there evidence of appropriate activity? Are children being fed or taught or cared for? If not, why are payments not immediately terminated while an investigation begins? Is the state or local government incompetent—or complicit?
The Huge Hidden Tax
Certainly taxpayers are being defrauded if their earnings are being taken on false pretenses. But why hasn’t there been a tax revolt? One reason is that they are not conscious of the amount taken because of what has been called “the perfect crime”: Milton Friedman’s 1943 inspiration, payroll withholding. Even more ingenious, the tax “refund” makes most people feel grateful, instead of angry at the interest-free loan they were forced to provide (https://tinyurl.com/388skrhf). Many people also receive benefits, especially a paycheck from a government agency, and might well lose more than they would gain from a tax and spending cut.
In a still more devious fraud, the taxpayers—all citizens—are not paying for government largesse through immediate taxation, nor are they unloading the burden onto future taxes. The bills, for weapons, managed-care executives, foreign aid, all things whether beneficial or harmful, are paid immediately, by “borrowing.” No, we do not “owe it to ourselves.” We owe it to the bank, which created it out of nothing. It will never be repaid (AAPS News, March 2026), certainly not to “us.” Tax revenues will be used to pay interest to the bank. The fiat currency injected into the econo-my goes first to the owners of assets, diluting the value of the dollar (“inflation”)—an ever-increasing tax on everyone.
Fiat currency is a fraud. The inflation it creates is theft.
The Bretton Woods Fraud
The 1944 Bretton Woods meeting did not establish a gold standard for the dollar, only the appearance of gold backing while eliminating any mechanism to enforce it. The 44 nations gathered there agreed to peg their currencies to the dollar at fixed exchange rates, while the dollar, in turn, would remain convertible to gold at $35 per ounce. But only foreign central banks could make this exchange. American citizens had already lost gold convertibility in 1933 when Roosevelt criminalized gold ownership. The U.S. could print dollars without limit, export them worldwide, and foreign governments would treat them as equivalent to gold reserves. This created what French economist Jacques Rueff called “deficits without tears” for America. The charade lasted 27 years. By 1971, foreign central banks held $80 billion in dollar claims against America’s $10 billion gold stock. When France and other nations began demanding actual gold delivery, Nixon slammed the window shut on August 15, 1971. The architects designed Bretton Woods not as a gold standard, but as a transition mechanism to permanent fiat currency dominance under American monetary hegemony (https://tinyurl.com/2uhmzwuv).
The Federal Reserve Fraud
The Federal Reserve System, despite its carefully created deceptive name, is a privately owned central bank.
Since President Andrew Jackson had destroyed the Second Bank of the U.S., and was almost removed by impeachment because of it, the U.S. had had only state-chartered banks. His message vetoing the Bank’s renewal said it pitted “the planters, the farmers, the mechanic and the laborer” against the “monied interest,” benefiting the wealthy at the expense of the common people. After the Civil War, the National Banking Acts of 1863-1865 created a system of nationally chartered banks with significant power over the monetary system. Booms and busts and bank failures and panics occurred.
This was the background for the clandestine meeting of six men representing one-fourth of the world’s wealth at a resort off the coast of Georgia to design The Creature of Jekyll Island (first edition by G. Edward Griffin published in July 1994). The goals were to place control of the nation’s financial resources in the hands of those present; shift inevitable losses onto the taxpayers; and convince Congress that the purpose was to protect the public.
The Creature would be a true central bank with the ability to create unlimited amounts of fiat money (which is debt). The plan was not to call it a cartel (which it is) or even a central bank. It was to look like a government agency, with regional branches to create the appearance of decentralization not dominated by Wall Street. Employing university professors gave the appearance of academic approval. Anger caused by bank failures was used to stir up demand for reform. Proponents spoke against the plan to convince people that bankers did not want it. The original structure incorporating sound banking principles could be quietly altered later. The most important new feature was that bank notes were legal tender for private debts as well as public.
“унтер-офицерская вдова сама себя высекла!” [“The NCO’s wife lied to you…she’s lying, I swear to God she’s lying. She whipped herself!”]
Nikolai Gogol, The Inspector-general
Election Fraud
The initial bill to create the Creature failed. Later success depended on getting Woodrow Wilson elected President. He had said during the panic of 1907 that “all this trouble could be averted if we appointed a committee of six or seven public-spirited men like J.P. Morgan to handle the affairs of our country.” It seemed inevitable that William Howard Taft would be re-elected. Taft was not averse to the plan though he wanted more government control. But the bankers needed a champion, not simply lukewarm support.
These were the days before voting machines and vote harvesting. But it was true then as well as now that “the most practical method of getting hold of a political party is to furnish it with money in large quantities,” according to soon-to-be Treasury Secretary William McAdoo.
The bankers put their money on a third-party run by Theodore Roosevelt. Taft was portrayed as the champion of big business and Wall Street banks, as he was. So were Wilson and Roosevelt although they ran as opponents of the “Money Trust.”
Wilson won with 42% of the popular vote. He was probably elected by Theodore Roosevelt. Also entering the White House was Col. Edward Mandel House, who was described as the “Chief Magistracy of the Republic,” “the pilot who guided the ship.”
Wartime Fraud
Signing the Federal Reserve Act in 1913 was one gift to its creators. Then, in 1917, Wilson led the U.S. into World War I, months after he narrowly won re-election on the slogan “He kept us out of war.”
Getting the U.S. into the war was the only hope to save the moneyed interests who were funding the British and French war efforts. If their loans went into default, their investors would face total losses. As it appeared that the Allies were on the brink of defeat, they could not raise new capital. Using a small fleet of newly developed U-boats, Germany was about to cut them off from all outside help: an amazing feat. Between 1914 and 1918, a mere 21 U-boats had sunk 5,700 surface ships.
Ten months before the election, Col. House had negotiated, with Wilson’s approval, a top-secret agreement to enter the war on behalf of the Allies. The casus belli was the sinking of the Lusitania with 123 Americans on board. Though outfitted as a luxury liner, the ship’s under deck was carrying an enormous quantity of munitions, making it a legitimate target. The German Embassy paid for ads in 50 newspapers warning Americans not to board, but the U.S. State Department blocked publication.
Inflation orchestrated by the Federal Reserve paid 70% of the cost of World War I, Griffin states.
AAPS Calendar
Sep 24-26, 2026. 83rd Annual Meeting, Alpharetta, GA
Censorship from the Right
At the meeting of the American Diabetes Association in New Orleans, several attendees were escorted out by local and state police and barred from attending the rest of the meeting or giving a scheduled talk. Their “crime” was quietly handing out free copies of an editorial in the ADA’s own journal Diabetes Care, outside the meeting hall, prior to a talk by Richard Woychik, Ph.D., a senior adviser to the NIH director for the Trump Administration’s “Make America Healthy Again” strategy. (Woychik was substituting for Dr. Jay Bhattacharya, who had cancelled his appearance at the last minute.) The editorial criticized the Administration’s extensive cuts to diabetes research, jeopardizing ongoing multicenter trials and “dismantling” the biomedical research enterprise. It also questioned MAHA concepts that were being imposed on ADA, such as that diabetes could be cured by “changing the food source” (https://tinyurl.com/3bvat7s4).
An ADA press release claims that registrants were violating its code of conduct, though videos show no disruptive or disrespectful conduct (https://tinyurl.com/2h7t4s6b).
Louisiana State Police confirmed that intervention had been requested by ADA event organizers. The press release and an email to the ousted physician were signed by the ADA “Executive Team” (https://tinyurl.com/yc5bywuf). ADA’s $1.2 million/yr CEO Charles Henderson is thought to be responsible, but he has neither acknowledged nor denied it.
What could explain ADA’s censorship of its prominent members? It could be a classic case of “obeying in advance” or “anticipatory obedience,” an idea popularized by historian Timothy Snyder in his book On Tyranny. He notes that in shifting political climates, most of the power of an authoritarian regime is freely given up front by institutions and citizens who adapt to an expected new reality before they are even forced to.
The ADA possibly acted out of sheer anxiety about the potential consequences of allowing anti-administration literature at their conference. They were likely worried about loss of federal grants or loss of tax-exempt status: Nonprofits are hypersensitive about being perceived as overly political, which could risk their 501(c)(3) status under a hostile administration.
The event was covered in major outlets such as The New York Times, The Washington Post, and the Seattle Times.
Neither media nor academics being affected now protested against leftist censorship that harmed doctors who did not support COVID policies. They never expected that tables could turn.
Unpunished Fraud
Two federal food programs spent $656 million in Minnesota in FY21 and FY22. Prosecutors allege they produced invoices for 91 million meals that were never served, ran shell companies, laundered money, indulged in passport fraud, and accepted kickbacks. Only Aimee Bock, co-founder of Feeding Our Future, and affiliates have been prosecuted. Bock was sentenced to 41 years in federal prison. Her former partner, Kara Lomen, who has a similar non-profit, Partners in Quality Care, also received about $200 million in funds, but she has not been arrested or charged. Nor has anyone in the state agencies who turned a blind eye to the frauds and possibly received kickbacks (https://tinyurl.com/7n62vfsv).
Summary Lessons
- With fractional reserve banking, banks face failure if too many depositors demand their funds at once. The Federal Reserve is the “lender of last resort,” i.e., has unlimited ability to create money.
- Goods and services of real value are sold to pay the compounding interest on the debt so created. The real economy is perpetually strained to generate physical value to service a purely mathematical/illusory construct (interest on digital ledger entries).
- The earnings and savings of all Americans are eroded through inflation, an invisible, unlegislated, highly regressive tax.
- The newly created money enters the economy through the institutional “moneyed class,” which buys up scarce tangible assets before prices go up. By the time it filters down to the average citizen, it has lost value, the Cantillon Effect (https://tinyurl.com/5xdh8xcr).
- This process of converting the people’s real wealth into financial assets is the cause of today’s vast wealth disparities.
- The consequences of natural law, as reported in Andrew Dickson White’s 1876 book Fiat Money Inflation in France, cannot be averted despite modern technocratic sophistication. Prosperity cannot be printed, and a debt saturation wall is eventually reached.
The U.S. Constitution on Money
According to Article I, Section 8, Clause 5: “[The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; ….” Article I, Section 10, Clause 1 prohibits the States from coining money. The Legal Information Institute of Cornell Law School summarized relevant Supreme Court decisions (https://tinyurl.com/j7men23c).
Inasmuch as “every contract for the payment of money, simply, is necessarily subject to the constitutional power of the government over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with reference to that power,” the Supreme Court sustained the power of Congress to make Treasury notes legal tender in satisfaction of antecedent debts (Knox v. Lee , 1871; Julliard v. Greenman, 1884).
It held that Congress may require holders of gold coin or gold certificates to surrender them in exchange for other currency not redeemable in gold (Nortz v. U.S., 1935).
The Court also upheld Congress’s authority to abrogate clauses in pre-existing private contracts calling for payment in gold coin (Norman v. Baltimore & Ohio R.R., 1935), but not in obligations of the U.S. government, as the latter would make government contracts “mere illusory pledges” (Perry v. U.S., 1935).
Tip of the Month. The uninsured population is sharply increasing. Rising insurance premiums, which may exceed mortgage payments, and deep federal cuts in Medicaid are contributing factors. The result will be 41 to 42 million Americans, or roughly 12% of the population, who will need to pay cash for medical care by 2030. Direct Primary Care (DPC) clinics are expected to grow during this period from an overall valuation of $75 billion today to $95 billion by 2030. While there are now no federal tax penalties for being uninsured, CA, NJ, MA, RI, and DC still impose their own penalties, which can be quite steep.
Correspondence
MSCE on Vaccine Policy. The current president of the Medical Society of the County of Erie, pediatrician Dr. Michael Terranova, notified members of the “disturbing development” of changes to the U.S. childhood immunization schedule that reduces the number of routine shots.
I have received no reply to my letter to MSCE about the disturbing development I have seen in the AAP lawsuit. AAP stated that “…members have suffered financial harm that “includes engaging in SCDM [shared clinical decision making] conversations without compensation… [thus] being able to see fewer patients per day due to the increased amount of time spent with patients discussing vaccines.” Isn’t talking with patients and answering their questions what physicians should be doing? All clinical practice should involve “shared decision making.”
Lawrence R. Huntoon, M.D., Ph.D., Eden, N.Y.
Monumental Bubble. When Alan Greenspan took the helm at the Fed in 1987, he promptly activated its printing presses like never before. Since then, the dollar has lost 66% of its value. Since 2010, nearly $60 trillion of added market cap has been generated. We now truly have a financial bubble of biblical proportions. The Fed has generated a massive distortion of both wealth holdings and current total incomes, skewing it to the top of the economic ladder like never before. The top 2% of US households now account for 55% of total stock holdings and 25% of the $22 trillion of total personal consumption spending. The potential stock market losses would cause the entire US economy to go into a thundering tailspin.
David Stockman’s Contra Corner 5/28-29/2026
County Sues over ACA Rule Changes. Pima County, Ariz., is the first county to file a lawsuit against HHS over changes to ObamaCare. Arizona is already part of a multi-state lawsuit over ACA changes, and a separate case includes cities and health agencies. Those cases allege that the Trump Administration violated the Administrative Procedure Act in changing the open enrollment period and adding pre-enrollment requirements, among other complaints. ACA made a bad situation even worse. The amount of waste and fraud is staggering, yet it is a big driver of the American economy, especially in a city like Tucson with a high poverty rate. Much of the new construction here is for health facilities, as the result of the money sloshing around from Medicaid, Medicare, ObamaCare, and federal mandates on employers and private insurance plans. For example, insurers and individuals are being billed tens of thousands of dollars by shady operators for such autism “treatments” as reading to children and doing puzzles with them. My wife and I do that for free.
Craig Cantoni, Tucson, AZ
Keynes on Inflation. In 1919, Keynes wrote that inflation acts as “the most important method for diminishing the burden of debt” and allows governments to confiscate wealth “arbitrarily.” He called this theft “progress toward the managed currency of the future.” He openly admitted that central banks exist to rob savers through currency debasement. He bragged that inflation transfers purchasing power from workers to debtors (especially governments) while most people remain “completely ignorant” of the process. Not one person in a million, Keynes wrote, can diagnose the disease. Today the Fed runs 2% inflation targets while wages stagnate and housing costs explode. Powell prints trillions for banks while grocery bills double. The playbook scales larger with each cycle.
Handre, https://tinyurl.com/2fh2cfes
Entitlement Fraud. The Government Accountability Office (GAO) has confirmed that federal government programs paid out hundreds of billions of dollars of undeserved benefits to criminal organizations and other opportunists over just five years (https://tinyurl.com/2wa22fv7). It’s not just Medicare and Medicaid, but many other programs. Little effort is made to verify eligibility. Those who dole out money don’t care whether money goes to criminal fraudsters. It’s not theirs, and they have a comfortable sinecure that is dependent on the give-away program.
John Dale Dunn, M.D., J.D., Brownwood, TX
Health Insurance Death Spiral. Health systems make their money through inflated commercial real estate, sale of patient health information, consolidation of supply chains, and kickbacks in exchange for redirecting federal dollars. Absent a tiny sliver of procedures, the delivery of care itself is a loss leader. It is a requirement for entry, not a source of value.
After the ACA, the insurer’s only cash cow was the immensely overfunded and fraud-filled Value-Based Care Medicare and Medicaid programs such as Medicare Advantage.
The ACA itself is in a death spiral. Envisioned as a universal mandatory risk pool, so many exceptions have been made that only the sickest and those who have no choice get their care there, the former being subsidized by the latter, the government, and ever dwindling coverage. Non-participation will be its end.
Healthcare in its current extractive-cartel form will bankrupt the nation all by itself.
Charles Hugh Smith, https://tinyurl.com/2eynvjyf
