It's official: world's most powerful financier calls the Obama-Pelosi-Reid spending spree the most brazen Ponzi scheme ever

Since Nancy Pelosi took over the federal purse-strings in 2007 and promised 'no new deficit spending', the Democrats have added $5 trillion to the national debt.

And investor Bill Gross believes America's debt-financing days may be nearing an end. Only he doesn't say it that nicely.

One more thing: Gross runs Pimco, the world's largest bond house. It oversees assets totaling more than $1 trillion. Yes, with a 't'. So he is arguably the world's most powerful financier.

Wednesday is the day when the Fed will announce a renewed commitment to Quantitative Easing – a polite form disguise for 'writing checks.' The market will be interested in the amount (perhaps as much as an initial $500 billion)...

...the American people should recognize that Wednesday, even more than Tuesday, represents a critical inflection point in determining our future prosperity. Of course we’ve tried it before, most recently in the aftermath of the Lehman crisis, during which the Fed wrote $1.5 trillion or so in “checks” to purchase Agency mortgages and a smattering of Treasuries. It might seem a tad dramatic then, to label QEII as "critical," ...

...Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic. Granted, the U.S. has, at times, paid down its national debt, but there was always the assumption that as long as creditors could be found to roll over existing loans – and buy new ones – the game could keep going forever...

Now, however, with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further... One and one-half trillion in checks were written [by the Fed] in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time...

...The Fed wants to buy, so come on, Ben Bernanke, show us your best and perhaps last moves on Wednesday next. You are doing what you have to do, and it may or may not work. But either way it will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.

Which is precisely why we must elect Constitutional conservatives -- who will stand for limited, fiscally responsible government.

We must slash the unconstitutional federal bureaucracies, we must outlaw public sector unions, and we must begin spending within our means.

But we must start on Tuesday. If not, I fear the great American experiment may be near its end.