With the world in financial meltdown, the G-20 power brokers smiled and told us it will all be okay. With cameras flashing, they said they were committed to working together to solve the economic crisis. They spoke of the promise of a reversal of fortunes. They called this summit a turning point.

And so, the world hopes that this turning point is different than all the other turning points that have come and gone without a sign of improvement. Another 663,000 American jobs disappeared in March, which means 5 million American jobs and over 20 million global jobs gone, since the recession began. Will the G-20 really reverse that trend?

The G-20’s big decision was to end “the era of banking secrecy.”

Its timing couldn’t have been more ironic. As the world focused on the summit and its proclamation to end banking secrecy and its accompanying corruption, the United States Financial Accounting Standards Board issued a new rule that sent U.S. banking transparency back to the Dark Ages. It’s a turning point of a very corrupt, dishonest kind.

Under the old, more enlightened rules, when banks reported what their investments were worth, they had to do so based upon what they could actually sell those assets for in the marketplace (what they were actually worth). It was called “mark-to-market” accounting. This system was designed to keep banks honest and protect shareholders and depositors.

The rules have changed. Under the new laws, banks no longer have to mark-to-market their assets.

For example, if a bank owns a bundle of mortgages, instead of reporting what those mortgages are actually worth if it were to sell them today, the bank is allowed to report their value based on what it thinks the bundle of mortgages will be worth in the future. The same goes for undefined trillions of risky speculative derivatives positions and other exotic assets.

But banks have no better idea what their investments will be worth in the future than you or I do. If they did, they would not have issued all the risky subprime mortgages in the first place, and Bear Stearns, Lehman Brothers, Merrill Lynch and Washington Mutual would still be with us today.

This is “marked-to-make-believe.”

Compare this new accounting method to how the federal government “balances” its budget, and all the senselessness begins to make sense.

For instance, the president says, By this date we will have a balanced budget. But the reality is: The budget will be balanced only if the economy grows at this hoped for pace, if the stock market grows at this hoped for pace, if politicians don’t decide more handouts are needed to usher in votes beyond this hoped for amount, if China keeps buying our bonds at this hoped for rate, if billions more dollars are not needed to stimulate some other sector of the economy, if the inflation rate stays above this hoped for rate, if wars go according to budget, etc.

And we know how many times the government has followed through on balancing the budget. To be exact: not once since 1957.

The real reason the big banks persuaded the government to change the accounting rules is so Wall Street can pretend it’s solvent. Thus, America‘s economic problems will go away, and everything can get back to normal.

But the reality is that regardless of paper accounting tricks, America’s banking core is rotten. Banks owe more money than what their assets are worth. The rule change may let the big banks hide their sickness, but it doesn’t change the fact that they are dead or dying.

Instead of quarantining the banks, the new rules let them go about business as usual—allowing them to pretend that residential property prices weren’t down 19 percent in January from one year ago, and that commercial real estate like the John Hancock Tower in Boston wasn’t just sold on the auction block for half of what it was worth in 2006. But pretending to be healthy doesn’t cure the disease, and it certainly doesn’t reduce the risk of transmission to the general population. Consequently, the danger of the whole system becoming more deeply infected has just gone way up.

The problem facing banks has nothing to do with onerous accounting procedures, as politicians and Wall Street bankers would have you believe. That is a gross misdiagnosis. What is really destroying America’s biggest financial houses is broken trust.

America’s economic system is a fiat system built on trust. In a fiat system, currencies are not backed with tangible assets; they are backed by confidence—confidence that the government will act responsibly, confidence that the government will honestly pay its debts (not just print more money), and confidence that the currency will remain a store of wealth.

Business in America is no longer conducted with trust either. Gone are the days of handshakes sealing deals. A person’s word counts for very little in most cases. Everything must be signed on the dotted line—and even there, there are lies. That is why accounting regulations that force people to be accurate (honest) are an integral part of the economy. This is especially true in high finance, where banks can exist as viable businesses only if they maintain the trust and confidence of their depositors and business partners.

Far from helping America overcome its economic crisis, this new marked-to-make-believe world adds one more crack in the trust the world places in America. That is something America can ill afford.

“The U.S. economy, once the envy of the world, is now viewed across the globe with suspicion,” wrote Hamid Varzi in 2007. “America has become shackled by an immovable mountain of debt that endangers its prosperity and threatens to bring the rest of the world economy crashing down with it.

“The ongoing subprime mortgage crisis, a result of irresponsible lending policies designed to generate commissions for unscrupulous brokers, presages far deeper problems in a U.S. economy that is beginning to resemble a giant smoke-and-mirrors Ponzi scheme.”

Is it any wonder that while at the G-20 summit, as America was trying to get other countries to borrow and spend money they don’t have to solve the economic crisis, the European Union was instead pushing for more regulation and oversight of the financial system? The EU is making it clear that it doesn’t want to tread the same path as America.

America’s “faith based” economic system, like the other flawed economies of this world, requires a massive overhaul. Trust, honesty, integrity and reliability are the pillars of a sound economy and society. Without these character traits in the leaders and populace, the economy corrupts itself—then dies.

Look at history objectively. Moral breakdown (dishonesty, greed, selfishness, theft, fraud, corruption) directly precedes economic breakdown. It is no different today. The G-20 leaders were right. The world is at a turning point—just not in the direction they think. Despite political promises and sweeping claims, the fundamentals of our economies are unsound and need to be completely replaced. In the meantime, the job losses are just beginning.