A Gilded Age Built On Debt For Modern Day Financial Aristocrats


A Gilded Age Built On Debt For Modern Day Financial Aristocrats: Fed Reports Record For Household Net Worth Only Problem Is That Most People Do Not Own Financial Assets.

The Fed recently reported that US households reached an all-time record high when it comes to their net worth.  A record $77.3 trillion net worth figure was reported with $7.65 trillion of this growth occurring over the last 12 months.  The only issue here is that most Americans do not own any financial assets.  The bulk of the gain has come from the juiced up stock market courtesy of mega Quantitative Easing.  Yet at the same time, we have a peak in food stamp usage and the real estate market is largely being driven by Wall Street speculators.  The Fed is creating a modern day Gilded Age that is favoring a very small portion of the population.  The vast majority of the population is leveraged into debt with high rates while those with premiere access continue to increase their balance sheets.  It is no coincidence that the top 10 percent of households control 75 percent of all wealth in the nation.  This is why sentiment for most households is negative.  For the majority to participate in this party they need to go into massive debt yet again to pretend they are still part of the middle class.


The rise in financial assets

The rise in net worth is largely being driven by financial assets and the mega-stock market run:

Households Balance Sheet

Financial assets make up over $60 trillion in the asset column.  Real estate is above $20 trillion but most of the recent real gains have gone to investors since they are dominating the housing market buying up single family homes to rent out or flip.  In other words, a significant extraction is happening in the real economy via the Fed’s mechanisms.

For the very poor, the safety net includes food stamps and other income tested programs.  For the middle class however, they are dealt a troubling hand of massively inflated college tuition, higher rents/home prices, rising healthcare costs, and stagnant wages:

median household income

So much for these massive gains trickling down to the public.  It is interesting to read the financial press and how they are “baffled” as to why Main Street USA is still feeling as if this were some kind of recession.  The reason of course is that there is growing divide between the connected wealthy and the rest of the country.

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