Wealth in US Greatest Ever, But Enjoyed Mostly by 1%
|June 20, 2014||Posted by Jeffery J. Smith under Inequality / Concentration|
This 2014 excerpt is of the AP, Jun 5.
Rising stock markets and home prices helped lift U.S. household wealth to a record in the first three months of the year.
The Federal Reserve says household net worth increased $1.5 trillion in the first quarter to $81.8 trillion. The gain was driven by higher home prices, which boosted Americans’ home values $758 billion. A rising, if choppy, stock market pushed up stock and mutual fund holdings $361 billion.
Checking account balances, pensions plan assets and retirement savings, such as 401(k)s, also rose.
The Fed’s figures aren’t adjusted for population growth or inflation. And the wealth is flowing mainly to affluent Americans: Roughly 10% of households own about 80% of stocks.
Since the first quarter ended, stock and home prices have risen further, boosting household wealth even higher.
Ed. Notes: They admit that just because total wealth is up doesn’t mean distribution is any better. Otherwise, fundamental errors are grave — paper wealth is real wealth; a higher price for your home doesn’t mean you have more home or appliances or cars or computers. You would have to sell your home, and somebody would have to pay you that higher number, to buy more wealth … but then you would not have a home. If you want one, and with homes being more pricey, how can you come out ahead? You could borrow against your higher-assessed home, but then you’d be in debt … which might not make you happy but sure would please the banks.
You could sell the higher-valued stocks for more than you paid for them and buy stuff. Then you’d have real wealth. Real wealth is not numbers on paper, black figures on a white background, as the Federal Reserve and economists and business press want you to believe. Real wealth is real goodies and services that you can consume.
They also leave out workweek vs. leisure. How much time does it take you to grow your paper wealth? And which makes you healthier? Wealth or free time?
The main thing they leave out is: none of this “increase in wealth” is earned by any individual. If you can sell your house-plus-land for more, it’s because other people can pay more or newcomers are moving in and driving up the price. Those are things the buyer has done, not the seller. If you can sell your stocks for more, that’s because of the Fed pumping trillions into the economy, inflating the price of assets. It might also be due to corporate welfare, depending on the stock.
You know what economic news would be truly uplifting? Headlines blaring that the workweek is shrinking while the standard of living is rising. That the impact on the environment is shrinking, along with the cost and size of government, too. Once the economy works right for everybody, automatically, then we can lock the hood on the economy and forget about it. But to get there, first we have to adopt geonomics.