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The Federal Reserve today released wealth distribution data for the first quarter of 2021. This proves the effectiveness of the Fed’s monetary policy in widening the huge gap between rich and poor that has been unimaginable in the United States. The Fed’s data covers 1%, the next 9%, the next 40%, and the bottom 50% of household wealth. The bottom 50%-half of the U.S. population-are poor, and they are not even registered on my “wealth-per-household monitor” because they do not have enough money.
1% of the 126 million US households (that is, 1.26 million households) are the main beneficiaries of the Fed’s actions. At the end of the first quarter, their total wealth was US$41.5 trillion, with an average of US$32.9 million per household. In the past 12 months, the wealth of each of their families has increased by $7.9 million.
The “next 9%” of the wealthiest households with an average wealth of US$4.3 million have increased by US$708,000 per household in 12 months. “The next 40%” has an average wealth of US$725,000 per household and a wealth of US$98,000.
At the top of the list are the 30 richest American families. From Bezos to Icahn, Musk ranks second. According to the Bloomberg Billionaires Index, the total wealth of these 30 families is US$2.0 trillion, and the average wealth of each family is US$67 billion. They are the absolute winners of the Fed’s monetary policy.
The bottom 50% have basically no stocks. Only a small percentage of them own real estate, and they own very little equity in the real estate. But they have a lot of debt. Not only is the bottom 50% not bypassed by the Fed’s wealth effect—they must also pay for it at a higher cost.
The average wealth of each of their families is US$42,000, which includes durable goods such as cars, TVs, washing machines and mobile phones. In the past 12 months, their wealth has only increased by $10,000, most of which is not from the Federal Reserve, but from the government’s stimulus funds. They save, pay off credit cards or use them for durable goods.
In the bottom 50%, there is also a big difference. High-end families may own an ordinary house, and they can barely pay a large mortgage, a small 401k, plus a beautiful car and other durable goods, minus car loans, student loans, and credit card debt. Those are the lucky ones at the bottom 50%. But this category also includes the poorest of the poor.
The chart below shows the wealth of the bottom 50% (red line) under the “next 40%” (green line) scale. The “wealth” of the bottom 50% has only increased by $14,000 in 20 years, regardless of inflation, of which $10,600 occurred in the past 12 months, thanks to stimulus payments.
The bottom 50% of “wealth” consists of $122,500 in assets minus $81,000 in debt. Mortgage debt used to be the largest part of debt, but consumer debt—credit card debt, car loans, and student loans—surpassed mortgage debt in 2018:
The real estate at the bottom 50% is the largest asset, at $61,500 per household (the black line in the figure below), mortgage debt is $39,000, and the home equity is $22,500. This means that relatively few households in the bottom 50% own real estate. On average, the real estate income of these families is $3,000.
When the Fed’s wealth effect policy inflates the real estate market, most people in the bottom 50% will not benefit at all because they do not have houses. But they are paying for the wealth effect because their costs, including rents, are rising.
Durable goods are the second largest category among the 50% of the lowest income group, at US$24,000 per household, such as vehicles, electrical appliances and mobile phones (green line). In the past 12 months, people have used government subsidies to buy cars, which has increased by 2,500 Dollars and other things.
Stocks and mutual funds are the smallest category of assets, with only $1,356 per household (red line). The bottom 50% simply cannot benefit from the Fed’s efforts to push the stock market higher. This is reserved for the top 10%:
The doctrine of the “wealth effect”-making the rich richer, letting them spend a little more money, the ultimate version of trickle-down economics-has long been the official basis of the Federal Reserve’s monetary policy and has appeared in many Federal Reserves. Including Janet Yellen’s paper when he was chairman of the San Francisco Federal Reserve Bank. In 2010, Ben Bernanke, chairman of the Federal Reserve, explained this concept to the American people in an editorial in the Washington Post. In March 2020, Federal Reserve Chairman Jerome Powell (Jerome Powell) wisely chose not to use the term “wealth effect”, but instead proposed his own terminology, raising the wealth effect to the most wonderful level ever, just like you The green line in the figure shows the first chart.
The population of the United States has been growing for many years. According to the Census Bureau, there were 126 million households in the United States in the first quarter, up from 105 million households in 2000. By definition, all categories have grown in these 20 years. So yes, over the years, 1% of households have added 210,000 households, Hallelujah. But the bottom 50%-the poor-added 10.5 million households.
In the 12 months ending in the first quarter, the wealth of 1% of households increased by $7.9 million. The wealth of the bottom 50% increased by $10,600. The wealth gap between them has widened by US$7.9 billion.
In the past 30 years, the wealth gap between the 1% and the bottom 50% has widened six times, from 5 million US dollars per household in 1990 to nearly 33 million US dollars now, a large part of which is in the past 12 months. Thanks to the tireless policies of the Federal Reserve:
This is a shocking but completely accepted result of the Federal Reserve’s monetary policy. No one is even allowed to question it. It’s accepted because the top 10% like this, including members of Congress, they can actually do something about it, and because the bottom 50% don’t know about it, and don’t understand what the Fed has done to them What, and is busy surviving the nightmare of this gap.
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“This is evidence that the game has been manipulated. Even if you work 26 hours a day and only eat ramen and water, you still can’t get close to this increase in personal wealth”
The Fed has eliminated the ability of people to achieve some kind of financial stability by saving themselves…this is usually the first step. Saving is going backwards, starting in 2009… This is ridiculous! Savings are over. The possibility of owning the first house is very small. Investing in reasonably priced stocks… The Fed misrepresented everything they touched…
Historically, the interest rate at this time in history should be above 5%, because any hemi-brained investor or saver knows that over time, he or she must beat the annual inflation rate to truly lead. When a rebellious government agency is allowed to artificially set an interest rate far below the actual inflation rate, add a minimum of 30% to the reported CPI to get close to this point, and various types of changes will appear in the U.S. economy. difference.
When anyone with an accounting background looks at the data and charts above, he or she realizes the weakness of the Federal Reserve data from the beginning. So-called assets such as real estate and stocks/bonds are not locked in prices, but vary greatly with the ebb and flow of their respective markets. I have always said that when considering net assets, these variable assets need to be cut to reflect their ability to move south and north.
Similarly, automobiles, electrical appliances, and mobile phones are depreciating assets, which can only be priced at current market value rather than cost.
Ah, but on the debt side of the net worth equation, the combination of mortgage, auto loan, personal loan, student loan, and credit card debt is a certain amount. It will not go away, forget the bull market nonsense of this illegal debt suspension payment just experienced, when the asset side of the equation returns to its historical average price appreciation rate (through a bear market or, for that matter, a crash).
The bubble always bursts. When the last fool shoots his or her ball in Powell Casino, other players inevitably start pressing the “sell” button and figuratively rushing towards the exit. Bitcoin and other Crypto-Cruds are perfect examples of exhaustion from buying at high prices.
Anyone with ten dollars can buy stock commissions for free. Even with 8% or 10% annual earnings, blue-collar investors can hardly keep up with inflation. For 50% of people without assets, inflation is different. If you play down equity in this renewable energy market, then you are doing well by yourself. Renewable energy is still the real wealth effect of the public, which is good. The Fed is advertising capitalism so that the United States can continue to drain the world’s talents. If we don’t let Chinese talents drain now, then there will be a problem. Next we have a small war, and then you know that all the best Chinese scientists are in our laboratory. At the same time, the paranoid rich are going to New Zealand or Singapore, where they write poisonous pen letters to their families. They are absolutely certain that the United States will become Scandinavia. Once you become rich in the United States, no one will bother you. They have never noticed that the revolving door can only go one way, but they realize that patriotism serves the poor. Then, the poor shake things up from time to time.
Astor, Vanderbilt, Morgan, Rockefeller, Carnegie, Frick, Fisk, Cook, Duke, Hearst, Mellon, to name a few.
The only time I think of rich people putting the country above their own interests is during the founding era. Washington, Jefferson, Madison, Hancock, Adams, Franklin, etc. are all rich people who risk their lives and wealth.
It didn’t last long. The new republic needs funding. It requires investors to buy its bonds. Thanks to Hamilton’s efforts, the US financial industry has been welcomed by foreign investors. But surprises, surprises, surprises, as the great Gomelpel often said, people who come to the market first, people with significant wealth get the goods, especially in the Northeast. There is great favoritism, and favoritism is aimed at wealthy cronies. It kind of makes you support Aaron Burr.
As far as I know, none of the descendants of the families you mentioned are billionaires. You will not find any DuPont or Ford on the Forbes 400 list. In fact, many of the richest people in the country today have a fairly ordinary middle-class background, but they take advantage of existing opportunities. Some are downright poor. One of my business school classmates used to wear military uniforms in almost every class. He retired with a fortune of hundreds of millions of dollars.
We have leaders from elite families who put the country first during World War II. Look at this member of the Roosevelt family:
https://www.historynet.com/teddy-roosevelt-jr-the-officer-who-stormed-normandy-with-nothing-but-a-cane-and-a-pistol.htm
Can you imagine anyone in the *any* family of our corporate or political elite landing in Normandy?
Hancock is not behind the Boston Tea Incident, because will this shipment compete with his tea?
Except for your point of view, why is there no statue of Thomas Paine? After he convinced the poor that things would be different and encouraged them to fight, suffer and die for the difference, why did his name become dirt?
We did not have a “revolution”, we just changed the management. I seriously suspect that Hancock spends most of his time drinking tea, and some rich people are like that. Seek opportunities for more wealth, as Anon 1970 described… hundreds of millions, eh? I think this is not an article to dump these nonsense.
I hope I can find your comments on our “selected government organizations”. It is very good and very relevant.
How ignorant and superficial it is! History (and historiography, I might add…) is just one of the many disciplines we study in an effort to find out many problems/problems/mysteries in life, including the very common concept of “humanity” (Although I doubt whether there is a class inside…too vague). Cultural beliefs/values/ethics or our own primitive biology? The “innate/nurture problem” that is always avoided! Sadly, some people just cannot accept the unknown mentally and follow other people’s dietary guidelines, or are taught long before they have a say in their lives.
This sentence does somewhat imply that you have a place in the status quo, pecking order, Wolf’s chart, etc., but…
The ancient Greeks (the source of most of our core “ideas”) endlessly debated “what is a good life”. They don’t believe that any “humanity” is fixed. Why should we do this?
Put me in the NOT column and people at the bottom, even though I am not as bad as most people. It must be dealt with, just like climate change and our current definition of “good life”.
I’m thinking of a barbell strategy-a long pitchfork and noose on one end; shackles and white bread on the other. You don’t know which way we will go, but we know it will be extreme.
There is still a problem, mobile phones are listed as assets and considered part of personal wealth. It’s a mobile phone
Post time: Jul-16-2021