Household Net Worth (assets less liabilities) has become a focal point of my Macro Credit Analysis. For the quarter, Household Net Worth inflated another $1.342 TN, or 7.3% annualized, to a record $74.821 TN. At 449% of GDP, Household Net Worth is within striking distance of the record 470% of GDP back at the 2007 peak of the mortgage finance Bubble. Over the past year, Household Net Worth jumped $7.690 TN, or 11.5%. Net Worth rose a notable $13.388 TN, or 21.8%, over two years. In arguably the single most pertinent macro data point, Household Net Worth has surged $17.607 TN, or 30.8%, since the end of 2008.It’s worth our time to dig just a little into the composition of Household Assets. At the end of Q2, Financial Assets accounted for 70%, and Non-Financial Assets 30%, of Total Assets. This compares to a 65%/35% split at the end of 2008. In nominal dollars, Financial Assets increased $15.237 TN, or 33%, since 2008, while Non-Financial Assets gained $1.684 TN, or 7% to $26.516 TN (Real Estate, at $21.123 TN, comprises about 80% of Non-Financial Assets).Even more striking is the growth divergence between Household Financial Asset categories since 2008. In particular, safer “money”-like holdings have notably lagged the historic expansion in “risk assets.” Total Deposits (bank and money market), the bedrock of perceived safe and liquid “money,” increased $982bn since the end of 2008, or 12%, to $9.026 TN. Treasury holdings rose about a Trillion to $1.2 TN, and agency securities increased $597bn to $1.65 TN. In total, deposits, Treasuries and agencies rose $2.58 TN, or 28%, to $11.865 TN.Meanwhile, since ’08 Household holdings of mutual funds and equities have surged $10.640 TN, or 85%, to $23.191 TN. Pension Fund Entitlements jumped $4.675 TN, or 33%, to $18.737 TN. It’s no longer true that American households have the majority of their wealth in savings and real estate. These days, and much the product of experimental monetary policy, Household perceived wealth is wrapped up in the risk markets.
(bold mine)
This perspicacious quote is from Credit Bubble Bulletin author Doug Noland at the PrudentBear.com
This is a striking observation on the deepening dependence of US household on the inflation financial assets as a source of “wealth”, as indicated by the data from the US Flow of Funds.
The so-called gains on prosperity of US households have less been from value added real economic activities but from increased speculation and of the sustained inflation of asset prices which alternatively means that US households have been imbuing more market risks in response to the FED’s grand experimental bubble blowing policies.
More importantly or more tellingly, this reveals of the US Federal Reserve’s direction of policy making or why the orgy of inflationism will remain as main instrument to bloat up artificial wealth.
Yet the bigger the boom, the greater the bust.
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I present three ideas.
First, Jesus Christ acting in Dispensation, that is in oversight of all things economic and political, has fully completed Liberalism as an age of investment choice powered by credit and carry trade investing, by expanding fiat wealth to an unprecedented level, as Doug Noland relates in Safehaven.com article, The Federal Reserve has created a massive Bubble of risk assets. "Since since ’08 Household holdings of mutual funds and equities have surged $10.640 TN, or 85%, to $23.191 TN. Pension Fund Entitlements jumped $4.675 TN, or 33%, to $18.737 TN. It’s no longer true that American households have the majority of their wealth in savings and real estate. These days, and much the product of experimental monetary policy, Household perceived wealth is wrapped up in the risk markets. Those of a bullish persuasion would argue these dynamics confirm the underlying strength and stability of the U.S. economy. I’ll counter with the view – one supported by Fed data – that massive federal deficits and Federal Reserve monetization have created unprecedented and deeply systemic financial and economic distortions".
In the age of authoritarianism, physical possession of gold bullion, and diktat will be the only forms of sovereign and thus sustainable wealth.
Second that The No Taper Rally of September 18, 2013, in World Stocks, Major World Currencies, DBV, and Emerging Market Currencies, was Liberalism’s peak event, which terminated the Creature Jekyll Island and birthed the Beast Regime of Revelation 13:1-4, and pivoted the world from a policy of investment choice ... consisting of credit schemes, such as, free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, dollarization, financialization of stocks and ETFs, such as corporate bonds which convert into stocks, all of which created capital for corporations to operate and revenue for governments to operate ... to a policy of diktat ... consisting of debt servitude schemes, such as, regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, austerity measures, and statist vitalizations where banks and other corporations are given charter to operate as public private partnerships for regional economic security, regional stability and regional sustainability.
Three, Liberalism was defined by what Doug Noland terms wildcat finance, where bankers of all types fiercely outdo one another to generate the greatest investment gains, and where Ben Bernanke fathered credit easing.
Authoritarianism, on the other hand, is defined by what I term wildcat governance, where leaders bite, rip and tear one another apart in their struggle to become top dog leader, and where Angela Merkel fathered debt servitude with Greek Bailouts I, and II, and she in calling for More Europe, laid the groundwork for a soon coming One Euro Government, a United States of Europe, characterized by a deficit of democracy.
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