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Record 71% Of Household Net Worth Is In Financial Assets

Tyler Durden's picture




 

Another quarter down, and another $3 trillion in net worth added.

On the surface, the increase in household net worth to a record $80.7 trillion is good news. The problem is that with $2.5 trillion of thie $3 trillion purely thanks to an increase in financial assets, which as has been made quite clear over the past several years, benefit only the 1%, what the lede should say is "another quarter down, another $3 trillion added to the net worth of America's richest." Put another way: of the $94.4 trillion in total assets (gross, not excluding $13.8 trillion in household liabilities), a record 71% or $66.9 trillion, is in financial products. And now you know why the Fed can not possibly allow any hiccups on the road to trickle down Fed balance sheet nirvana. If only for the 1%.

The breakdown of the household balance sheet by quarter based on the just released Z.1 Flow of Funds statement is shown below.

A snapshot of the household balance sheet as of Q4.

 

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Thu, 03/06/2014 - 14:17 | 4517649 alien-IQ
alien-IQ's picture

Mission Accomplished.

Thu, 03/06/2014 - 14:18 | 4517650 Gringo Viejo
Gringo Viejo's picture

My guess...not for much longer. Dollar dump is on.

Thu, 03/06/2014 - 14:25 | 4517707 nightshiftsucks
nightshiftsucks's picture

And then the market will go up even more.

Thu, 03/06/2014 - 14:37 | 4517774 TruthInSunshine
TruthInSunshine's picture

If you have any doubts that the entire U.S. Economy (as well as those of most EU nations as well as Japan & China) are complete illusions, wonder no more.

But seriously, when companies such as salesforce.com & priceline are "the wealth" of nations, what could possibly go wrong?

Hey Janet ...

...Now pump it!

ha ha
Pump it
Ha ha ha
And pump it (louder) [4x]

Turn up the radio
Blast your stereo
Right

Niggas wanna hate on us (who)
Niggas be envious (who)
And I know why they hatin' on us (why)
Cause that's so fabulous (what)
I'ma be real on us (c'mon)
Nobody got nuttin' on us (no)
Girls be all on us, from London back down to the US (s, s)

We rockin' it (contagious), monkey business (outrageous)
Just confess, your girl admits that we the shit

F-R-E-S-H We (fresh)
D-E-F, that's right we def (rock)
We definite B-E-P, we reppin' it
So, turn it up (turn it up) [3x]
C'mon baby, just

Pump it (louder) [6x]

And say, oh oh oh oh
Say, oh oh oh oh
Yo, yo

Turn up the radio
Blast your stereo
Right now
This joint is fizzlin'
It's sizzlin'
Right!

Thu, 03/06/2014 - 14:54 | 4517906 adr
adr's picture

I prefer

LET'S GET RETONERED IN HERE

LET'S GET RETONERED HA

Thu, 03/06/2014 - 15:03 | 4517930 TruthInSunshine
TruthInSunshine's picture

I should have gone with Radiohead or The Pixies -

--Reckoner--

You can't take it with you
Dancing for your pleasure

You are not to blame for
Bittersweet distractors
Dare not speak its name
Dedicated to all human beings

Because we separate
Like ripples on a blank shore
In rainbows
Because we separate
The ripples on a black shore

Reckoner, take me with you

Dedicated to all human beings

--Wave Of Mutilation--

Cease to resist, giving my goodbye
drive my car into the ocean
you'll think i'm dead, but i sail away
on a wave of mutilation
a wave
wave

i've kissed mermaids, rode the el nino
walked the sand with the crustaceans
could find my way to mariana
on a wave of mutilation,
wave of mutilation
wave of mutilation
wave

wave of mutilation
wave

Thu, 03/06/2014 - 15:31 | 4518128 frankthomaswhite59
frankthomaswhite59's picture

.

Thu, 03/06/2014 - 14:35 | 4517783 BKbroiler
BKbroiler's picture

correct. all gains go to the 1%.  anyone opposing this will be labeled socialist.  carry on.

Thu, 03/06/2014 - 16:01 | 4518291 zaphod
zaphod's picture

I don't agree with the categories here. 

Housing is a financial investment IMHO because it is only supported by the massive debt-based financial leverage provided by the government. Take that financial leverage away and see where housing goes. Simiarly I'd view stock investments in solid real-asset firms to not be a financial asset but part ownership of basic infrastructure. 

Thu, 03/06/2014 - 16:20 | 4518391 Pool Shark
Pool Shark's picture

 

 

Exactly.

Time for TPTB to crash the system in 3,... 2,... 1,...

 

 

Thu, 03/06/2014 - 19:36 | 4519192 DoChenRollingBearing
DoChenRollingBearing's picture

And lowly physical gold would be what, 0.1%?  (Say, 10% of the 1% - 2% of gold owners?)

Hard to believe.  If paper burns..., look out!

Thu, 03/06/2014 - 19:37 | 4519198 DoChenRollingBearing
DoChenRollingBearing's picture

dupe, sorry

Thu, 03/06/2014 - 14:19 | 4517666 doggis
doggis's picture

TOOOO MANY 1%'ERS!

TOO MANY PRETENDERS TO THE THRONE!

THEY TOO WILL GET THROWN UNDER THE BUS.

 

 

 

Thu, 03/06/2014 - 14:22 | 4517686 Colonel Klink
Colonel Klink's picture

Tick tock, til you're sucking banksters cock.

Thu, 03/06/2014 - 14:22 | 4517690 Battleaxe
Battleaxe's picture

A result of lower real estate values.

Thu, 03/06/2014 - 14:29 | 4517714 ParkAveFlasher
ParkAveFlasher's picture

I wonder if this subtracts from "financial holdings" how much in HELOC got plunked down on Apple stock.

Thu, 03/06/2014 - 14:24 | 4517701 hairball48
hairball48's picture

It'll be interedsting to see how the retail sheeple investors react this time when the shit hits the fan and they're left holding the bag so to speak.

Thu, 03/06/2014 - 14:27 | 4517729 nightshiftsucks
nightshiftsucks's picture

QE forever,get it ? They can't let it dump or it will be game over.

Thu, 03/06/2014 - 15:08 | 4517938 TruthInSunshine
TruthInSunshine's picture

Permanently High Plateau?

Thu, 03/06/2014 - 14:27 | 4517724 joego1
joego1's picture

This is going to be very very painful.

Thu, 03/06/2014 - 14:29 | 4517730 adr
adr's picture

I'd drop real estate from the assets category because when you go to sell you might find out it isn't worth as much as you thought, just like stocks.

Mr. Media told me my house went up in value by 25% over the past four years. Mr. Bank ended up making me take a 30% loss from what I paid. The real value ended up somewhere around 40% of what the media claimed my house was worth.

The only real asset is a skill worth something to someone else when they need it. If you can't fix your pipes and need water but can't find anybody willing to fix them, 10k shares of Tesla aren't going to help you.

Thu, 03/06/2014 - 14:33 | 4517760 lasvegaspersona
lasvegaspersona's picture

adr

The beauty of hyperinflation is that regardless of the value of money or the dollar value of real estate...you still have the property (or gold in the case of 'durable goods' and other real assets).

Thu, 03/06/2014 - 14:35 | 4517789 adr
adr's picture

Not when hyperinflation causes a six million dollar property tax bill due at the beginning of the year. Nobody owns property in the USA other than the government.

Thu, 03/06/2014 - 14:29 | 4517739 Peter Pan
Peter Pan's picture

If I was part of the 1% I would begin worrying that much of my wealth is in the form of debt owed by the bottom 80%.

Thu, 03/06/2014 - 14:33 | 4517762 adr
adr's picture

I'd be worried about what happens when cow disappears from the gourmet supermarket shelf and the largest pasture within 100 miles is central park.

The farmer upstate probably isn't going to trade food for a S-class or Netflix shares.

Thu, 03/06/2014 - 14:55 | 4517911 Big Corked Boots
Big Corked Boots's picture

I might take a G-wagen.

Thu, 03/06/2014 - 21:29 | 4519639 Ceylon tea
Ceylon tea's picture

The beatings will continue until morale improves

Thu, 03/06/2014 - 14:33 | 4517763 NOTaREALmerican
NOTaREALmerican's picture

It's the government workers, and "those people" getting all the wealth.

Thu, 03/06/2014 - 14:38 | 4517778 Dr. Engali
Dr. Engali's picture

It's going to be epic to see that 2.5 trillion in 'assets' that it took a quarter to build get wiped out in nano-seconds.

Thu, 03/06/2014 - 14:41 | 4517819 adr
adr's picture

It's funny. I know what I created exists because I can go to a store and see it. I can feel it with my hands. If the company that sells it goes out of business, what I created still exists. Even if the products are dumped in a landfill or dropped into the Marianas Trench, they still exist.

These financial assets don't have a physical form. They only exist as a figure in a computer, like a design I think of but never make. The financial assets are as easy to erase as a line of an illustrator drawing. In that case do they really exist at all?

Thu, 03/06/2014 - 14:36 | 4517793 whisperin
whisperin's picture

So what happens when Vlad and the gang fire up their Atari's and tryout a few anti- algos?

Thu, 03/06/2014 - 14:41 | 4517822 NOTaREALmerican
NOTaREALmerican's picture

"The algos" don't matter.   In the end, the casino will still win because there are gamblers out there.   "The Algos" are just another way to screw them, but if they were to disappear another way would be invented.

It's like "Keynesians" or "Conservatives".   If all the bullshit they believed could somehow magically be erased, the sociopaths would spontanously create new bullshit for them to believe within seconds which accomplished the same thing.

Thu, 03/06/2014 - 14:37 | 4517795 NOTaREALmerican
NOTaREALmerican's picture

The doomers will never be satified.   Regardless of what happens, the immoral people will win. 

The Righteous Sword of Libertarian Justice is just a myth.

Thu, 03/06/2014 - 14:51 | 4517887 adr
adr's picture

Because the immoral have made the moral believe it is immoral to do harm. The immoral do not have that problem of conscience.

Only a great cleansing act of absolute immorality can set the world back to a moral path. Witnessing this act focuses society on morality for a short time until the immoral gather thier strength again.

You won't find many people claiming Hitler acted in a moral fashion, but one can't argue that the results of this immorality did not lead to a more moral focused America in the short period after WWII. 

 

Thu, 03/06/2014 - 15:04 | 4517960 RabbitChow
RabbitChow's picture

Moral focus leads to presumptive arrogance, such as we have today in places like NYC.  Eventually moral focus changes to justify not what is right, but what we want to do.  That's because moral focus leads not to judging ourselves, but others.

Thu, 03/06/2014 - 15:08 | 4517991 NOTaREALmerican
NOTaREALmerican's picture

You are pretty smart for one them "worthless govmint workers" (that most people on here despise so much because you and your comrads get most of the 2 trillion dollar the government spends each year). 

Thu, 03/06/2014 - 15:06 | 4517967 NOTaREALmerican
NOTaREALmerican's picture

Re:  Only a great cleansing act of absolute immorality can set the world back to a moral path

AND assuming that humans aren't naturally self-serving sociopathic assholes, yes.   (So, really no). 

Thu, 03/06/2014 - 14:49 | 4517877 Bam_Man
Bam_Man's picture

"Phantom wealth".

Thu, 03/06/2014 - 15:01 | 4517939 RabbitChow
RabbitChow's picture

I guess most of my wealth is in "Other tangible assets".  Real estate is only partly tangible, that being the part you actually own (or equity).  But I imagine the gummint could drain equity away in the form of ofsetting tax liens if the property tax bill gets too high and no one can pay it. 

Thu, 03/06/2014 - 15:08 | 4517974 realWhiteNight123129
realWhiteNight123129's picture

Let us fix it for the household of America:

Equities = Promises of cash flows in the Future

Debt = Promises of cash flows in the future

Equities and bonds (debt) are financial assets (depending on future cash flows0

GDP = circulation of present goods whose value is immediate, depending on their consumption value

Those goods include goods and services and consumable commodities. (Gold is a present good with immediate value)

We have too much debt to GDP = 

We have too many promises of cash flows in the future in relation to the nominal circulation of present goods. Buy the present physical goods because the ratio of Financial Assets to Present goods (Dow Gold ratio is one interpretation) (Debt to GDP is another) will SHRINK.

The shrinkage is unlikely to come from numerator falling i.e. bankruptcies debt at pennies on dollar and equities at  0 (Cyrpus or US 1929). Why? Because US prints its own money. 

The shrinkage will likely come from expansion of denominator. But only in nominal terms (i.e. inflation) because the capex is dismal in teh US which prevents GDP expansion in real terms. 

THOSE WHO DO NOT OWN GOLD DO NOT UNDERSTAND THE DIFFERENCE BETWEEN A PRESENT GOOD AND A FINANCIAL ASSET.

 

 

 

Thu, 03/06/2014 - 15:16 | 4518040 NOTaREALmerican
NOTaREALmerican's picture

Did you ever hear that joke about Communism?   Good idea, wrong species.

The "gold people" tend to forget they are dealing with humans too.

If your prediction calculations don't include the value-of-bullshit, you aren't predicting reality. 

bullshit + goverment = politics
bullshit + morals = religion
bullshit + craft = spatter art
bullshit + sex = romance

Bullshit ADDS value.

X + bullshit = $ ** bullshit   (Money to the power of bullshit) 

Thu, 03/06/2014 - 15:44 | 4518203 realWhiteNight123129
realWhiteNight123129's picture

An illusionist show always has an end, in the meantime and for a while people are mermerized in the bullshit. People drinking have 2 choices, they drink continuously until they die or they stop drinking and they have an overhang. There is no precedent in history where financial assets (cash flows promises in the future) rise faster than GDP forever.  Be patient, death or overhang will come.

 

 

Thu, 03/06/2014 - 16:41 | 4518513 FredFlintstone
FredFlintstone's picture

Third choice: they can stop drinking before they get drunk and just feel a little groggy. Oh, right we are talking about the human species.

Thu, 03/06/2014 - 15:07 | 4517978 nakki
nakki's picture

I think its funny that people don't think the FED will pull the rug one more time. Like the .001% give a shit about the top 10 or 20%. Not sure when it will happen but it will. They have to steal from someone.

Thu, 03/06/2014 - 15:12 | 4518016 NOTaREALmerican
NOTaREALmerican's picture

Re:  They have to steal from someone

Yes,  but as this is Merica the bottom gets eaten first.    The top 30-20% range still have at bit of loot, and the 20-10% range have quite a bit.    So, the top 10% are still safe.

There's still lots of loot to take and lots of dumbasses willing to die for the top 1% in their wars of Empire.

The US has the most loyal dumbasses on the planet.   

Thu, 03/06/2014 - 16:37 | 4518483 FredFlintstone
FredFlintstone's picture

A steady bout of inflation will turn a lot of the loot to dust, won't it? The squeezed retirees will get slaughtered. Even those sitting on a pile of several millions. A $5 million beach house can inflate to a $10 million house, but would have to be funded out of a relatively fixed pile of loot.

Thu, 03/06/2014 - 15:29 | 4518125 Kreditanstalt
Kreditanstalt's picture

If and when any substantial number of these financial "asset" holders ever actually want the cash to spend on living, that 71% will be worth a LOT less rather quickly...

Thu, 03/06/2014 - 15:48 | 4518221 realWhiteNight123129
realWhiteNight123129's picture

You are exactly predicting the turn # 4. John Fullarton wrote in 1844 that money printing does the following 1. Lower interest rates (LIBOR and money market spikes are repressed) 2. Price of land rise 3. Price of interest bearing securities (equities) rise. 4. Price of commodities in general rise. 

So when the base money stops toying in financial assets and enter the circulation (GDP), the price of everything rises. 

Thu, 03/06/2014 - 16:09 | 4518324 BeerMe
BeerMe's picture

They have to get a few more moving their wealth into fake assets.  At a certain point they will bring another grand theft.  So far so good.

Thu, 03/06/2014 - 16:16 | 4518372 gaoptimize
gaoptimize's picture

Can someone confirm my math that this works out to about $300K of assets per capita in the US?  If that is the case, my family and I (6 of us) are much poorer than average.  I aways thought we were doing much better than average.  How sad for us.

Thu, 03/06/2014 - 16:30 | 4518454 FredFlintstone
FredFlintstone's picture

Cheer up, I am sure the median is much lower.

Thu, 03/06/2014 - 19:48 | 4519233 isudas
isudas's picture

The median is probably negative.

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