The Stunning Charts Showing Just How Much Richer The Rich Have Gotten While The Poor Drown In Debt

Tyler Durden's picture

The Fed's epic wealth redistribution scheme has gotten so simple, even a 5 year old Census Bureau employee gets it.

In the latest Household Wealth report by the government agency, the Census found that for the period ended 2011 the rich got richer (and would get much richer in the subsequent 2.5 years), while the poor, i.e. the majority of the US population, got poorer. In fact, not only did the poor get poorer, but the first quintile of the US population, or the bottom 20% by net worth, certainly not by representation as it happens to be the most populated, saw a decline in net worth from negative $905 in 2000 to negative $6,029, in other words debt.  Remember this chart showing that the rich have assets and the poor have debt...

... Well here it is again, this time with numbers populated from the Census Bureau:

In the meantime the rich have gotten ridiculously rich. The numbers, for 2011, are straightforward: the median net worth of the top 20% rose 0.4% to $630,754, and has increased by $61,379 in net worth since the year 2000. A simple infographic showing this:

 

A time lapse at the change in net worth across all cohorts. Of note: the 4th and 5th quintiles have done well. Everyone else, not so much. In fact, the median net worth for all households declined by 6.8% ot $5,046 between 2000 and 2011!

This is how the Census phrases it:

Median net worth increased between 2000 and 2011 for households in the top two quintiles of the net worth distribution (the wealthiest 40 percent), while declining for those in the lower three quintiles (the bottom 60 percent), according to new statistics released today by the U.S. Census Bureau. The result was a widening wealth gap between those at the top and those in the middle and bottom of the net worth distribution. Each quintile represents 20 percent, or one-fifth, of all households.

 

According to Distribution of Household Wealth in the U.S.: 2000 to 2011 and associated detailed tables, median household net worth decreased by $5,124 for households in the first (bottom) net worth quintile and increased by $61,379 (or 10.8 percent) for those in the highest (top) quintile (Figure 1). Median net worth of households in the highest quintile was 39.8 times higher than the second lowest quintile in 2000, and it rose to 86.8 times higher in 2011. (Figure 2).

 

The report also details a widening of the wealth gap for households sharing the same demographic characteristics, such as age, race and Hispanic origin, and educational attainment of the householder. For example, the median net worth for non-Hispanic whites in the highest quintile was 21.8 times higher than for those in the second-lowest quintile in 2000; in 2011, this had increased to 31.5 times higher. For blacks, the ratio increased from 139.9 to 328.1, and for Hispanics, the increase was from 158.4 to 220.9.

As noted above, keep in mind that this data is only through 2011. Based on historical data, and as we have reported previously total household net worth surpassed previous records in mid 2013 and is currently in uncharted territory courtesy entirely of the relentless engineered rise in the Fed-manipulated stock market. In fact, based on Q1 data, total household net worth is at a record high of $81.8 trillion, with the bulk of it, or $67 trillion, derived from financial assets.

 

Which means that in the interim two years the rich not only got even richer, but have now surpassed all previous records.

And by implication, America's poor, that 20% on the net worth scale which is far greater than 20% in terms of population and that has only debt to show and no assets, are currently so deep in debt, there is no wonder the US economy is a complete disaster to all but the choice few who comprise the top quntile, and to the paid economists and pundits who make money by cheerleading the "growing" US economy to its final resting place.

But nowhere is the "financialization" of the US economy more evident than in this chart showing the relative net worth ratio of quntile to the next quintile right below it. Quote Census: "The distribution of net worth became more spread out between 2000 and 2011. The ratio of median net worth of the highest quintile to the second quintile increased from 39.8 to 86.8 between 2000 and 2011, and the ratio of the highest quintile to the third quintile increased from 7.7 to 9.2. The ratio of the highest quintile to the fourth quintile was 3.0 in 2000 and showed no statistically significant change over this period." 

The surge took place precisely as the last credit bubble peaked and then burst. "Ironically" the richest did not get nearly as hurt as everyone else.

It is safe to say that the net worth ratio of the top quntile to the second higher is now, 2014, well over 100%. And to thin it was just 40% at the beginning of the century.

Here Census does a curious detour, because in addition to just wealth quntiles it also looks at wealth distribution by race. And while it is no surprise that in absolute terms rich whites are richer than rich blacks or hispanics, with a net worth at the end of 2011 of $754,244, $229,041 and $250,462 respectively...

... the wealth redistribution within the ranks is far greater among blacks than the other two racial cohorts. In fact, while the ratio of the wealthiest 20% of whites increased only modestly, the increase was somewhat greater for the fifth hispanic quintile, and soared for the richest 20% of all blacks.

From the Census: "the ratio of median net worth of non-Hispanic whites to that of blacks rose from 10.6 to 17.5 between 2000 and 2011, and the ratio of non-Hispanic whites to Hispanics also increased from 8.1 to 14.4. "However, when looking at the highest quintile for these groups, we see that blacks experienced higher relative increases in median net worth than non-Hispanic whites and Hispanics," Census Bureau economist Marina Vornovitsky said.

This is a finding that probably won't be mentioned too often by the president in his populist, race-baiting speeches.

Finally, why is any of this important?

Simple: the trends presented here confirm not only why class animosity within American society is at all time highs, they also explain why without the life support of the Fed, the US economy would crumple.

The chart below, which we have shown before, explains why: with the purchasing power of the poor being funneled to the rich couretsy of the Fed, and as a result of ever greater indebtedness which limits how much more debt they can carry, the poor have no choice but to consume less and less. Something which the US economy has demonstrated vividly to all but the 1% who continue to live, oblivious, in its ivory tower.