Consumer Credit Misses, As Fed Magically Creates $1.5 Trillion In Net Worth Out Of Thin Air

Tyler Durden's picture

That the just released consumer credit update for April missed expectations of a $11 billion increase is not much of a surprise. As noted earlier, the US consumer has once again resumed deleveraging: April merely saw this trend continue with revolving credit declining by $3.4 billion, offset by the now traditional increase in student and subprime government motors car loans, which increased by $10 billion. In other words, following a modest increase in revolving consumer credit in March, we have another downtick, and a YTD revolving credit number which is now negative. Obviously the government-funded student loan bubble still has a ways to go.

No: all of this was expected. What was very surprising is that as noted in the earlier breakdown of the Z1, the entire consumer credit series was revised, with the cumulative impact resulting in a major divergence from the original data series. Why did the Fed feel compelled to revise consumer credit lower? Simple: as debt goes down, net worth goes up, assuming assets stay flat. Which in the Fed's bizarro world they did! Sure enough, if one compares the pre-revision Household Net Worth data (which can still be found at the St. Louis Fed but probably not for long) with that just released Z.1, one notices something quite, for lack of a better word, magical. Ignoring the March 31 datapoint which does not exist for the pre-revision data set, at December 31, household net worth magically grew from $58.5 trillion in the original data set to $60.0 trillion in the revised one!

And that, ladies and gentlemen, is how you "create" $1.5 trillion in net worth in this wonderfully wacky fiat world, with the wave of a magic wand, or the push of a revision button.

We hope all of you feel $1.5 trillion wealthier as of this post.

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CClarity's picture

Smoke and mirrors - the people want to be fooled, told everything is fine.  Politicians, statisticians, and market movers are happy to oblige.

ihedgemyhedges's picture

Dear Customer:

I am writing to let you know that contrary to recent reports on various websites, YOUR debt did NOT get revised down.  Have a great life.

Sincerely, J. Dimon

eclectic syncretist's picture

Does this mean we can get back to tank-o-rama and then have another little squeeze before the Fed meeting in two weeks?

Bunga Bunga's picture

But but but Ben can create inflation whenever he wants to.

battle axe's picture

We have the best Government.....Honest/Hard Working/Caring about the little guy..../sarc

economics9698's picture

Yep the pond scum took over around 65 or so.

TheGameIsRigged's picture

for the people by the people (in power that is...)

LasVegasDave's picture

“Our government teaches people by example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."

-Louis Brandeis

pods's picture

Well I think I am going to run right out to Best Buy and get me something.


urbanelf's picture

They have a special on iThingamajig.

urbanelf's picture

iThingamajig is only 1/2 oz of gold.

urbanelf's picture

I MEAN $800!!!  $800!!!  I SWEAR, I MEANT $800!

We're cool, right?

stocktivity's picture

at least you'l have the store to yourself..and a few sales people standing around.

bigdumbnugly's picture

well, i don't feel 1.5 trillion wealthier right now but i do have an urge to stay at a holiday inn express tonight.

eclectic syncretist's picture

In the bizarro world of "baffle you with bullshit terminology" of the Fed they always graph credit/debt as if it's an asset.  Then they tell you complex it all is, and not to bother yourself worrying about it, since they are taking care of everything for you.  Sweet dreams!

CPL's picture

...guests of the central bank stay at the luxurious maytag fridge box near the Wall Street holiday inn.

catacl1sm's picture

Credit Cards, bitchez!

Cognitive Dissonance's picture

Ben - "Watch me pull a rabbit out of my hat. Nothing under my sleeve. Presto.

Whoops. Better get me a new (fiat) hat."

All four Rocky and Bullwinkle versions just in case you want to watch the cartoon referrence.

krispkritter's picture

'Hey Krugman! Watch me pull an Economy outta my ass!'

The Magical Fed said it could raise the Dead,

Economy as it has been for years. 

Ben waved his wand and confirmed our fears,

We'll soon be living on water and bread.

cougar_w's picture

'Hey Krugman! Watch me pull an Economy outta my ass!'

Instant ZH classic.

I Am The Unknown Comic's picture

I didn't know that Bearnanke did his undergrad at Wossamotta U.

booboo's picture

Ok then, tell me I'm a handsome devil.

Gringo Viejo's picture

Just a quick, off topic observation. I'm intrigued by the number of socialist, nanny state advocates that frequent ZH. It's a "free country" but it's a bit like my spending the day on the nation of islam's website.

Global Hunter's picture

spice of life and all that besides unless you're a Sheik from Dubai, a European aristocrat or part of the Rockefeller family etc. you probably have more in common with the average run of the mill socialists, nanny state advocate or nation of Islam members than you do Jamie Dimon, Barry Obie-One, Leon Panetta etc.

cougar_w's picture

Ha! That is so true. Let's see who can handle it.

BeetleBailey's picture

I concur. However, instead of "intrigued", I would put the word "nauseated".

I got junked on another post as to my utter disgust for the big government nanny staters.

Socialists simply blow. Government ALREADY fucks up and spends more money than they have, ALWAYS over-spends, fucks up in general - and these cretins want MORE government?

It defies logic, any form of sense, and it disgusts me that their so-called "leaders" (Obama, Clinton, Kerry, etc.) go on and on and lie straight to their faces and get away with it.

I am NOT "for" big business, corporate lobbying, and a fucked UP tax structure. I am for a government FOR the people - which it is NOT.

infinity8's picture

Maybe this will cheer you up:


"KABUL, Afghanistan – The U.S. has terminated funding for a $20 million project to develop a Pakistani version of Sesame Street, the U.S. Embassy said Tuesday. The decision came as a Pakistani newspaper reported allegations of corruption by the local puppet theater working on the initiative."

I Am The Unknown Comic's picture

Well, the TBTF banks do need more muppets....

stocktivity's picture

There goes another one of those "shovel - ready" projects.

TheCanadianAustrian's picture

I say good graces. The more uninformed people there are exposed to sites like this, the better chance our world has.

lizzy36's picture

Photoshop for Fed data series.....what could be better.

tabasco71's picture

A rounding error...

Trillion here, trillion there, pretty soon you're talking about real money...

fuu's picture

What do you call that thing at the bottom of the urinal?


Dr. Engali's picture

I'm feeling wealthier already. I think I'll take a second mortgage out and buy a boat.

percyklein's picture

Sure did knock the crap out of the SPY.

ParkAveFlasher's picture

In fact I too am inflating right now, myself.

Cursive's picture

Rule by fiat.  Whatever they say it is.  The BLS has already famously revised U3 to the point that it does not represent what it did 30 years ago.  I believe none of these numbers, but Bob Brusca and his "economics" brethern will happily swallow them whole and beg for more of this bullshit.

HD's picture

 I can't tell you how many times I've found a trillion or two in the couch cushions...

Poetic injustice's picture

While cleaning my garbage, I found 2 trillions which were accidentally put in throwaway bag.
People do tend to forget small things.

cougar_w's picture

I found a trillion once, in the pocket of a jacket I pulled off the rack at the thrift store. I asked the lady at the counter what I should do with it, and she said I should donate it to the store. I sorta did that; used it to buy the coat. It was a great coat, best trillion I ever spent, and it wasn't even my money. That's sorta like Jon Corzine though, so I feel kinda bad about that part. Maybe I should have just donated it like she said.