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2018, largest drop in household net worth since 2008.

794 104 March 7, 2019 at 09:25 AM
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Supposedly the economy is good but the numbers on a variety of metrics don't support that. Net worth is down by 2008 level numbers and debt is up to pre 2008 numbers. Both of which is not good.

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#2
"Household Net Worth" is not a very meaningful quantity. It's just a "notional" amount with very little relationship to the ground reality.

The total "net worth" attempts to measure an amount "that *could* be raised if everyone liquidated all their assets today". Does that sound a reasonable or feasible thing to you? It takes what happens at the margins - when a small amount of liquidation and purchase go hand in hand - and attempts to project it to the entire economy.

Net worth may make sense for an individual, because the market will not budge much if - say - Bill Gates was to liquidate it within a reasonable amount of time. But as an aggregate it makes zero sense. In terms of mathematics - this is like attempting to estimate a function using it's first derivative, it works for a tiny bit and then become completely inaccurate!!

Look at the measures of economic activity, not supposed "net worth"!
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#3
What you are saying is nobody has learned anything, credit card debt is at all time highs, nobody saves for retirement and it's all going to be someone else's fault right? The economy IS good, people are idiots. I saw an article on motley fool about average 401k balances by age, I'm 37 and I have what a 65 year old would have according to them. Unfortunately it increasingly appears those who plan and save are going to have to pay for the idiots who don't... people are now getting 7 year car loans, they are a $500 emergency away from absolute financial ruin, live paycheck to paycheck. Nobody made them do this, but you can best believe they will quickly convince you that someone did.
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#4
OP doesn't list a cite... but here is one:

https://www.washingtonpost.com/us...092173c857

The data shows that change was driven by the poor performance of the stock market in the fourth quarter of last year.



when you put it in context, not just raw numbers, I'll take the the $105TN any day of the week.
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Coming back to the topic:

"Assets" don't make an economy. Velocity of asset movement, with each step/transfer of asset adding incremental and sustainably productive value - i.e. "economic activity" is what determines the health of the economy!!

I can put a notional value of $1T on the Brooklyn bridge today, and change that to $2T tomorrow and claim the $1T delta to be "earning". That "Asset Inflation" does not make for a healthy economy, nor a good measure of economic health!

Any "stimulus" in the form of tax cuts or new money supply are fantastic when it increases the economic velocity of the money! It is counterproductive, and downright harmful when it goes solely into asset inflation.

If you give $1 stimulus to Joe Schmo in Bronx, NY, doing 2 minimum wage jobs in Bronx NY to support his family and paying 15% FICA taxes, then Joe Schmo spends the money and that increases the economic velocity. This is a good thing.

If you give that $1 stimulus to Ivanka Trump, on the other hand, it just goes to the pile of money she inherited and does not get spent! There is just no conceivable way to start spending a billion dollars. This does not increase money velocity and leads to asset inflation!

All these are common knowledge!

But obviously common knowledge is not very common! You have entire schools of charlatans who supposedly "practice economics" and come up with b*llsh*t like Supply Side Economics - where all available data that is not cherry picked oppose their conclusions!!

Bottom line - don't judge the state of economy by asset size.

The Feb job numbers *would* become far more concerning instead, irrespective of any fantastic asset-price induced gains, if it becomes a trend for another month or two.
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#6
My accounts all seem to be doing just fine, lol. I keep spending on house renovations yet our NW hasnt dropped. Amazing how that works. Its good to be me.
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Back in the real world - plan in NYC for a "pied a terre" tax.
https://www.nytimes.com/2019/03/1...ule=inline

This will likely make some more dent in this "household net worth" figure we speak of. But this is good. It will reduce the economically unproductive use of condos and co-ops as empty "investments" and some might actually start providing real value as residences to real people.

The risk is - doing this in one city (NYC) will just migrate the problem to others. Hopefully, this will spread to enough cities that the billionaires will start buying condos at Bismark, ND.
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Quote from puddonhead
:
Back in the real world - plan in NYC for a "pied a terre" tax.
https://www.nytimes.com/2019/03/1...ule=inline

This will likely make some more dent in this "household net worth" figure we speak of. But this is good. It will reduce the economically unproductive use of condos and co-ops as empty "investments" and some might actually start providing real value as residences to real people.

The risk is - doing this in one city (NYC) will just migrate the problem to others. Hopefully, this will spread to enough cities that the billionaires will start buying condos at Bismark, ND.

"A plan to tax the rich on multimillion-dollar second homes in New York City has rapidly moved closer to reality, as legislative leaders in Albany and Gov. Andrew M. Cuomo have all signed off on the idea as a funding stream for the city's beleaguered subway system."

That's what they say.... now. I'm *sure* if this passes then all that $$ will go to the subway. Roll Eyes (Sarcastic)

Meanwhile

New York City is edging toward financial disaster, experts warn [nypost.com]
New York City is careening closer to all-out financial bankruptcy for the first time since Mayor Abraham Beame ran the city more than 40 years ago, experts say.

As tax-fleeced businesses and individuals flee en masse, and city public spending surges into the stratosphere, financial analysts say Gotham is perilously near total fiscal disaster.

Long-term debt is now more than $81,100 per household, and Mayor Bill de Blasio is ramping up to spend as much as $3 billion more in the new budget than the current $89.2 billion.

I read this article the other day..... seems NY's soak the rich policies are working so well all they can do is try and squeeze people as they flee:

As residents flee New York's high taxes, state uses intrusive audits to get cash from defectors [foxnews.com]
But New York state auditors are doing their best to ensure that those fleeing the state's high taxes will face difficulties, including being subjected to an audit -- likely to be followed by a massive tax bill.

New York conducted 3,000 "nonresidency" audits between 2010 and 2017, recouping around $1 billion from the practice, CNBC reported.
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Last edited by Dr. J March 13, 2019 at 06:42 AM.

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#9
Quote from Dr. J
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expenses?
Nah, say the S&P 500 closes up 1.5%, the next day you check your index fund and it's only up say 1.2%, that's what I'm saying
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#10
Quote from bonkman
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if you want to start throwing political punches, go to the podium.
Pay attention to the smart comment above these red letters.
Quote from vairox
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surprised the mods haven't crapped all over this by now.
No alerts, didn't notice it at first. Hi Smilie

Now, I am going to clean up...often times this results in some decent information getting lost in the mix. Truly apologize, but I see a lot of garbage I don't think needs to be sorted when a thread is so far off the rails.
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