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My “Wealth Effect Monitor” & “Wealth Disparity Monitor” for the Fed’s Money-Printer Economy: December Update

December 28, 2021

My “Wealth Effect Monitor” & “Wealth Disparity Monitor” for the Fed’s Money-Printer Economy: December Update

Billionaires got more billions, bottom half of Americans got peanuts and inflation.

My “Wealth Effect Monitor” uses the data that the Fed releases quarterly about the wealth of households. The Fed, after having released the overall data for the third quarter earlier in December, has now released the detailed data by wealth category for the “1%,” the “2% to 9%,” the “next 40%” (the top 10% to 50%) and the “bottom 50%.”

Wealth here is defined as assets minus debts. The wealth of the 1% ($43.9 trillion, according to the Fed) is owned by 1% of the population. The wealth of the “bottom 50%” (only $3.4 trillion) gets split across half the population. My Wealth Effect Monitor takes this a step further and tracks the wealth of the average household in each category.

The average wealth in the 1% category ticked up by only $121,000 in Q3 from Q2, after skyrocketing over the prior five quarters, to $34,478,000 per household (red line). In the bottom 50% category, the average wealth ticked up by $6,800 $53,600 (green line). And get this: About half of that “wealth” at the bottom 50% is the value of consumer durable goods such as cars, appliances, etc. Even the top 2% to 9% (yellow), have been totally left behind by the explosion of wealth at the 1%:

Note the immense increase in the wealth for the 1% households, following the Fed’s money-printing scheme and interest rate repression in March 2020.

A household is defined by the Census Bureau as the people living at one address, whether they’re a three-generation family or five roommates or a single person. In the third quarter, there were 127.4 million households in the US, per Census estimates.

…click on the above link to read the rest of the article…

LEE CAMP: The Secret Reason Billionaires Love a Pandemic

June 19, 2020

LEE CAMP: The Secret Reason Billionaires Love a Pandemic

You see, there has been a class war going on for years – perpetrated by the rich (who aren’t smarter or better) against everyone else.

We live in a time when there are more billionaires walking around than ever before. (They don’t actually walk. They have someone do that for them.) And one can’t deny billionaires are billionaires because they’ve worked harder than anyone else—roughly 300 times harder than an average worker. They are smarter, cleverer, more intuitive and show more initiative than anyone else, too. That’s why they’re billionaires and we’re not. That’s why they will always be billionaires and we will never be. That’s why we can all see ourselves in the reflection on Jeff Bezos’ bald head and yet can never touch it.

‘Deportmental ditties : and other verses;’ Graham, Harry, 1874-1936. London : Mills & Boon 1900. (University of Toronto)

Now, I must say—everything stated in the first paragraph is utterly false. No part of it is true (except the part about the walking). Most billionaires don’t work harder, don’t think harder, and don’t know more. They have nothing over your average person except: a) luck b) sometimes inheriting a fortune and c) being more sociopathic. So I guess you could say they’re extraordinary on the sociopathy front. They are more willing to crush other humans to get what they want and thereby they are more able to get what they want.

All of this might slightly explain why a vein bulges in my forehead when I read that billionaires are doing better than ever during this global viral outbreak that has killed hundreds of thousands.

…click on the above link to read the rest of the article…

Market Commentary: Faux Statesmanship

April 7, 2019

Market Commentary: Faux Statesmanship

April 5 – New York Times (Dealbook): “’It doesn’t take a genius’ to know capitalism needs fixing. Capitalism helped Ray Dalio build his investment empire. But in a lengthy LinkedIn post, the Bridgewater Associates founder says that it isn’t working anymore. Mr. Dalio writes that he has seen capitalism ‘evolve in a way that it is not working well for the majority of Americans because it’s producing self-reinforcing spirals up for the haves and down for the have-nots.’ ‘Disparity in wealth, especially when accompanied by disparity in values, leads to increasing conflict and, in the government, that manifests itself in the form of populism of the left and populism of the right and often in revolutions of one sort or another.’ ‘The problem is that capitalists typically don’t know how to divide the pie well and socialists typically don’t know how to grow it well.’ ‘We are now seeing conflicts between populists of the left and populists of the right increasing around the world in much the same way as they did in the 1930s when the income and wealth gaps were comparably large.’ ‘It doesn’t take a genius to know that when a system is producing outcomes that are so inconsistent with its goals, it needs to be reformed.’ Stay tuned: Mr. Dalio says that he’ll offer his solutions in another essay.”

I’m reminded of back in 2007 when Pimco’s Paul McCulley coined the term “shadow banking” – and the world finally began taking notice of the dangerous new financial structure that had over years come to dominate system Credit. Okay, but by then the damage was done. As someone that began posting the “Credit Bubble Bulletin” in 1999 and had chronicled the prevailing role of non-bank Credit in fueling the “mortgage finance Bubble” fiasco (on a weekly basis), it was all frustrating.  

 …click on the above link to read the rest of the article…

Paul Tudor Jones Warns Disastrous “Wealth Disparity” Will End In “Rev

October 7, 2017

Paul Tudor Jones Warns Disastrous “Wealth Disparity” Will End In “Revolution, Taxes, Or War”

Having previously warned of the “disastrous market mania,” and told Janet Yellen to “be terrified” in April, legendary trader Paul Tudor Jones has a new message for CEOs, urging them to stop embracing the profit-above-all-else ethic creating massive wealth-inequality, or face the “tearing down of our civilization via war, revolution, or taxes.”

“One of the key things that always ends up tearing down great civilizations and countries is wealth disparity. It’s not sustainable,” explained the billionaire hedge fund manager at the Forbes Under 30 Summit in Boston, telling corporate chiefs that they have gone too far in embracing economist Milton Friedman’s profit-above-all-else ethic and they need to change how they do business.

Corporations have paid too much attention to prioritizing shareholders, said Jones, who’s backing a nonprofit called JUST Capital that will rank companies on how well they treat their employees, consumers, communities and investors.

Bloomberg reports that Jones said that even Friedman would rethink his ideas if he could see how divided the U.S. has become in terms of wealth, and worries about the outcome…

“The way wealth disparity has been historically dealt with is either wars, revolution or taxes. My guess is in the future it’ll be one of those three in this country.”

At the time of Friedman’s 1970 article, “The Social Responsibility of Business Is to Increase Its Profits,” the maximum federal individual tax rate was 70 percent, versus about 40 percent today. The wealth gap was one-fifth of what it is today, said Jones.

Friedman believed corporate executives should make as much money as possible while “conforming to the basic rules of the society.”

…click on the above link to read the rest of the article…

Energy limits: Why we see rising wealth disparity and low prices

July 10, 2016

Energy limits: Why we see rising wealth disparity and low prices

Last week, I gave a fairly wide-ranging presentation at the 2016 Biophysical Economics Conference called Complexity: The Connection Between Fossil Fuel EROI, Human Energy EROI, and Debt (pdf). In this post, I discuss the portion of the talk that explains several key issues:

  1. Why we are right now seeing so many problems with respect to wealth disparity and low commodity prices (Answer: World per capita energy consumption is already falling, and the energy/economy system needs to reflect this problem somehow.)
  2. Why the quest for growing technology leads to growing wealth disparity (Answer: The economy must be configured in more of a hierarchical pattern to support growing “complexity.” Growing complexity is the precursor to growing technology.)
  3. Why rising debt is an integral part of the energy/economy system (Answer: We could not pay workers for making long-lasting goods and services without using debt to “pull forward” the hoped-for benefit of these goods and services to the present, using debt and other equivalent approaches.)
  4. Why commodity prices can suddenly fall below the cost of production for a wide range of products (Answer: Prices of commodities depend to a significant extent on debt levels. A major problem is that when commodity prices rise, wages do not rise in a corresponding manner. Rising debt levels can mask the growing lack of affordability for a while, but eventually, debt levels cannot be raised sufficiently, and commodity prices fall too low.)
  5. The Brexit vote may be related to falling energy per capita in the UK. Given that this problem occurs in many countries, it may be increasingly difficult to keep the Eurozone and other similar international organizations together.
  6. My talk also touches on the topic of why a steady state economy is not possible, unless we can live like chimpanzees.

…click on the above link to read the rest of the article…

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