{"id":37201,"date":"2018-08-31T18:50:26","date_gmt":"2018-08-31T23:50:26","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37201"},"modified":"2018-08-31T18:53:03","modified_gmt":"2018-08-31T23:53:03","slug":"once-the-bubbles-pop-were-broke","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37201","title":{"rendered":"Once the Bubbles Pop, We’re Broke"},"content":{"rendered":"

Once the Bubbles Pop, We’re Broke<\/a><\/h3>\n
\n
I hate to break it to you, but the\u00a0everything bubble\u00a0isn’t permanent.<\/i><\/div>\n
OK, I get it–the Bull Market in stocks is permanent.<\/b>\u00a0Bulls will be chortling in 2030 that skeptics have been wrong for 22 years–an entire generation. Bonds will also be higher, thanks to negative interest rates, and housing will still be climbing higher, too. Household net worth will be measured in the gazillions.<\/div>\n
Here’s the Fed’s measure of current household net worth: a cool $100 trillion<\/b>, about 750% of disposable personal income (DPI):<\/div>\n
<\/div>\n
Household net worth has soared $30 trillion in the past decade of permanent monetary and fiscal stimulus.<\/b>\u00a0No wonder everyone is saying Universal Basic Income (UBI)– $1,000 a month for every adult, no questions asked–is affordable, along with Medicare For All (never mind that Medicare is far more expensive than the healthcare provided by other advanced nations due to rampant profiteering, fraud and paperwork costs–we can afford it!)<\/div>\n
And we get to keep the Endless Wars ™, trillion-dollar white elephant F-35 program, and all the other goodies–we can afford it all because we’re rich!<\/div>\n
We’re only rich until the bubbles pop, which they will.<\/b>\u00a0All speculative bubbles deflate, even those that are presumed permanent, And when the current\u00a0everything bubble<\/i>\u00a0pops, net worth–and all the taxes generated by bubble-era capital gains–vanish.<\/div>\n
Take a look at the Federal Reserve’s\u00a0Household Balance Sheet (June 2018)<\/a><\/b>:
\n$34.6 trillion in non-financial assets
\n$81.7 trillion in financial assets
\n$15.6 trillion in total liabilities ($10 trillion of which is home mortgages)
\n$100 trillion in net worth<\/div>\n
So $25 trillion is in real estate. When the housing bubble pops, $10 trillion will go poof.<\/b>\u00a0Maybe $12 trillion, but why quibble about a lousy $2 trillion? We’re rich!<\/div>\n
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\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Once the Bubbles Pop, We’re Broke I hate to break it to you, but the\u00a0everything bubble\u00a0isn’t permanent. OK, I get it–the Bull Market in stocks is permanent.\u00a0Bulls will be chortling in 2030 that skeptics have been wrong for 22 years–an entire generation. Bonds will also be higher, thanks to negative interest rates, and housing will […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[88,1799,4792,127,195,235,303,4156,587,1234,1138,3650],"class_list":["post-37201","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bonds","tag-bubbles","tag-bull-vs-bear","tag-charles-hugh-smith","tag-debt","tag-economic-bubbles","tag-fed","tag-net-worth","tag-of-two-minds","tag-stimulus","tag-stock-market","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37201","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37201"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37201\/revisions"}],"predecessor-version":[{"id":37202,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37201\/revisions\/37202"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37201"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37201"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37201"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}