This is a contribution from Bud Hebeler who runs Analyzenow.com
So here we go again. The Wall Street Journal publishes the Fed Reserve’s Wealth chart* which makes it look like our household wealth has been increasing even though savings rates are zilch.
Consider the following:
First and foremost, this includes Bill Gates, Warren Buffett, George Zoros, etc. I personally don’t expect to get any of their wealth.
The chart is not inflation adjusted. That brings the 2007 value down almost to the 1999 value.
Retirement savings do not account for income taxes due.
Then we look at the footnotes from the Federal Reserve. Real estate is adjusted upwards to replacement costs.
And finally, it doesn’t account for the growth of the population.
So, what would an honest chart on wealth look like?
Instead of the total wealth of the country’s households in then year dollars it would be the Median Value of Wealth PER Household in Today’s After-tax Dollar values. (Median Value would eliminate the problem of Gates, Buffett, Zoros, etc.) Then to really make it exciting, it would subtract the per-household-value of national debt and present value of unfunded obligations for Social Security, Medicare and public pensions. Of course, the result would be all negative values on an ever worsening plummet downward. And maybe we wouldn’t be viewed as the richest people on this earth. Maybe the dumbest, but not the wealthiest.
Bud