How the Fed's Inflation Policies Benefited the Top 1% In Pictures Part 2

Part 1 looked at results of the Fed's inflation policies in percentage terms. This post looks at dollars and includes real estate.
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Total Net Wealth of the Next 9% 2020

Of the total USA net worth (assets minus liabilities) the net worth of the top 1% rose from $4.90 trillion at the end of 1989 to $38.61 trillion at the end of 2020.

Data for this series was downloaded from the Fed report Distribution of Household Wealth in the U.S. since 1989

The charts all show end-of-year figures with the Fed chair at that time in colors.

Total Net Wealth of the Next 9%

Total Net Wealth of the Next 9% 2020

Of the total USA net worth (assets minus liabilities) the net worth of the next 9% rose from $7.75 trillion at the end of 1989 to $46.99 trillion at the end of 2020.

The top 10% was worth $15.18 Trillion in 1989 and $81.80 trillion at the end of 2020.

Total Net Wealth of the Next 40%

Total Net Wealth of the Next 40% 2020

Of the total USA net worth (assets minus liabilities) the net worth of the next 9% rose from $7.43 trillion at the end of 1989 to $34.81 trillion at the end of 2020.

Total Net Wealth of the Bottom 50%

Total Net Wealth of the Bottom 50% 2020

The total net wealth of the bottom 50% was $0.74 trillion in 1989 and $2.49 trillion at the end of 2020.

Of special note, the total net wealth of the bottom 50% declined by more than half between 1989 and the end of 2010. 

Equities Wealth of the Top 1% 

Total Equities Wealth of the Top 1% 2020

The equities net worth of the top 1% rose from $0.89 trillion at the end of 1989 to $17.79 trillion at the end of 2020.

Equities includes ETFs, mutual funds, and bonds.

Equities Wealth of the Next 9% 

Total Equities Wealth of the Next 9% 2020

The equities net worth of the next 9% rose from $0.84 trillion at the end of 1989 to $11.88 trillion at the end of 2020.

Equities Wealth of the Next 40% 

Total Equities Wealth of the Next 40% 2020

The equities net worth of the next 40% rose from $0.36 trillion at the end of 1989 to $3.66 trillion at the end of 2020.

Equities Wealth of the Bottom 50% 

Total Equities Wealth of the Bottom 50% 2020

Real Estate Minus Mortgage Wealth of the Top 1%

Real Estate Minus Mortgage Wealth of the top 1%

This category includes includes all real estate, not just primary residence. Nonetheless, the top 1% only has $4.07 trillion tied up in real estate, a tiny percentage of their wealth. 

Home mortgages only total $0.54 trillion as of the end of 2020. 

Real Estate Minus Mortgage Wealth of the Next 9%

Real Estate Minus Mortgage Wealth of the next 9%

The next 9% have $7.01 trillion tied up in real estate as of the end of 2020 vs $1.69 trillion in 1989.

Home mortgages in this group total $2.71 trillion as of the end of 2020, up from $0.41 trillion at the end of 1989.

Real Estate Minus Mortgage Wealth of the Next 40%

Real Estate Minus Mortgage Wealth of the next 40%

The next 40% have $8.60 trillion tied up in real estate as of the end of 2020 vs $2.28 trillion in 1989.

Home mortgages in this group total $5.23 trillion as of the end of 2020, up from $1.18 trillion at the end of 1989.

A housing slump would hit this group hard.

Real Estate Minus Mortgage Wealth of the Bottom 50%

Real Estate Minus Mortgage Wealth of the Bottom 50%

The bottom 50% have $1.42 trillion tied up in real estate as of the end of 2020 vs $0.21 trillion in 1989.

Home mortgages in this group total $2.46 trillion as of the end of 2020, up from $0.59 trillion at the end of 1989.

The fate of the bottom 50% is totally related to the fate of housing. 

At the end of 2009, the real estate minus mortgage wealth of the bottom 50% was -$0.53 trillion.

Bernanke's Finest Achievement

Many consider the mortgage debt series and the negative net real estate wealth of the bottom 50% to be Fed Chair Ben Bernanke's finest achievement.

Count me in that group.

The Fed's unstated goal is obvious. It hopes to make the bottom 50% and even bottom 90% debt slaves to the banks while transferring all the assets to the top 10%.

Fed's Unstated Goal

I sarcastically commented that the Fed's goal is for the top 10% to own all the assets and everyone else the debt.

That is not their stated goal, of course, but that is the result.

The Fed's inflation policies make homes unaffordable and make it hard for half the nation to save anything at all or buy assets.

In contrast, the Fed's inflation policies, bank bailouts, and stock market support has done wonders for the top 10%.

The next 40% is losing dramatically to the top 10%.

Stated Inflation Targeting

These events happen in response to the Fed's stated inflation policies. 

The Fed specifically targets housing by keeping interest rates too low. 

In response, the price of housing has soared.

Inflation a Tax on Consumers

Inflation is a Fed-sponsored tax on consumers. The bottom 50% are getting killed by it.

Yet the Fed wants more of it. It is thus a direct sponsor or wealth inequality.

Hello Fed, Inflation is Rampant and Obvious, Why Can't You See It?

Home prices have soared well beyond the means of the bottom 50%.

The Fed does not count this as "consumer inflation".

What's important? Inflation or the Fed's and BLS's perverted sense of inflation?

I strongly suggest the former.

And if we substitute home prices for Owners' Equivalent Rent (OER) in the CPI we get a better sense of how far off base the Fed and BLS is regarding inflation.

If you don't like house prices in the CPI then drop the C and rename the index. However, the result of PI is how the Fed has destroyed the middle class for the primary benefit of the top 10%.

For discussion, please see Hello Fed, Inflation is Rampant and Obvious, Why Can't You See It?

A Word About the CPI 

CPI Year-Over-Year Percent Change NSA 2021-05

Earlier today I noted Year-Over-Year CPI Jumps 5%, That's the Most Since August 2008

For now, the economy is running very hot. Bubbles abound.

The Fed, a collection of groupthink fools, is pleased. Consumers aren't. And home prices are not even included in the Fed's measure of inflation.

In case you missed it, please consider How the Fed's Inflation Policies Benefitted the Top 1% In Pictures Part 1. It's a look at the above data in percentage terms rather than dollar terms.

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