U.S. household wealth has never been higher…
According to the Congressional Budget Office (CBO), America’s household net worth just hit an all-time high. As of March 31, U.S. household assets climbed to $102.6 trillion. They were offset by $14.5 trillion in liabilities… leaving a record high of $88.1 trillion in household net worth.
But the chart below (showing 2013 numbers, the most recent data) reveals a stark, if unsurprising, disparity in American family wealth…
From the report:
[Since 1989], the share of wealth held by families in the top 10 percent of the wealth distribution increased from 67 percent to 76 percent, whereas the share of wealth held by families in the bottom half of the distribution declined from 3 percent to 1 percent.
Said another way, half of America has seen its “share of the pie” drop from 3% to 1%, while the rich have never been richer.
If you want to pinpoint the driver of the growing prosperity gap, look no further than your local central banker (the Federal Reserve)…
Of total household assets, 69% were financial assets (things like stocks, bonds, mutual funds, pensions, and deposits). These are mainstays of the upper classes’ asset breakdown. Only $31.5 trillion were real, tangible assets—including $26 trillion worth of real estate (the leading source of middle-class net worth).
As more new currency flooded the system, the upper classes’ assets enjoyed the greatest gains. Meanwhile, the bulk of society was forced to cope with 0% interest rates brought on by so much new money creation.
Bottom line: Central-bank monetary policies are on track to devolve into even more “experimental” monetary schemes. These will continue to be a boon to the wealthiest American families… and a form of financial repression for everyone else.
That’s why we continue to recommend financial assets in the Palm Beach Letter portfolio. There’s no telling just how high the flood of fresh money may carry them.