for those of you who keep track of such things here, mr smith provides evidence that the george carlin quote about you not being in the club is accurate especially when it comes to bank accounts;

November 17, 2021

Given that political power in America is a pay-to-play auction in which the highest bidder wins, how this incomprehensibly lopsided ownership of wealth plays out is an open question.

Wealth inequality easily falls into an abstraction unless we contextualize it in meaningful ways. I've annotated two St. Louis Federal Reserve (FRED) charts--the net worth of America's top 1% and the net worth of America's bottom 50% of households, roughly 66 million households--to show their net worth and their share of all household net worth, and put this in the context of inflation and GDP (gross domestic product) of the U.S. and other nations.

These charts may look complicated but the idea is actually pretty simple: I've noted how each group (the top 1% and the bottom 50%) did at the top and bottom of each bubble: the dot-com bubble in 2000, the stock/housing bubble that topped in 2007, and the current bubble, noting the pre-pandemic data at the end of 2019 and the most recent totals (2nd quarter 2021).

Next, I pose a simple question: if the net worth of each group had tracked the growth of America's GDP (i.e. its real economy), where would its net worth be now? All else being equal, the assumption that net worth would rise more or less in lockstep with the expansion of the entire economy makes sense.

I note both the dollar amount of each group's net worth and their share of total household wealth to track their slice of wealth relative to the entire pie of wealth and to each other's slice. In other words, as the net worth pie expands, does each group expand its share of the pie or not?

What we find is a stunning asymmetry: if the top 1%'s net worth has risen along with GDP since 2000, it would now be about $21 trillion. Instead, it's now over $43 trillion, a $22 trillion gain above where it would be had it tracked GDP growth.

For context, this is larger than the GDP of the U.S. ($21 trillion) and the combined GDPs of the six largest economies behind the U.S. and China: Japan, Germany, UK, France, India and Italy which total about $20 trillion. It's more than the nominal GDPs of China and Japan.........read more........