U.S. household net worth posts biggest gain in a year

Reuters ^ | 3-12-2015

[1010RD]

You’re not paranoid if they’re really gunning for you. ;-]

[expat_panama]

you count the individual's federal bond holdings as a asset, but don't count the taxes that will have to be levied to pay them back as a liability

That's part of the problem (just figured it all out) but we're talking about 'net-worth', it's total assets that someone or some group has minus the total debts of that same 'one' or 'group'.   The topic here is the total net worth of all private individuals in the U.S., which right now happens to be $97T in assets minus $14T in debts = $83T which is an all time high only because the $'s are worth less and the the number of individuals is also at an all time high.

We decided to include the national debt in the private net worth.  If we do that then it's no longer 'private' but rather 'private plus 'national government', and if we've decided to talk about a total net worth for some kind of "private-individual-plus-federal-gov't combo" then we're supposed to be subtracting private plus national debts from the private plus national assets.

In other words, if you say that I personally owe $40K --my share of the national debt-- then I get to have my share of the national assets too.  I get to have 4 acres of federal land (I'm picking the federal building in Manhattan plus 3 plus acres of oil fields in Alaska) along with my 900 oz. of gold from Fort Knox and...

Bottom line here is the reason most business and economist types don't mix national debt into private net worth is because you have to cross through Fantasyland to get there.

[xzins]

Stocks and property....that is such a joke.

Spending cash has not increased at a rate that matches real inflation. But, since the stock market has risen and houses are increasing in value slightly the average for families has risen? Is that what they’re trying to sell?

[tacticalogic]

If you don't account for it somewhere, then you're back to a situation where you can increase private "net-worth" by increasing the national debt. For instance, right now student loan debt counts against individual "net-worth".

If Obama succeeds in nationalizing that debt the private "net worth" just went up, and the figures make it look like we're having a nice recovery.

[expat_panama]

...you can increase private "net-worth" by increasing the national debt...

That's not what I'm seeing, let's think together on this.   If we take money out of our bank and buy T-bills, our net worth stays the same as bank balances are replaced with bond holdings. 

right now student loan debt counts against individual "net-worth".

This whole topic is based on the Fed's "Flow of Funds" report that came out last Thurday.  The private 'net-worth' breakdown is on table B.101 (147th pdf page or page 133 in the report) and the money that folks have loaned out directly to students is listed in is on line 23 at $33.2B.  The money borrowed and owed by students is part of the $3,316.3B  'consumer credit' on line 34 --broken down in L.222 (139th pdf page or page 125 in the report).  I got too much free time on Saturdays.

You're right that we've got to account for the national debt in private hands but net-worth calcs aren't where we should go.  Another blind alley (imho) is name-calling: Obama says adding $4 trillion to debt is unpatriotic. - YouTube.  My take is that what we're spending our tax dollars on is what's important.  I like the idea of slashing fed spending on "human resources" (3/4 of spending) and put a lot more into defense (less than 1/6).  For revenue I vote for borrowing it all from foreigners at zero percent and make this years taxes payable a year later with no penalty.

I say debt's not what we should worry about, but spending priorities are.