Deflation

America: Still $5 Trillion Poorer

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Spare a copper, m'lady?

"For some time now I have been tracking the question of how much value the private sector has lost since the peak. The interesting thing is that since the trough of household net worth in the first quarter of 2009 ($17 trillion off the peak), we have not come close to returning to pre-recession levels of wealth. In fact, the thumbnail that we're now $5 or $8 trillion off the peak recurs in quarter after quarter. It's like one of Zeno's paradoxes or a going-out-of-business sale at an Oriental rug store. We're always $5 to $8 trillion away from the return of the good times."

That was this author six months ago, noting the way the household net worth figure reported in the Federal Reserve's Flow of Funds report shows a curious constancy over time. 

The Flow of Funds report [pdf] for the second quarter is out, and that means I've got my "date" for the weekend! It also means that net worth in these here United States is….

$5.8 trillion below the peak of $64.3 trillion set in the third quarter of 2007. 

That 2007 figure is adjusted not only for inflation but for subsequent data collection. At $58.5 trillion, the current household net worth figure is only $100 billion lower than the $58.6 trillion the Fed actually reported [pdf] in 2007. 

Note that trillions of dollars have been created in an effort to get that inflation, and that through all the difficulties of the past four years you have not once been allowed to enjoy declining prices on anything other than real estate. Additional hundreds of billions have been expended to prevent real estate prices from reaching market-clearing levels.

Nevertheless, Calculated Risk points out that real estate assets have deflated by $6.6 trillion since the peak. That's a small step, but at least it's in the right direction.

NEXT: How Can You Believe in the American Dream Anymore When People Have to Pay Cash for Their Vacation Condos?

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  1. That alt-text reminded me – they used to make coins out of valuable metals.

    Of course, if the Bernank retains his leash on the Fed for long enough, people are going to be melting their pennies for the zinc…

    1. Hopefully, they have been pennywise.

      1. Any time is a good time for pennywise. Great band.

      2. Awesome. I don’t know of a song/band called “Pound Foolish”, so I’ll just link to Stiff Little Fingers, with what I still claim are the most libertarian lyrics written.

        1. The most “libertarian” lyrics? Let us examine the actual words.

          Don’t believe them
          Question everything you’re told

          Sounds like run-of-the-mill skepticism to me.

          It’s time the bastards fell

          Oops, maybe they’re revolutionaries.
          But how will they topple their bastard oppressors?

          Just take a look around you
          At the bitterness and spite
          Why can’t we take over and try to put it right?

          Uh oh. Desperate impotency. You know that leads to…

          I’m a suspect device the Army can’t defuse
          You’re a suspect device they know they can’t refuse
          We’re gonna blow up in their face

          Hooray violent anarchy!
          Or “libertarianism.”
          Or maybe pop lyrics are just…pop lyrics.

          1. Paul is dead.

            1. Art: “I am the Waitress“.

    2. The nickel’s the only contemporary coin with a melt value higher than its face value. It’s only 6 cents at the moment, but what other investment offers an immediate 20% return?

      1. *Rushes to bank to get a shitload of rolled coins and to the hobby shop for a smelter – that is if the lead smelter I have for making bullets doesn’t work.*

      2. Lots of pre-1982 pennies are still in circulation, and they are worth about 3 cents each. Of course, it takes work to separate them from the modern pennies, as opposed to dumping a roll of nickels in a forge.

        mlg – If wikipedia is correct, copper melts at 1900?F. Lead melts around 700?F, so you’d have to check the specs.

        1. Of course, melting Fed Reserve coins is against the law, so we would never actually do anything like this. I certainly have no plans to talk to my artist friend about his forge. But it’s humorous to talk about…

        2. I have about a 2 foot high glass cylinder 3/4 filled with pre-1982 pennies and nickels that I have been collecting for a couple years. I probably should just go to the bank and buy rolls of nickels, but for some reason this is more fun.

        3. Some inventive collapsitarian should build an MRI-equipped coin sorter that would slot the coins with valuable metal content into separate containers. Maybe I’ll invent that and get all my 1981 pennies together, and then it’s “So long Reason! In your face!

  2. Also, you forgot to sign this, Tim.

    1. I was wondering about the by line.

    2. If you click on the “This author…” hyperlink it takes you to one of Tim’s posts.

  3. We’re always $5 to $8 trillion away from the return of the good times.

    Oh, please. When you spread that out amongst everybody, so it’s really just like $20-25,000 each American. (Per capita saves the economy once again.)

    1. ….a trillion dollars is not what it used to be….

    2. Hey Fisty, here’s a pretty good article on Orpik.

      I think Orpik might be my favorite pen. I remember watching him way back in the dark days.

      1. Dude, open practice today. Be there or be square.

  4. That begs the question of whether our “net worth” in 2006 was just overvalued by $5T – $8T. After all, real estate assets were making up a lot of people’s net worth back then.

    1. (yes, I know that’s not begging the question. But “leads to the question” or “brings up the question” isn’t as sexy)

      1. ‘Begging the question’ has got to be the most misused phrase. OM does it all the time, and even though I think he’s awesome, it aggravates me.

        1. It’s been misused so much it is now considered “correct”. I blame Katie Couric’s frequent utterances on The Today Show.

          1. That could be it. Though another big abuser is Jim Rome, who uses that phrase every. other. sentence.

          2. I blame Bush

            1. Yeah, I mean, c’mon ladies, shave that shit!

        2. “Begging the question” may be the most misused but “The fact of the matter is….” has to be the most irritating.

          1. Now let me be clear…

            …there are some who say…

            …the richest amongst us…

            …I reject that false choice…

            …millionaires and billionaires…

            …some say…

            1. I am a firm believer in intelligent design as a matter of faith and intellect, and I believe it should be presented in schools alongside the theories of evolution.

        3. “Begging the question” may be the most misused but “The fact of the matter is….” has to be the most irritating.

          1. What about “at the end of the day”?

            1. What about “the bottom line is…”? Or how about “thusly”? Gillespie seems to be fond of that one. I put that in the same category as “irregardless.”

          2. There are those who say…..

            Most irritating

      2. Oh yeah, today I wrote a script that gave the first 50 fibonacci numbers, put ’em in a string, then formatted that into a right handed aligned column(iterating first so that each member of the string got its own line), and wrote it into a file.

        Basically, I’m really proud of myself for this simple ass shit, but damn when you type ‘vi file.py’ and it works it’s like a drug.

        1. Meh, I never really liked vi. I use nano, despite the fact that Unix snobs mock me whenever they discover this.

          1. I’m learning this stuff for a research project and they use vi, so I use vi.

            Is nano better, or is it just your personal preference?

            —————

            The best resource so far has been the online MIT lectures, in particular ‘intro to compsci’. They even have the course materials online, including tests with solutions. You could literally go to MIT for free, you won’t have the shiny papyrus to earn with, but knowledge is always useful.

            1. Nano is for the semi-retarded and people who can’t take the five minutes to learn how to use vi. In vi, with a few key presses, you can find/replace/skip ahead X words or X characters/etc. With Nano, its features pretty much include saving and loading. I spend most of my day on a Linux command-line though, so I might be a bit biased.

              You can also install Pentadactyl on Firefox after learning to use vi. I literally don’t use a mouse on my computer unless I have to deal with an embedded bit of flash (or I play a video game…)

              1. This is all new to me; the only scripts I’ve ever written were in matlab(if that’s even considered a language) for linalg, and ode so anything is good as the next. But, like I said, my group uses vi, it seems okay to work with, and a lot of people know it so I’ll stick with it.

              2. Nano is for the semi-retarded and people who can’t take the five minutes to learn how to use vi.

                That didn’t take long!

              3. Sorry, I don’t trust a program that fills the screen with tildes that aren’t really in the file and demands an exclamation point before it quits.

                1. +1000

                  vi is ok, but nano is definitely easier imo.

        2. Though it has led to me becoming a peacemaker of sorts. A few weeks ago I entered a room where a vi devotee and an Emacs fan were duking it out. They asked me which I preferred, and I said I used nano, and they joined forces laughing at me.

          It’s good to know I’m a uniter, not a divider.

          1. I don’t know man, this is gettin’ ugly.
            They’re comin’ out of the woodwork to do compgeek battle.

            idle is the best editor EVAH!

            1. Over/under until someone comes along and reminds us that sed is the only text editor you really need?

              1. Or, that you don’t need some fancy “language” to code, just a soldering iron.

                1. Yeah, but I’m always afraid I’ll screw it up when I pull the RAM chip out of the motherboard and start soldering, on account of always having so much caffeine in my system.

              2. sed is an editor?

                1. I still don’t know why people think we need more than BASIC. They can all
                  10 GOTO HELL!

                  1. HELL!:
                    PRINT “OMG, INFINITY?”
                    GOTO 10

                    1. undefined label ’10’

                  2. BASIC? Man up and write assembly.

                2. Of course it’s an editor. That’s where the -ed comes from.

          2. Reminds me of the cartoon spoofing the “I’m a Mac” commercials. Cool guy says “I”m an atheist”. Suited guy says “I’m a Christian”. Third guy says “I’m a Scientologist”. Last panel shows the first two beating the shit out of him together.

            1. This little off-topic cul-de-sac is a revealing psychological study.

              1. Yup. It turns out many of the libertarians on this online forum are tech geeks. Revealing.

                1. More revelations have come out! Many libertarians like science fiction, comics, and porno! Some of the more disturbed even like all three!!

                  1. That so many tech geeks gravitate to an antisocial pseudophilosophy such as libertarianism, and find comfort in chatting anonymously with likeminded misfits in a public forum, is a behavioral curiosity that may interest the social pathologist.

                    1. surely there is sample bias here. You could say the same about the people who hang around slashdot, but it’s hardly libertarian.

                    2. No. /. is for computer geeks who think they have a much better understanding of physical sciences than they do. If you want to get IT advice, its great. Reading the comments on hard science topics is slightly more hazardous to your understanding of the topic than reading NYT article comments on economics.

        3. vi rocks!

          1. I worked as an intern for an NGO where the web page was coded in MS Word

        4. why aren’t you using file.py > output.txt?

          1. Using the editor like an ide is a lot like using idle. There are advantages for beginners.

    1. I concur. Once again, Seanbaby is one of my favorite web-based comedy writers (props also to SugarFree and the fellas at Urkobold).

  5. Tulpa|9.16.11 @ 9:39PM|
    “That begs the question of whether our “net worth” in 2006 was just overvalued by $5T – $8T. After all, real estate assets were making up a lot of people’s net worth back then.”

    Ignoring the ‘b-t-q’ issue, the fact is the peak number was a ‘prediction’; it presumed that each and every one of us could sell our assets at the peak value and realized that value.
    That’s false on the face of it; any mass selling of that amount would drive down the value of those assets instantly, and we’d have found the market value of them *at that time*.
    Not to beat on Tim, but the *claimed* asset value is only that. The market says otherwise.

  6. It’s freaking 2011. We’ve had GUIs for decades. There’s no reason to use crap like vi anymore.

    1. That’s true when you’re just working with files on your local machine, but when you’re SSHing into a remote server it’s a different story. The remote GUI stuff I’ve experienced is all seriously slow, particularly considering that the server you’re connecting to may be serving dozens of other users.

      1. You can use X over SSH. Yes, it’s a total bitch and I only got it to work once, but it is real.

    2. In addition to what Tulpa mentioned, vi is still better than GUIs in terms of powerful features and speed at which you can make edits. If you _HAVE_ to use a mouse, then yes, a GUI will be better for you. If you’re editing text files for a living (say a sys admin), then you’re going to want to learn vi.

      1. If you’re editing text files for a living (say a sys admin), then you’re going to want to learn vi.

        You’re also going to want to learn Krav Maga for dealing with novice users who try to edit their /etc/bashrc file to put a pink smiley in their prompt.

        1. eh. Once you discover the ‘-kill $user’ command in UNIX, this issue solves itself.

      2. Why would a sysadmin not want keyword highlighting for sh? You don’t need to use a mouse to use emacs in a graphical mode or vim.

    3. Fuck that. There is no reason to take your hand off the keyboard and move it over to the mouse just to get to half of the menu commands in newer programs. It’s so much more efficient to just learn some keyboard shortcuts. GUIs are useful in their own way, but file editing? Spreadsheets? It’s just way easier to use the keys.

    4. “There’s no reason to use crap like vi anymore.”

      Sounds like someone who has never needed to swap around columns in a text file while adding/deleting/changing other parts of the line, too– all with one (admittedly complex) command. vi rocks! So do regular expressions. To me, they’re the real power in vi.

      CB.

      1. @Tulpa

        Exactly, if I;m connected from home I’ll use putty which has ~1s delay command window. If I use nx client I can see graphics (molecular modeler for example), but it has an annoyingly long delay.

        1. clearly you need the government to provide you with a fatter pipeline.

          1. Or you can get a Mac, which has a Unix shell with python preloaded so you don’t have to putty.

            1. but mac is for statists! You’re not a true libertarian until you’re running linux, or better yet, FreeBSD, because if your software is supported by IP monster [copro]ations it’s just crony [copro]atism/government-subsidized monopoly

        2. For your next task, little grasshopper, you must surf H&R using only Lynx for a full week.

          (the indentation doesn’t show up correctly, so threads longer than 5 posts look like a jumbled mess….but it still lets you comment)

          1. lynx? Not hard-core enough to be using pure wget | sed -e s/

            1. wget “address” | sed -e s/<.*>//g

              is what I meant to say

              1. ..aand I dropped the question mark to make it non-lazy

  7. Van Jones warned me you people were stealing money. So it’s $5T? GIVE IT BACK, FUCKERS!

  8. In honor of Constitution Day we pose the question: Which part of the Constitution governs the use of laser pointers?

    [T}his year, the House of Representatives declared it had found an answer: Article I, Section 8, Clause 3.

    That clause says Congress has the power “To regulate Commerce … among the several States.” But the House still used those words to justify a bill that prohibited pointing lasers at aircraft: The logic was that they were acting to protect “commerce.”

    This legal loop-de-loop is the result of a new rule in the House, where Republican leaders require every bill to carry a “Constitutional Authority Statement.” The idea was to demonstrate that a new GOP majority respected the enduring restraints of the Constitution.

    Instead, this Congress has often demonstrated something else: an ongoing tendency to make the Constitution say whatever they want it to.

    Over nine months, the House has passed laws about a variety of modern issues that the Founders didn’t mention ? abortion, charter schools and lasers. For authority, they have often turned to broad clauses about “commerce,” the “general welfare,” and the need for “necessary and proper” laws.

    http://www.washingtonpost.com/…..ml?hpid=z9

    1. To be fair even relatively narrow understandings of the commerce clause include regulating interstate carriers such as aircafts. That’s a far cry from something like the substantial effects doctrine…

    2. Technically there are aircraft which are not engaged in interstate commerce (ie flaying between points in a single state) but of course the laser pointerer doesn’t know which ones are which.

      I’d think that preventing actions which directly interfere with interstate commerce is a core function of regulating interstate commerce.

      1. That should be easy to deal with, as Lopez suggested just add a jurisdictional clause (“whoever knowingly points a laser point at an aircraft engaged in interstate commerce…”)

  9. As is by now well known, Robertson suggested on his show that a husband could divorce his wife and “start all over again” if she had Alzheimers. Robertson, in fairness, walked back an inch from his remarks, suggesting that they needed to get a professional ethicist to answer the question while underscoring his empathy for person in that situation and wrestling with the difficulty of the problem.

    Yet the reaction to Robertson’s remarks was surprisingly unified: the condemnation was swift, strong, and universal–especially among the demographic that Robertson purportedly speaks for, evangelicals.

    While much of the ire was rightly directed at Robertson’s characterization of Alzheimer’s as “walking death,” various observers also reacted against the hypocrisy of Robertson’s selective affirmation of divorce. Sounding a note that was echoed throughout the blogs, John Thorpe described Robertson’s view of marriage this way: “In it, you vow to be together until death…or inconvenience?”

    http://www.washingtonpost.com/…..ml?hpid=z7

    1. robertson’s problem is he forgets what has been time-tested but so readily discarded by liberals, libertarians and libertines in general: that society and the state has an interest in fostering the time-tested forms of marriage which promote stable families and thus stable societies…even so-called conservative heroes forget this (witness Reagan signing divorce liberalization laws as governor of California)…divorce should be exceedingly difficult and incentives should be offered to keep families together…

      1. Marriage has always been between and man and a woman and they have always stayed together forever because if you swayed from the norm, there was a very real chance of being FUCKING STONED TO DEATH, so we should totally keep it that way. You know, because “society” has made its choice and individuals shouldn’t be able to say, “you know, society’s narrow definitions of what marriage should and shouldn’t be don’t work for me.”

        Fuck off collectivist.

      2. “that society and the state has an interest in fostering the time-tested forms of marriage which promote stable families and thus stable societies.”

        Ya know, I really don’t give a shit about the “interests” of society and the state.

        1. it is silly to say you don’t care about the interests of society because you are a member, it is your interest as well…the rampant crime and disorder that comes from the break down of the family impacts all of us, so it is certainly the duty of the state to combat it…why should the state have to wait to combat the consequences by paying police and building prisons for people who come from the broken homes when they can arrest the problem long before by taking active steps to foster time-tested family arrangments? ultimately this leads to smaller government so even libertarians should be in agreement…

          1. it is silly to say you don’t care about the interests of society because you are a member, it is your interest as well…

            Wrong. My interest is what best works for my family. If my wife turned out to be a cheating ass whore who came home drunk every night, it would be in the best interest of my family to kick that bitch to the curb. I don’t give a damn that “society” thinks that it would be better to stay together.

            Fuck off collectivist.

            1. your actions do not exist in a vaccum…your divorce could negatively impact your children and they could negatively impact the rest of us and your example could negatively impact struggling families…its pretty clear this is the case though of course this had been worked out in the hundreds of years in which people chose traditional marriage and reenforced it with proper state action…

              marriages should be as permament as the children they are meant to create and nurture…the state and society can either pay a little up front to make this so or pay a lot in prisons and social workers to address the inevitable consequences of not doing so…

              1. its pretty clear this is the case though of course this had been worked out in the hundreds of years in which people chose traditional marriage and reenforced it with proper state action…

                If it has to be “reinforced with proper state action”, it isn’t a willing choice on the part of people, now is it?

                Using “proper state action” (whatever the fuck that is) to uphold a particular cultural institution is indicative that said institution ISN’T working in the natural order of human existence. If it’s “natural”, you don’t need to force people to do it.

                Fuck off collectivist.

          2. Sounds like the type of reasoning used to support the WOD. Unintentded consequences, how do they work?

      3. “time-tested forms of marriage which promote stable families and thus stable societies”

        I see. So we should go back to arranged marriages? Marriages to unify feuding families? Actually, polygamy is the most “time-tested” form of marriage. why should that be illegal?

        1. If you’re going to have marriage, I actually think arranged marriages are not a bad idea. It sounds horrific to us today of course, but note that we’ve all but abandoned the traditions of Western marriage and are only paying it lip service at this point; in our society marriage really is an obsolete institution.

          1. [flawed] empirically speaking, you’re actually correct. Cultures with arranged marriages tend to have lower divorce rates.

        2. the natural form of the family is not necessarily the oldest one, though I don’t concede your assertion that polygamy is such…have you any proof of this? it may seem quaint to you but the Biblical teaching on this is that one man-one woman was the original…perhaps you don’t think that teaching is literally true, but i think you would have to concede it at least is a mythological recognition of the original and most natural family form, the archetype of the family unit…it is the form which has long dominated around the world…such wide-spread and long-standing acceptance demonstrates that it is simply natural…it speaks to innate human needs and immutable principles of group dynamics…why else would most of the world, so varied in other aspects, come to such a widespread and longstanding common choice? states that do not foster it do so in the face of human nature and history…

          1. The biblical account of relationships is no more valid than that of ancient Greeks where the most pure form of affection and love was man-boy love in the gym.

            Fuck off collectivist.

          2. you never argued ‘the biblical teaching’. You argued ‘time-tested’. People over much time and over many, many cultures have been polygamous – from avram to pu’yi.

          3. such wide-spread and long-standing acceptance demonstrates that it is simply natural.

            CITATION PLEASE. Polygamy is far more wide-spread and long-standing than monogamy.

            1. “only approximately 17.8% (100) of 563 societies sampled in Murdock’s Atlas of World Cultures has any form of monogamy”

              For the most part, even Americans, at best, are merely *serially* monogamous.

              1. I’m guessing at least 500 of those societies are no larger than a village. The dominant cultures in the world are all (at least in theory) monogamous.

                These ethnographic studies often have a subtle flaw in that they treat the Wabahuti and Buwatahi and Tuhawabi tribes in a 7-mile radius of each other as separate cultures, but then lump Miami, Poland, Utah, and New Zealand together as “Western culture”.

                1. http://www.washingtonpost.com/…..02485.html

                  Saw the data with mine own eyes (researcher works in the same building as me)

                2. besides, some of us prefer submissive cultures.

    2. I’m getting a severe case of the lawlz seeing Pat Robertson defer moral questions to “a professional ethicist.”

  10. The Times talking sense?

    Over the past three years, the United States has been committing the planning fallacy on stilts. The world economy has been slammed by a financial crisis. Countries that are afflicted with these crises typically experience several years of high unemployment. They go deep into debt to end the stagnation, but the turnaround takes a while.

    This historical pattern has been universally acknowledged and universally ignored. Instead, leaders in both parties have clung to the analogy that the economy is like a sick patient who can be healed by the right treatment.

    The Democrats, besotted by the myth that the New Deal ended the Great Depression, have consistently overestimated their ability to turn the economy around. They regard the Greek crackup as a freakish, unlucky break, even though this sort of thing is a typical feature of a financial crisis.

    Republicans, who should know better, also have an inflated sense of the power of government. In the presidential debates, Rick Perry, Mitt Romney and Jon Huntsman argue about which one oversaw the most job creation during his term as governor, as if governors have an immediate and definable impact on employers’ hiring decisions.

    The reality, of course, is that the economy is not a patient. It is a zillion, zillion interactions. Government is not a doctor. Most of the time, it is a clashing collective enterprise that is occasionally able to produce marginal change, for good and for ill.

    Democrats should be learning about the limits of social policy. As in the war on poverty, as in the effort to transform American schools, as in the effort to create prosperity in the developing world, it is really hard to turn around complex systems.

    Republicans should be reflecting on the fact that if a Republican president were in office right now, and even if he or she did sensible things, the economy would still be in the dumps. It would be Republicans losing “safe” Congressional seats in special elections.

    Of course the pink elephant in the room with this reasonably well thought out piece is that Brooks never once mentions that there are candidates out there who don’t fall in to this planning fallacy trap because they share the belief that government has very little power to positively affect something as huge and complex as the economy, and that virtually anything they try to do only slows down that process of rehabilitation. He maintains via omission that the only choices we have are politicians who overestimate their capacity to “help”.

    If you want to keep your sanity, stay away from the comments.

    1. The Democrats, besotted by the myth that the New Deal ended the Great Depression, have consistently overestimated their ability to turn the economy around.

      In other words: The Democrats are a) deluded and b) stupid.

      1. That’s still one of my favorites.

        “um, yuh, tea-bagger! liek single handedly ending the gr8 depressionnn wit the new deal and being the best presadint ever is a small deal, huh???”

      2. I’m truly surprised that the Gray Lady actually ran this piece. It’s not a hit-job on republicans/libertarians, and they heavily criticize not just particular Team Donkey politicians, but also the entire political premise of the left (namely that government is our savior from the evil free market folk).

        Of course the comments are full of leftist stupidity, namely in the vein of “If it weren’t for those obstructionist Republicans government could help, but they’re holding the awesome power of government back.”

  11. This is very informative regarding government spending:

    http://www.youtube.com/user/thepowerlineblog

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