The Federal Reserve reports that household net worth declined 4.7% in the 3rd quarter of this year, the fourth consecutive quarterly decline. Also, household debt declined for the first time in history, not because people are cutting back on borrowing, but because foreclosures are erasing mortgages from the household debt column.
The real story is that this represents an acceleration of a three-decades-long decline. Median household net worth is now lower than it was in 1976 which, not coincidentally, was the first year in a 33-year long string of consecutive trade deficits.
And, in 1976, the per capita share of the national debt was only about one third of each person’s net worth. Today it far exceeds it!
Others, who are satisfied with superficial analysis and explanations, will tell you that this is all due to the credit crisis which, once fixed by the government bail-outs, will put us back on a path to prosperity. Bull! This is clear evidence of the consequences of the economic collision I’ve warned of in Five Short Blasts – the rising unemployment and poverty caused by the collision between falling per capita consumption (exacerbated by free trade with grossly overpopulated nations) and rising productivity.
There will be no end to our decades-long economic decline until we stop treating symptoms and get to the root cause – the effects of worsening overpopulation, both imported and home-grown.