A New Wealth Record!
Barack Obama has accomplished what no politician, no president, and no person has ever accomplished in human history. He has been instrumental in adding $33.5 trillion to the net worth accounts of all Americans. His closest rival is Bill Clinton at $23 trillion. In fact the two of them have added more wealth than all other presidents combined, and all other Americans combined since 1776, and that includes the Rockefellers, the Fords, the DuPonts, the Waltons—add any names to the list you want. That is quite an achievement because net worth equals wealth, and wealth is the best measure of economic prosperity.
Republicans in Congress should be doing back flips at this news. After all their two main objectives for being in Congress are: 1) to get themselves re-elected, and 2) to help transfer the maximum amount of wealth from all others (you and me) to the top 2 or 3 percent of the richest persons in America. G.W. Bush is likely saying, “Mission Accomplished!”
As you might expect, there are some really bad elements in that news. We now have $88 trillion of wealth, but 90 percent of that wealth rests in the hands of those very few at the top. Here are a few more facts that take the praise out of our wealth stack and the wind out of our sails. In the entire world there is $164 trillion of wealth, and the US has 53.7 percent of that total. But we have only 4 percent of the world’s population. Those numbers make it appear to the rest of the world that all Americans are rich. You and I know that is not true . We produced all that wealth, but we do not all share in it—not equally, not even remotely close to equally. And there is the rub.
Here is a better definition of wealth, or net worth: It is assets minus debts. The assets that the Federal Reserve tallies are the certificate values of stocks, bonds, real estate, and commodities. You may note that the president has no direct control over the issuance or the value of any of these certificates. He or she has some limited control over economic growth, and that is the basic engine that drives security values.
The $33.5 trillion run-up in those values came almost exclusively from new money injections from the Federal Reserve. These funds (called “quantitative easing,” or QE) were intended to get the economy out of recession and back into a growth mode where new jobs could be created, new profits, new tax revenues, and new wealth. The vehicle for all that is M1, or money in circulation. Bankers, however, borrowed all the new money (at 0.25 percent) and channeled it into the wealth accounts of the wealthy. As a result, their wealth shot up from about $50 trillion to $80 trillion. Meanwhile, the economy languished. Eventually, a small amount of that new money trickled into M1, jobs were created, tax revenues started to rise, and the budget deficit started to fall. But it took too long, and it was too costly.
You and I are the ultimate holders of the Fed’s accounts, we empower them, and we have the final say about their actions. Technically, they did their job. The huge glitch in the money transfer from them to the banks is that they cannot tell the banks who to lend the money to. As a consequence, we (the other 98 percent) just took a $30 trillion screwing.
This arrangement between the Fed, the banks, and their wealthy borrowers must change.
The Fix. We need to demand that the Fed’s charter be changed to include this mandate: All new money made available to the banking system must go directly into M1 or M2 in amounts as directed by the Fed. The Fed is empowered to monitor and control these funds and to take all necessary steps to see that this mandate is followed.
I thank you for trying to educate them.
Ron