Home > upward income and wealth redistribution > US median wealth is down by 20 percent since 1984

US median wealth is down by 20 percent since 1984

from Dean Baker

A NYT article reported on a study from Russell Sage reporting that median household wealth 36 percent lower in 2013 than 2003. While this is disturbing, an even more striking finding from the study is that median wealth is down by around 20 percent from 1984.

This is noteworthy because this cannot be explained as largely the result of the collapse of house prices that triggered the Great Recession. This indicates that we have gone thirty years, during which time output per worker has more than doubled, but real wealth has actually fallen for the typical family. It is also important to realize that the drop in wealth reported in the study understates the true drop since a typical household in 1984 would have been able to count on a defined benefit pension. This is not true at present, so the effective drop in wealth is even larger than reported by the study. (Defined benefit pensions are not included in its measure of wealth.)

  1. F. Beard
    July 29, 2014 at 2:40 pm

    Usury for (legally) stolen* purchasing power (especially from the workers) is one way to create a lot of wealth (and at least WWII too) but it is on its face not a good way to justly share that new wealth.

    One look at a balance sheet should inform that money can be created as shares in EQUITY and not just as almost entirely virtual (for the banking cartel as a whole) liabilities.

    *Via extensive government privileges for the banks.

  2. July 29, 2014 at 8:11 pm

    Please share, then help to formulate a solution:

    Dear Justaluckyfool,

    The fact that banks have the power to create most of the money has led to the highest personal debt in history, unaffordable housing, worsening inequality, high unemployment and banks that are subsidised and underwritten with taxpayers’ money.

    We do our best to make the functioning of the current system and its impacts on society easy to understand and accessible to everyone. The short videos below explain how the current debt-based money system has led to unaffordable housing, a mountain of personal debt, and an ever-rising gap between the very richest and the rest of us.

    WHY ARE HOUSE PRICES SO HIGH?

    Thought it was because there’s too many people and not enough houses? This 2 minute video explains why house prices are really so high…

    WATCH: HOUSE PRICES – WHY ARE THEY SO HIGH?

    WHY IS THERE SO MUCH DEBT?

    Ever wondered why there’s so much debt? If personal debt, government debt and international debt is at an all-time high, who did we actually borrow all this money from?

    Watch this 3 minute video: Why is there so much Debt?

    WHY IS THE GAP BETWEEN THE RICHEST AND THE REST OF US GETTING BIGGER?

    Because almost all of our money is ‘on loan’ from banks, someone has to pay interest on nearly every pound in the UK. This interest redistributes money from the bottom 90% of the population to the very top 10%. Meanwhile, inflated house prices and financial instability all lead to a growing gap between the poor and the rich.

    Watch this 3 minute video: Inequality: Why are the rich getting richer?

    If you have any questions you might find an instant answer in our Frequently Asked Questions. If you can’t find your answer, please post your question in the comments underneath.

    Best wishes,
    Ben, Fran and Mira
    http://www.positivemoney.org

    Positive Money is a not-for-profit research and campaigning organisation formed in May 2010 to raise awareness of the deep flaws in our current monetary system. We believe these fundamental flaws are at the root of – or a major contributor to – problems of poverty, excessive debt, growing inequality, unemployment and the environmental breakdown.

    Share this email:
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    The Solution? Challenge Justaluckyfools next comment.

  3. July 29, 2014 at 8:16 pm

    The solution:
    Fix the “systemic flaw”
    “LEGISLATE FOR “We the People” WHAT WE HAD LEGISLATED THE CENTRAL BANK TO DO FOR THE Private For Profit Banks (PFPB) !
    ISSUE OUR OWN MONEY AS LOANS AND CHARGE A TAX CALLED INTEREST ! ! ! ”

    “Who has an accurate understanding of ‘Money’?
    If one has such an understanding, maybe, perhaps therein lies the solution.
    “Money is the NOTHING you get for SOMETHING to exchange for ANYTHING”,Soddy.
    All money is a receipt of wealth, yet all wealth is not receipted.
    Fiat must be created in order to redeem something of value into anything of value.
    If not, there would be only the impossible transferring value via barter.
    There must be a issuer of the sovereign currency be it colorful paper, coin, or printed dots.
    Call it a Central Bank, or a Monetary Group, whatever you like but it must exist and it must be able to control the quality and quantity of the sovereign currency. The total of which it is custodian of and not owner of, since the sovereign group being the owners of the entirety expect their sovereignty to redeem their fiat “on demand for any goods or services”.
    As per Frederick Soddy, Please read “The Role Of Money” (Free full download) http://archive.org/details/roleofmoney032861mbp

    “The real question is who is the Monetary Sovereign in our society: the Government we elect, or the Banks we don’t?”(scottonthespot)
    While we the people were asleep at the wheel, we legislated hat PFPB would be allowed to issue our currency via loans and also be allowed to tax that issuance via interest.
    We loss sight of “In God We Trust” and turned that trust over to the Private For Profit Banks.
    We have also now discovered that they can “print an unlimited quantity of issuance .
    Since reserves are required after issuance, a self fulfilling reserve is met. Also the Fed MUST honor that issuance with ‘good faith and credit’ or the system will fail.
    A Central Bank, under full transparency being the sole issuer of the currency. Currency that is owned by the people, currency that the Central Bank is the caretaker , custodian and stores while creating lawful transfers of the currency’s redemption value. The total assets of the Central Bank is the total of the redeemable goods and services of the entire sovereignty subject to audit (2014 being set at $900 trillion).This is the “Capital” of the “Capitalistic” sovereign group.This is the wealth of the group.
    In order ” “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…” the Central Bank must work “For the People” while at the same time without appropriating the people’s already owned “goods and service.”
    What better way is there than:
    DO FOR OURSELVES WHAT WE HAD ALLOWED THE CENTRAL BANK TO DO FOR THE Private For Profit Banks (PFPB) !
    LOAN OUR own MONEY and CHARGE (interest) A TAX ON IT.
    AMEND THE FEDERAL RESERVE CHARTER; TURN THE FED RESERVE INTO THE FEDERAL RESERVE BANK OF AMERICA (FRBA),RESTORE MONETARY POWER BACK TO THE PEOPLE ,OPERATE THE FRBA WITH ABSOLUTE TRANSPARENCY, (“GLINDA,the Good Witch, owns a Great Book of Records that allows her to track everything that goes on in the world from the instant it happens.”_The Road to Oz)
    Form a more perfect “capitalistic “monetary circle: $100 trillion issued as loans to come back as $200 trillion as payment while at the same time as it returns creates $100 trillion in new loans while spending $100 trillion as Congressional appropriations for the benefit of the people.
    No inflation or deflation for there is zero change in the capital value of the sovereignty.
    There is zero change on the balance sheet of the Central Bank; a true zero net change.
    Comments by Justaluckyfool ( http://bit.ly/MlQWNs )
    ( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)
    Read and challenge:
    Frederick Soddy writings, namely “The Role Of Money”
    (Entire book as a free download… http://archive.org/details/roleofmoney032861mbp
    “Capitalism is the “best” system to date devised by mankind. As it is administrated, perhaps, is where the “flaw” is manifested. If capitalism used its Central Bank properly,that is for the betterment of the common good, with equality and justice for all, capitalism would be the best ways and means to help “form a more perfect union….”, Pontifical Council.
    WHY WOULD YOU NOT…….
    “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha.

    “LEGISLATE FOR “We the People” WHAT WE HAD LEGISLATED THE CENTRAL BANK TO DO FOR THE Private For Profit Banks (PFPB) !
    ISSUE OUR OWN MONEY AS LOANS AND CHARGE A TAX CALLED INTEREST ! ! ! “

    • August 1, 2014 at 5:42 am

      While this question I think has a standard answer, i’ll ask it anyway—if the bank loans 100t$, gets back 200T$ (from repayment of the loan plus interest) and puts half of that into government programs and the other half back into circulation as loans, where did the 100T$ in interest come from? Obviously the money supply is not conserved—either some $ was printed, or it was derived (taken ) from somewhere else (eg maybe the loan was used to buy a gun which was used to rob a different bank).
      If one was thinking of real commodities, so a bank loaned someone an apple and some oil, and that was used to find or grow more apples, and find oil, then interest could be earned, since you could give back apples and oil. .

  4. July 30, 2014 at 8:19 pm

    My suspicion is that this is essentially the same phenomenon as middle class real wages having barely grown over the past generation. The reality is that the rewards of economic growth over that rough period of time have been accumulated mostly at the top of the income spectrum. Why is that? It’s not in all likelihood house prices, or just a feature of capitalism, or the result of globalization or technology. Policies matter, and unfortunately those policies have not been moving in a positive direction for the poor and middle class in recent decades.

  5. Hepion
    August 1, 2014 at 2:09 am

    Why did the study find that median wealth decreased between ’09 and ’11 even tough house prices had already reach the bottom in 09? Could it be since this is a survey based that people don’t really know their wealth levels and only slowly realize changes that have happened?

  6. August 1, 2014 at 2:52 pm

    p.s. As one would likely expect, wealth tracks essentially the value of the stock market, though probably many other indices show the same pattern (GDP, growth rate, housing and land values, etc.—and probably debt and income). So this suggests this type of analyses may be borderline absurd—presumably one could double the median wealth simply by passing a law that relabels the value of every dollar and thing valued in dollars by a mutiple of 2 (so you get the ‘wealth effect’).

    As I have tried to explain in my new all new micro, macro and math text book (since more are better, and over time knowledge evolves, so more recent findings on equations like 1+1=2 are revealed (eg a xerox copy of an old math book, repackaged as new, is as fresh as the new information gleaned by looking at your image in a mirror from a closer distance—its more accurate since the photons have fewer inches to travel) while obviously the gold standard, nor energy, nor entropy are any more accurate than the dollar, a universal stamdard unit of wealth measured in tulips is the correct , relativistically invariant (valid in all reference frames) standard. (Of course one must correct for the fact that tulips have life cycles, but one can assume a representative tulip takena at a static snapshot of time, and solve for the equilibrium and ergodic value; also tulips can be bred to develop new varieties, such as M1, M2, M3, bitcoins, ithaca hours, duckets, etc. but just as all animals are equal, though some are more equal than others, all kinds of tulips have the same, if incommeasurable (grossly substitiaility property, law of one price) value since like bitcoins they are valued by an efficient market of ideas (modulo some friction) (This follows from studies of ‘throwing darts at the real line’ leading to V=/L (in set theory).

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