In the hours following the release of the latest Flow of Funds statement on Thursday, some of the glorified powerpoint-cum-statist tabloid media outlets released a very disingenuous and flat out wrong comparison of household net worth to total US debt (even though technically total US GDP was showed, although the two are now interchangeable with total US Debt having surpassed total US GDP). Supposedly this was intended to demonstrate the “net worth of America is massively positive” and that America is “not even close to being broke.” Of course, by doing so they merely confirmed once more their complete cluelessness when it comes to the debt market, as US household net worth (source) is the direct beneficiary not just of sovereign debt, but certainly all on-balance sheet debt verticals in existence which include, again from the Flow of Funds report tab L.1, household, non-financial corporate, non-financial non-corporate, financial and rest of world debt. The grand total is also conveniently tracked by the Fed in the Total Credit Market Debt Owed category (source) which in the last quarter was $55.3 trillion: just “modestly” above the $16.3 trillion strawman of merely US Federal debt. Comparing this to the $65 trillion in household net worth certainly gives a far less rosy picture of just how “massively positive” net worth of America is.
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