Saturday, September 22, 2012

The Fiscal Gap is Really Over $222 Trillion Meaning the U.S. has NEGATIVE Net Worth

This is bad news here. In light of this week's release of Household Net Worth data at $62.7 trillion as of the 2nd quarter of this year - DOWN a tad from Q1 - the picture is gloomy. It's not so much that net worth slipped, but that compared to what is known as the "fiscal gap", or Alternative Fiscal Scenario (AFS) from unfunded liabilities at a staggering $222 Trillion that we see just how piled high and deep the country is.. By this measure, the U.S. has a negative net worth of in excess of $100 trillion when you consider that along with the $222 trl AFS...

-There is $16 trl in treasury debt;
-A Fed balance sheet of over $2 trl worth of junk paper to say nothing of the mystery $16 trln given to banks during the height of the financial crisis.

More on the AFS: Blink! U.S. Debt Just Grew by $11 Trillion via @BloombergView

Oh, and the latest household net worth data dump from the Fed merrily assumes that all of that net worth can be  liquidated. Paper worth vs real, future obligations do not portend happy financial times ahead.

And by the way, 68% of the so called net worth is financial assets, or over $51 trl. It doesn't take a rocket scientist to figure out that QE3 is aimed lock stock and barrel at inflating this realm. Good luck to them in keep the inflation bogey man in the closet.

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