"I have come here to chew bubblegum and kick ass. And I'm all out of bubblegum."- 'Nada' (Roddy Piper) in the film 'They Live'
"The looniest movie of the season and also one of the most engaging".
"The US economic structure remains viable – these days the 'envy of the world' – only so long as perceived wealth from securities markets remains grossly inflated. The consumption-based US economy requires record household sector perceived wealth (inflated Household Net Worth). And this requires ongoing loose financial conditions, strong Credit growth and buoyant financial flows."As a proxy for the 'US debt securities market', I combine Fed data for outstanding Treasury, Agency, Corporate and muni debt securities. I then combine this with Total Equities to come to my proxy of the 'Total Securities' markets. During Q1, Total Securities jumped $759bn to a record $73.195 trillion. Total Securities as a percentage of GDP jumped five percentage points to a record 414%. For perspective, this ratio began the nineties at 183%, concluded 1999 at 356% and then rose to 371% to end 2007."The value of US Household (and non-profits) assets jumped $1.611 trillion during Q1. By largest categories, Financial Assets jumped another $1.07 trillion and Real Estate assets increased $500bn. And with Household Liabilities little changed for the quarter, Household Net Worth (assets minus liabilities) rose $1.6 trillion to a record $84.925 trillion. Over the past year, Household Net Worth inflated about $4.6 trillion, with a two-year gain of $12.6 trillion. Since the end of 2008, Household Net Worth has ballooned a stunning $28.4 trillion, or 50%."One cannot overstate the integral role the inflation in Household Net Worth has played in the Fed's reflationary policymaking. Household Net Worth ended Q1 at a record 481% of GDP. This compares to 447% to end Bubble Year 1999 and 476% in Bubble Year 2007."