STAFF NEWS & ANALYSIS
Fed Evinces Tracking Unease
By Staff News & Analysis - May 31, 2013

Households Still Haven't Rebuilt Lost Wealth … Americans have recovered only 45% of the wealth they lost during the recession, adjusted for inflation, the Federal Reserve Bank of St. Louis estimated. The findings were released as part of the St. Louis Fed's 2012 annual report, which was made public on Thursday. In the report, the Midwestern bank announced the launch of a new Center for Household Financial Stability, which will track the nation's effort to dig itself out of the hole it found itself in during the financial crisis. – Wall Street Jounal

Dominant Social Theme: Things are pretty bad but we're on top of it! We got the numbers.

Free-Market Analysis: Just like the top Eurocrats at the EU, Federal Reserve bankers are compulsively taking the pulse of the US economy and its people.

There is a worry here, just as there is across the pond, that people have been pushed too far, that confidence in regulatory democracy has been shattered and that people are ready in aggregate for a new paradigm.

It is a bit like a dry forest, they fear, simply waiting for a spark. Yes, this is no doubt the concern of those who have created and who manage the modern demos.

One can see in this report, in its dry words, the point/counterpoint of an uncertain psychology. Like Hamlet, those extracting data from these surveys question every part of it and look for answers in statistics that will ensure the continuation of this tottering pyre. Here's more:

In the report, the bank said data shows a near complete recovery in total aggregate wealth is misleading. The analysts argue aggregate household net worth data isn't adjusted for inflation, population growth or the nature of the wealth.

They noted a lot of the recovery in net worth has been tied to the stock market, and is thus concentrated in holdings of wealthy families. "Clearly, the 91% recovery of wealth losses portrayed by the aggregate nominal measure paints a different picture than the 45% recovery of wealth losses indicated by the average inflation-adjusted household measure," the report said.

… The St. Louis Fed's new effort comes as other parts of the Federal Reserve are also taking stock of household balance sheets. The New York Fed has for some time released reports on household debt and borrowing, and in the most recent data, the bank found households continue to cut debt in most sectors.

Note the new New York Fed, too, is tracking the numbers – household debt in particular. It is to their credit that they do not seek to obscure the full damage of what has been perpetrated in their name.

No happy talk here. Unlike tales for public consumption, these sages seek the truth in order to tailor their responses to reality.

And the reality is that the US middle classes were absolutely slaughtered financially in the past five years. Investments were ruined, massive unemployment decimated plans for the future and neither the nation nor its citizens have recovered despite constant proclamations of "green shoots."

What recovery there is has been generated by massive monetary inflation and corresponding currency debasement. Failed enterprises have been propped up, misallocation enshrined and the dominant social theme of central banking omnipotence has been broadcast once more.

But Bernanke is leaving and the compulsive pulse-taking of the US public betrays the continued concerns of the US ruling class. Homeland Security is buying guns and tanks, the FBI is continually shooting "suspects" – apparently to silence them – and politicians are "eating their own" at the federal level amidst allegations of wiretapping, corruption and fraud.

After Thoughts

It's not easy being a leader of a regulatory republic these days. It will get harder still …

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