Hi System

Thanks for the follow up. Firstly, I agree with her view of how corrupt the whole Clinton clan is. I can’t fully express my own level of disgust towards H. Clinton for her arrogance, lies, pandering and manipulative statements. State Department emails being only one of a huge list, but that’s off topic. I do think the author is really fearful of another crisis driven by the security she described. That’s why I attempted to put it’s scale into perspective, and scale is critical here!

On your question of what happened to all that household wealth? I would offer up a handful of suggestions:

1) 2006 was basically the peak of the housing bubble, for the 22 million families right in the middle of the income distribution (those making between $39,000 and $62,000 before taxes), about 90% of their assets was in their home. On top of that, approx 7 million homes were foreclosed- which has an even more onerous impact on net worth.

2) Unemployment and under-employment have prevented people from rebuilding their savings, the economic recovery has been one of the most anemic in modern history.

3) Real wages have essentially be stagnate for most of the economic recovery, yet many costs (x- energy- but only recently) have continued to expand. Costs like healthcare, college tuition, rent, cable bills… resulting in people being unable to rebuild their savings and in some cases needing to dip into what savings they have left.

4) Those that did have savings via IRA’s, Roth’s, and 401K’s likely panicked and sold near the lows of the stock market’s decline, its typical. From the 2007 peak to the March 2009 trough the S&P 500 fell some 54%. Most who did sell, likely missed getting back into market for years, and missed a powerful recovery.

5) During the last expansion from 2003 to 2007, according to an analysis by Fed economists, American homeowners took $2.3 trillion in equity out of their homes through cash-out refinancing and home-equity loans, and they spent about $1.3 trillion of it on cars, boats, vacations, flat-screen televisions and shoes for the kids. Stuff that depreciates that was replaced with debt- not a good combination!

I think these are the key factors explaining why US net worth has deteriorated. The good news is that unemployment is now about 5% and wage growth is beginning to happen.