Thursday, March 10, 2005

Household New Wealth at New Record

Outside the Beltway posts a report on fourth quarter net household wealth. Link.
In its quarterly "Flow of Funds" report, the central bank said household balance sheet values rose nearly $2 trillion above $46.59 trillion in the third quarter. U.S. household net worth pierced a new record in each of 2004's four quarters.

In other words, new household wealth increased in one quarter the amount we are told by the MSM would be crippling as a "transition cost" over ten years for making Social Security secure for young workers by allowing them to invest a portion of their payroll tax and owning it, rather than staying in the Ponzi racket that is our current pay-as-you-go system. The reason I put "transition costs" in quotation marks is that, with real accounting, there are no transition costs. The accounting used by the government would, literally, be criminal for any private, publicly traded corporation to use. The adoption of private accounts would represent a reduction in long-term liabilities of the SS system. Under generally accepted accounting practices (GAAP), a reduction in long-term liabilities is booked as a current income, not as an expense.

A second observation is that four records in a row should not have come as a surprise, following the cut in marginal tax rates. It has always happened in the past, so there was no reason, except left-wing ideology, for not expecting it now.


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