The bottom line is that there has been basically no wealth creation … since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.
At one level this should come as no surprise. For most of the last decade America was a nation of borrowers and spenders, not savers. …
Why should we have expected our net worth to go up?
Yet until very recently Americans believed they were getting richer, because they received statements saying that their houses and stock portfolios were appreciating in value faster than their debts were increasing. … Then reality struck… The surge in asset values had been an illusion — but the surge in debt had been all too real.
So now we’re in trouble — deeper trouble, I think, than most people realize… For this is a broad-based mess. Everyone talks about the problems of the banks… But the banks aren’t the only players with too much debt and too few assets; the same description applies to the private sector as a whole.…
If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression.Since nothing like that is on the table…