By David Stockman at Brownstone dot org.
Here's a graph the Keynesians, statists, and Wall Street gamblers—yes, we repeat ourselves—would prefer not to explain. At the same time, it also explains why socialism at this late date in history—and after all its abysmal failures the world over—is having some kind of dubious second coming in America.
During the last three decades the national savings rate (red line) has essentially collapsed, having fallen from 6.3% of GDP in 1997 to 0.5% of GDP in 2025. Between the same two dates, however, the net worth of US households (blue line) has soared from 4.6X personal income to 6.5X personal income.
In economist jargon, the question would recur as follows: How in the world over a three-decade period did the stock of wealth soar when the flows of savings virtually evaporated?
Or in plain English, how did so many Americans get so damn rich while living high on the hog? And we do mean wealthy: According to the Fed's Flow of Funds data, household net worth erupted from $32 trillion in 1997 to $169 trillion at present. These figures amount to an average of $320,000 per household in 1997, which grew to an average of $1.250 million per household 28 years later.
Needless to say, some substantial part of that gain is reflective of inflation. But even in constant 2025 dollars, average net worth per household has virtually doubled from about $630,000 to the aforementioned $1.250 million.
In short, the average savings per household diminished to nearly zero over that three-decade period—even as $85 trillion in added wealth accumulated in household balance sheets.
As it happened, of course, the massive $136.4 trillion increase in net worth over this period went to the holders of financial and housing assets, less associated debts. Accordingly, with a lot of debt at the bottom income rungs relative to modest asset levels, the resulting wealth distribution skewed sharply to the tippy-top of the economic ladder.
To wit, $44.1 trillion of the gain was accounted for by the top 1% of households and fully $94.2 trillion by the top 10%. And while Keynesians, statists, and stockbrokers would have you believe this was nothing more than Mr. Market at work, we beg to differ.
Under a regime of sound money and honest markets there would have been no soaring gains in net worth relative to the very modest gains in national income and savings. To the contrary, the former is the work of the money-printers at the central bank and the Cantillon Effect of monetary inflation.
That is to say, when the Fed prints money it effectively first deposits the receipts among the primary bond dealers, which sell government bonds to its open market desk and then send the proceeds ricocheting through the canyons of Wall Street. At length, the inflation gets to Main Street in the form of higher energy, food, and other everyday prices, but not before much of the inflation is absorbed by the leveraged gamblers on Wall Street.
So there is no mystery as to why the wealth distribution in America has been skewed sharply to the top of the ladder during recent years. The culprit was not the Reagan tax cuts back in the 1980s or the inherent inequality of capitalism.
To the contrary, the normal skew of wealth to the most productive, capable, persistent, and enterprising households has been badly thrown out of kilter by the capture of the Federal Reserve by Wall Street speculators.
In the interim, however, the chart below speaks for itself. By embracing Greenspan-style monetary central planning in lieu of gold standard sound money, the modern day GOP has paved the way for the emerging Mamdani socialist coup in the Democrat Party.
That is to say, the wealth disparities shown below did not exist with nearly this much skew as recently as 1987, when Alan Greenspan's pro-inflation, pro-wealth effects regime became official policy at the Fed. Then again, the Fed's balance sheet stood at $250 billion in Q2 1987 after 73 years of a moderately tame pri...