The total value of all assets in the world dropped nearly 5% in 2015 to around $250 trillion, but the distribution of that wealth has continued to become more heavily weighted towards the wealthiest individuals, the so-called “one percent.” Since its records began, Credit Suisse reports that this portion of the population now controls more than 50% of the wealth in the world, with the United States accounting for the majority within that group, at 46%.
As the world economy sputters this year, economies in Europe and Latin America saw declines in household wealth of 12% and 17%, respectively. China and North America accounted for the only regions that saw an increase in household wealth, at 7% and 4.4%, respectively.
However, this increased wealth has been associated with an increase in debt levels for both China and North America. In the U.S., this was facilitated by the easy money policies of the Federal Reserve following the 2008 financial crisis.
Digging further into the data, citizens in the U.S. may be surprised to learn that if they earn at least $3,210, they are among the top 50% in the world, after debts have been subtracted.
Much of this increase in wealth within the U.S. is composed of financial assets, which has been made possible by debt-fueled buybacks of equities. Instead of allowing the deflationary cycle to take its course following the housing bubble, the Federal Reserve instead pursued a pattern of dropping interest rates, allowing companies to further leverage themselves.
Even with the hit that U.S. stock indices took in August of this year, economist Robert Shiller maintains that the economy is still within bubble territory, with investors claiming they are losing confidence in current valuations. “That’s the sign of the bubble. They’re worried but they’re thinking they’ll get out. This can suddenly turn, and we’re looking somewhat like that now.”
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