Returning to the Fed’s Z.1 report, the Household Balance Sheet provides some of the most pertinent analysis. Household Net Worth (assets minus liabilities) inflated $3.0 TN during the quarter to a record $70.349 TN. One has to go back to the Bubble year 2005 ($6.308 TN) to surpass the recent one-year $6.164 TN gain in Household Net Worth. It’s worth pondering a few analytical facts. Never has there been such a creation of (perceived) household wealth in the face of weak economic growth.
Never has there been such a divergence between stagnant private-sector Credit expansion and inflating securities and asset prices. Never has there been such a strong correlation between federal debt and securities prices. And, I would add, never has there been massive QE in a non-crisis (non-deleveraging) market environment.