Editor's note: We agree with much of the analysis above. I would also like to add that debt-funded transfer payments for coronavirus relief and other purposes are nothing more than wealth borrowed from future generations for the benefit of present generations. We made ourselves richer and our grandchildren poorer. Is it an ethical way to get rich? Even if there is no “wealth” from debt, there is “wealth” from printing money. Monetary expansion through inflation only increases claims on existing wealth, not the actual production of future goods and services. If that were not true, Zimbabwe would become the world's economic powerhouse. All countries can simply imprint themselves into prosperity. In fact, by creating more monetary claims faster than actual goods can be produced, we have caused prices to rise. It increases our brokerage accounts and our homes. Those with valuable assets fared well, but those who live paycheck to paycheck by renting or borrowing on credit cards faced the dual challenge of rising costs due to inflation and higher borrowing costs. He lost his life due to heavy demands. Those who do not value their assets continue to be robbed. In other words, we are getting rich by exploiting the poor and making our grandchildren poor. This is not wealth production, but wealth redistribution from the most vulnerable. That's a terrible way to get rich.
On Dec. 4, the Wall Street Journal published a column titled “Who's Got Richer During the Pandemic?” https://www.wsj.com/personal-finance/ Savings/who-got-a-lot-richer-and-who-didnt-during-the-pandemic-8dd238ab. I read it with great interest, A big hole was found in the analysis.
This column begins by saying that the pandemic has made Americans wealthier, which many may find contradictory to reality. After all, 2020 saw many businesses shut down for extended periods at the beginning of the pandemic. Depending on the state you live in, many businesses were closed for a wide range of periods.
I'm sure you've all seen your local retail stores and restaurants permanently closed. Large businesses were allowed to open, but small retail stores were closed, along with many service businesses.
The column states that house prices rose during this period. With no concerts, shows, or amusement parks, people have fewer opportunities to spend money. Reduce eating out. travel etc. So they paid off their debts or put the money into a savings account. On the other hand, the decline in commerce has reduced the overall income of many people.
Apparently, median household net worth increased by 30% during this period. It's almost like we're hoping for another pandemic.
This column barely touches on the real reasons for the financial improvement. It was a government benefit. Otherwise, Americans would get richer while the government went deeper and deeper into debt.
First, let's look at one of their claims. Home prices have increased for only one of two reasons. 1) the cost of alternative housing has increased due to the cost of raw materials and/or labor, or 2) demand has increased. There was certainly an increase in demand in certain parts of the country, especially states that had strict pandemic restrictions, as people used the crisis to reevaluate their lives. We all know states that have lost population and others that have gained new residents, driving up home prices in that state. The only reason housing prices haven't fallen in states with declining populations is because of the government regulations that forced people out in the first place.
Secondly, Savings people made because they didn't spend money. In normal times, people do not save a sufficient percentage of their income for two main purposes. First, save for retirement. The second is cash for emergencies and special expenses like medical expenses, home repairs, car repairs, etc. If people are saving more money and paying off credit card debt for these two reasons, that's great news. How did that happen? Were people really saving more money from their incomes? Were they cutting costs and being more responsible? Not so much. The main source of their increase in net worth was through remittances and all these “emergency” fund programs.
Evidence of this can be seen in the significant increase in credit card debt and the delinquency of that debt. Americans have not become more responsible for their spending habits.
To be completely clear, we are not personally involved in these programs and any money sent to us was immediately donated to PragerU.
The program getting the most attention is the college loan relief program that the Biden team is trying to shove down everyone's throats, even those who have never gone to college. It is nearly impossible to determine how much has been reduced from individual households' debt balances. The best number I found was he was $770 billion. This is how the transfer from the indebted people to the rest of us (Americans) took place.
There are various other programs as well. Paycheck Protection Program (PPP), Enhanced Unemployment Benefits Program, and Employment Retention Credit (ERC). These programs made some sense when the pandemic began and businesses were forced to close, but they dragged on and on. The ERC program continues to provide funding. While businesses and individuals were provided with capital, their debts reduced, and their net worth increased, governments, especially the federal government, became deeper in debt.
Second, the WSJ column analyzes wealth by race, which seems mandatory today even though no one asked. Of course, those with “white privilege” fared best. Find out that Asians have the highest average net worth of any group in America. So much for our racist economy.
The national debt has increased by about $8 trillion since the pandemic began in March 2020. It's good that personal net worth increased by an estimated 30% over this period, but did it really increase if it was primarily due to transfers from the government? We need to be accurate.
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This article Published by breaking news Reproduced with permission of the author.
