Liquid assets are those which you can easily convert to cash, usually within a week, without much change in their value. That excludes your house and car from the liquid asset calculation, meaning your liquid net worth is typically much lower than your net worth.
Having sufficient emergency funds in savings to cover three months to a year of expenses may be prudent in case of unemployment, illness or divorce.
According to the U.S. Census Current Population Report The Wealth of Households 2020, while 83% of Americans own a car, 61.9% have equity in their homes, 25.1% have stocks in investment accounts, 15.5% have business assets, and just 6.9% own rental properties.
See Figure 2 from the Wealth of Households 2020 to get an idea about how your household compares to other Americans.
The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union. The Central Labor Union held its second Labor Day holiday just a year later, on September 5, 1883.
By 1894, 23 more states had adopted the holiday, and on June 28, 1894, President Grover Cleveland signed a law making the first Monday in September of each year a national holiday.
As we approach a new season, I would like to once again thank our clients, family and friends. It has been a difficult road but as we overcome the challenges we face daily, the aureate beacon of CWM continues to brighten.
In their 2011 paper Former Senior Vice President and World Bank Group Chief Economist Carmen Reinhart, and International Monetary Fund Economist Maria Belen Sbrancia brilliantly explain the “pillars” or economic conditions of financial repression and demonstrate how it is effective in the liquidation of government debt.
A term introduced in the 1970’s, financial repression is marked by ceilings on interest rates of government debt and the creation and maintenance of a captive domestic audience, meaning domestic financial institutions, business entities and households are regulated and motivated to purchase and hold government debt. Along with a steady dose of inflation these conditions amount to an invisible tax of negative interest rates, or a transfer from savers to borrowers. (Reinhart & Sbrancia, 2011)
The Federal Reserve System is the central bank of the United States responsible for conducting monetary policy under a dual mandate given to it by congress “so as to promote effectively the goals of maximum employment, stable prices and moderate long term interest rates.” The Federal Reserve controls three tools of monetary policy—open market operations, the discount rate, and reserve requirements. (Federalreserve.gov)
The balance sheet of the Federal Reserve has reached nearly $9T dollars, with increased purchases or easing occurring in the wake of the ’07-08 financial crisis, and again as a response to the slowdown caused by the COVID-19 pandemic and skyrocketing unemployment.
The Federal Open Market Committee (FOMC) has ended purchases and the reinvestment of maturing securities, what they define as balance sheet “runoff,” having also begun to increase the federal funds rate in increasing increments to 1.50 to 1.75 percent in June after starting 2022 at .00 to .25 percent.
The 10-year U.S. Treasury yield, generally referenced as a risk free rate, sat at 2.98% at the end of June, while CPI reached 8.6% annually in May according to Bureau of Labor Statistics release, and Personal Consumption Expenditures (PCE), the prefered measurement of inflation used by the Fed, reached 6.8% on an annual basis.
According to the World Bank’s recently released Global Economic Prospect’s report Russia’s invasion of Ukraine has compounded the damage of the COVID-19 pandemic creating increased risk of a period of stagflation, or slow growth accompanied by elevated inflation.