Here’s another note to the person who emailed me about John Cochrane’s recent piece in the Wall Street Journal.
Mr. B__:
Thanks for your follow-up email to my reply.
You ask: “What happens with the net worth of American families if we consider their shares of the national debt [owed to foreigners]?” Great question, for such indebtedness is real and burdensome. (A side note: Also burdensome is the government debt that’s owed to fellow Americans – but that’s a point best left for another post.)
Currently, foreigners hold about $9.73 trillion in U.S. government debt, which is 32 percent of outstanding publicly held U.S. government debt. On average, that’s $73,592 for each of America’s 132,216,000 households.
The average household’s net worth today (not counting public debt) is $1,224,686. Subtracting from this net worth each household’s average share of the government debt owed to foreigners still leaves the average American household’s real net worth quite high, at $1,151,094.
Today (last quarter of 2024), therefore, the average American household’s real net worth, after subtracting what’s owed through the government to foreigners, is 215% higher than in 1975, the last year America ran an annual trade surplus (and 128% percent higher than in 1994, the year NAFTA took effect, and 69% higher than in 2001, the year China joined the WTO).
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
