We are constantly being told that as a nation, we are broke. Nearly every political or economic pundit is constantly repeating this accepted truth and the average citizen knows it must be true or everyone would stop telling them how bad it is every 2 minutes of every day. After all, it is obvious to anyone. Just look at how stressed most American households have become. Nearly 100 million people at or below the poverty level. The rest facing a shrinking job market with wages and salaries in free fall. Gigantic debt and ever increasing deficits calculated in the trillions or zillions or what ever "illion". Only a fool would deny that as a nation, we are cooked...

Anyone who questions this of dogma is automatically marginalized in all social, political or economic policy discussions regardless of the evidence that they might present that debunks our acceptance of financial ruin. Even those who pride themselves on being open to facts and balanced in their perceptions of the world are constantly chanting, "We are broke. We must cut spending. We cannot survive. Nothing can stop this inevitable bankruptcy." Any voice to the contrary is at best tolerated with a wink and a nod and other dismissed since only an insane person could not see the truth of our demise.

To find out if we are really broke is actually easy. Just look at net worth (hat tip AngryBear blog). This widely accepted measure of financial well-being. In short, net worth is the total value of assets minus total value of liabilities. This means that net worth is the amount of money you would have if you sold off everything you own and paid off all your debts. When you are bankrupt, your net worth is negative. When you are broke, your net worth is zero. If you are approaching financial collapse, you net worth if falling rapidly and approaching zero. If our national net worth is collapsing and failure is only weeks, months or a few years this should be readily apparent to anyone who takes a look.

Our net worth is available to anyone who wishes to look for the number.

According to Wikipedia as of 2008 the United Nations calculated the net worth of the US as $118 trillion.

http://en.wikipedia.org/wiki/Wealth_in_the_United_States

Our assets can be calculated from quarterly reports from the Federal Reserve Board and at the end of 2008 were $218 trillion.

http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/

Using that asset base, our net worth over the next 25 years can be calculated as $234 trillion. If we adjust that number for net trade deficit, the final value is $218 trillion.

http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/comment-page-1/#comment-654

So... even in the depth of the "Great Recession" we had a net worth of between $188 trillion and $218 Trillion. Any way you look at it, thats a lot of money!

Again, this represents our net value after pay off all we owe including federal, state, local, business and personal debts.

Stated another way, as a nation we have an average net worth per citizen of between $367,000 and $701,000. For households that is an average net worth of between $1,468,000 and $2,804,000. That doesn't sound like broke to me, but in the "land of equality", no one is average.

Unfortunately, most of that wealth is concentrated in the hands of very few of our citizens. As households, most Americans are not quite that solvent.

One fourth have a negative net worth. They are broke and hoping no one notices.

Another one fourth has a net worth of about $49,000. Not quite bankrupt, but not a lot of wiggle room.

Another one fourth has a net worth of about $200,000. Some comfort, but a single major set back could make their lives much less stable.

The final one fourth of Americans are the most wealthy. Of that group, the bottom 60% are worth about $526,000. The top group (about 10% of households) is worth $1,721,000. The net worth of the top 1% of American household have net worth of over $9,000,000. The richest 400 Americans have a net worth of $1,500,000,000,000.

So, only the top 10% of Americans live in a household wealth equal to or greater than average. The other 90% are much less well off. The top dogs are doing really well.

Of course, the net worth of individual households is always biased in a positive way. The assets are valued at current market levels. Their debts do not include any of the federal, state, local debt and discount most of the business debt. Personal net worth calculations simply assume that the liabilities for government and business debts are included in the value of the assets. The market however almost always completely discounts those liabilities. With this in mind the individual net worth calculations look even more grim.

The bottom line is simple. As a nation, we are not even close to broke and we will continue to become more wealthy in the future. As individuals, not so much.

Is the sky falling? Nope. Should we be concerned? Yes.

If our nation went to the bank and asked for a loan the bank would jump through hoops to make sure we walked away with a boat load of cash. After all, the national net worth is a measure of equity and as such we have between 86% and 93% net equity in our shared homeland. Even the most conservative banker will gladly approve loans up to 75% of equity at the best of interest rates. In our case, that would be an additional loan to the country of between $88 trillion and $164 trillion. That is probably enough to cover our entire federal deficit for well over a century. If every American had an equal share of the wealth, a prudent banker would easily lend each of us between $283,000 and $527,000 with a payback period of 30 years. In other word, our national net worth represents an available equity line of credit of between $1,132,000 and $2,108,000 for each and every household in the country.

Of course we shouldn't borrow so much money. But even if we did, it wouldn't bankrupt us for many generations.

Could things go south? Of course. In World War II of 60 million people were killed and $3.5 trillion was destroyed worldwide. A modern version of such a conflict would certainly be more destructive. We could be devastated by diseases, drought, volcanos, earthquakes or asteroids.

Our real concern should be with 2 more sensitive issues.

First, much of the value of stocks and bonds look good on individual balance sheets because the only time any business has to pay off it's debt and settle with it's owners or stock holders is when it closes, is sold or declares bankruptcy. After over 30 years of leveraging business assets without actually making capital investment the net worth of most companies is nearly zero. This is a threat to anyone who is saving or investing any money. This may be one of the reasons that many of the most wealthy Americans have a much smaller percentage of their wealth invested in stocks and bonds that the average American with a 401K. It also explains why most business execs who are compensated with stocks and options have contracts that require their companies to insure the value of those stocks and options (of course the cost of that insurance is deducted from profit so the real cost is transferred to taxpayers).

Second, we are living in a land that has increasingly limited economic upward mobility while placing additional downward pressure on most citizens. This concentrates the good life is an extremely small minority of our citizens and makes serfs and paupers of the rest. This has happened over that last 50 years and must be reversed if we are to prosper as a nation.