Trapped assets that generate no income streams in the present are not capital; the value of such non-productive assets is illusory. Strip away these trapped assets and the reality is revealed: most American households toil to service their debts.
The typical American household is insolvent: its debts exceed its assets.There is nothing fancy about calculating insolvency: if debts exceed assets, the enterprise is insolvent. By this measure, most American households are insolvent, if their real assets are marked to actual market.For example:Auto loan balance: $9,000 Actual market value of auto: $6,000Credit card balance: $6,000 Street value of stuff purchased with credit card: $300home mortgage: $250,000 Auction value of house: $200,000Student loans: $60,000 Market value of education: Not applicable, as it cannot auctioned off or securitizedAnd so on.The typical American household is thus in service to its debt, not to its assets, and to the holders of that debt. This is debt-serfdom: serfdom in service to the owners of debt, debt that may well always exceed the value of the household's assets. This is debt-serfdom for life.
Read the rest at of two minds, Debt-Serfdom Is Now the New American Norm by Charles Hugh Smith
Smith continues in The Origins of American Debt-Serfdom where he traces the beginning and course of the long financial cycle culminating in Ponzi finance that was described by Hyman Minsky.