Issue Household wealth is partly a claim of citizens on themselves as taxpayers and customers

Summary

MGI argues that household wealth is healthiest when it rests on real investment, and that growth driven mostly by financial valuations is a warning sign. It adds that imbalances between sectors can signal risk too. Much of what households own is financial claims on companies, through shares and bonds, and on governments, through public debt, held directly or via financial institutions. If those claims are worth more than the assets companies and governments actually own, or fail to generate enough income, they end up as claims citizens hold on themselves, as customers of those firms and as taxpayers. Debt defaults or collapsing share prices therefore hit household wealth directly through the financial assets people own.