U.S. Registries – Linking buyers and sellers across North America

Month: March 2016

The Net Worth Bubble, Losing Air.

Bill Dunkelberg, Chief Economist

National Federation of Independent Business



American consumers have about $14 trillion in debt and a net worth of over $80 trillion according to the Federal Reserve. Net worth is the sum of the values of all assets, real and financial, that consumers own, less their debt, including mortgage debt, leases, credit cards and the like. The wealth we hold is a way of storing purchasing power. You can sell your shares of Apple and buy “stuff”, goods and services. Ultimately, for most consumers, that’s what our wealth is used for, to acquire “stuff”. Some of our assets provide services directly such as our houses and cars. The real services received from these assets would seem to be unchanged over time even though their market prices vary.

Consumer Net Worth vs GDP

Financial assets do provide an income that can be used to buy stuff (although interest income was dramatically reduced by Fed policy, dividends held up reasonably well). And part of the goal of Quantitative Easing was to induce people to buy more stuff (real goods and services) as their asset values were inflated by Fed policy. On first blush, not much of this seemed to occur. That said, the total value of our net worth represents a potential claim on stuff, the real output of our economy.

The broadest measure of “stuff” is the Gross Domestic Product, the total value of final goods and services produced in a given period of time. Constructing the ratio of Net Worth to GDP illustrates the fluctuation of claims on output per dollar of output produced. Not surprisingly, this was a fairly steady series for 25 years (maybe longer) from 1970 to the mid-1990s as gains in nominal wealth were matched with gains in nominal output, averaging about $3.50 in claims on output for every $1 of GDP. The advent of the dot.com era (and Y2K) drove the ratio up to $4.40 and then the housing bubble up to $4.80. Real housing services received in that period likely did not rise and fall with house prices. The end of the housing bubble drove the ratio back down to $3.70, a full dollar, but still 20 cents above the 25 year average from 1970 to 1995.

Each peak was followed by a recession, the last one the worst since the early 1980s. And now the ratio has once again reached $4.70. “History” suggests that the ratio will collapse again toward the $3.5 level. This can be accomplished by a massive increase in real GDP (unlikely) or a massive decline in the value of assets (more likely). The economy is not likely to fall into a recession in the next year or two, but growth will be historically modest.

What can impact the market value of assets? The return of “normal” interest rates, weaker profit growth, a serious global slowdown, each could trigger the “adjustment” in net worth. The adjustment might be accelerated because of widespread short covering and record high margin credit and other leverage. Logically this seems unavoidable, unless you believe that we are truly wealthier now, even with an economy that is delivering a rather poor performance (historically weak output and sales growth) in real terms. It would seem to not be “whether” we will adjust but ‘when’ and ‘how’ that will challenge the money managers and prognosticators. Every bubble is different, this one will be about stock prices as well as bond prices, missing in earlier bubbles which occurred during the steady decline in interest rates that started in the early 1980s. This time, rates will likely go up, not down.


Since writing this piece last year, central bankers have developed a new tool, NIRP. At 0% or negative rates, there is mathematically no limit to how high bond and equity prices can go. Real earnings can fall while asset prices rise as people put their money into any asset rather than hold cash. Asset prices will rise, yields will fall. Cash will be a “hot potato” that we can’t get rid of. Should the Fed become so disconnected from reality and common sense that it moves to “negative interest rates”, equity markets can rise, at least for a while. Ultimately, the value of “shares” in USA INC will depend on the economy’s real performance.

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Cloud Computing – What can it do for your business?

Cloud Computing concept with businessman drawing with a marker

Cloud Computing – What Can it Do For Your Business?

Originally believed to have been created in the 1960s by Joseph Licklider with his work on the ARPANET and the original Internet, cloud computing has evolved into something much bigger in the 21st century. It’s a term that is thrown around frequently these days. But what is the cloud exactly?  The cloud is simply the internet and it allows you to store, manage, and process data remotely through Internet servers rather than on your own personal computer or local server.  Cloud computing is essentially revolutionizing business models while leveling the playing field between small and large companies.  So what can cloud computing do for your business?

Backup Data Securely

Backing up data is a must in case of a systems failure or other disaster.  With cloud technology, copies of your data are kept off-site in safe locations.  The cloud also enables automated data backup while you work taking one more task off your to-do list. Furthermore, large commercial data centers offering quality certifications offer top-notch protection from security threats that many small businesses can’t provide on their own.

Offer Mobility

Telecommuting is an option that many companies like to offer as a perk or a necessary for getting qualified talent in their business.   With cloud computing, an employee can have access to a virtual mobile office allowing for a flexible and adaptable business. Regardless of where an employee is on the road, collaboration and easy access to data helps keep productivity on track.    PICS ITech has recently started offering Workspace as a Service or WAAS which provides our customers with everything they need to outfit a remote employee.

Lower Costs

Cloud services can help your business save money by reducing the total cost of your infrastructure. Spending less on equipment (such as servers), software licensing and upgrading, as well as utility costs associated with running equipment helps improve profits.   Cloud computing often goes hand in hand with virtualization which minimizes servers sitting idle which is common in single use systems.


Cloud computing is able to grow on demand.  Business has cycles and it’s imperative that IT requirements and needs are able to scale up or down depending on what is driving business at that time.  Not having to make expensive changes to your IT environment allows your business to react quickly and efficiently.    Using cloud computing you can add more or less resources with a flip of a switch.

PICS ITech offers many different solutions that at their core are cloud computing.  These include backup and disaster recovery services, Cloud File Sync and Storage, Office 365 and traditional Software as a Service and Website Hosting.  If you would like to know more about what cloud computing can do for your company, please contact us and we would be happy to discuss our services and solutions with you!


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