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@steveroth.bsky.social

Odd labeling in the Fed's balance sheet for Corporate Nonfinancial Firms. shorturl.at/HRpMT "Net worth (market value)" means: 1. nonfinancial assets (real-world "capital" holdings) are posted at current replacement cost, & financial assets are (necessarily) posted at current market value. 1/

Steve Roth

@steveroth.bsky.social

Key missing words: "Shareholders' Equity". The possessive apostrophe says it all: firms don't "own" their own Net Worth. HH shareholders (& ROW) do. This measure is "book" equity. Not "Net Worth." The next measure is "market equity." The "historical cost" measure has no import at all. /2

Steve Roth

@steveroth.bsky.social

Book equity likewise has ~zero import, because firms’ Market:Book ratios wander all over the map. For better or for worse, Shareholders’ Equity @ current market equity prices (which you'll see as an asset on the HHs + ROW sectors) is the only feasible measure of what corps are “worth.” /3

12/10/26, 1:19 pm0 reposts1 like

Steve Roth

@steveroth.bsky.social

For those who might be interested in Haig-Simons income accounting that's actually balance-sheet-complete (unlike the NIPAS), this book:market discrepancy is ~fully explained in the Fed's HH-sector Reconciliation/Revaluation table. fred.stlouisfed.org/release/tabl... /4