( CNN ) -- The Federal Reserve 's newly released Survey of Consumer Finances confirmed what most of us already knew : The middle class has taken a really big hit . Between 2007 to 2010 , the typical family had lost nearly 40 % of their wealth . And , despite that our economy was 15 % larger in 2010 than in 2001 , the typical family 's wealth decreased by 27.1 % since 2001 . On top of that , income had fallen . Median family income in 2010 was down by 7.7 % from its 2007 level and 6.3 % from its level a decade ago . The picture looks dismal , does n't it ? But none of these numbers are surprising really . Is the average American poorer than before ? Yes . The Fed 's survey is picking up on the huge effect of the collapse of the housing bubble . For many middle class families , their home is by far their largest financial asset . For decades , people were encouraged to believe that it was the safest way to save for retirement or other purposes . This clearly was not true when house prices became inflated . In the years when the bubble reached levels that were clearly unsustainable , from 2002 to 2007 , housing was just about the worst possible place to keep wealth . Unfortunately , tens of millions of Americans listened to experts such as former Federal Reserve Chairman Alan Greenspan , who assured the country that there was no housing bubble . According to reports , Greenspan has a very nice pension and a job that pays more than $ 1 million a year . He certainly does n't have to worry like the typical American family . It is difficult to read through the Fed survey and not get angry at the wreckage from a completely preventable disaster . American families : How are you coping ? Greenspan could have used his enormous stature to warn of the dangers of buying overvalued houses . He could have warned lenders of the risks of issuing mortgages on overvalued property . And he could have used the massive research capacities of the Fed to document without question the existence of a bubble and the damage that its collapse would cause . He also could have used the Fed 's regulatory power to crack down on the epidemic of mortgage fraud that the FBI had highlighted as early as 2004 . If Greenspan had acted responsibly and taken some of these steps , as some of us have urged at the time , the housing bubble could have been contained before it was too late . But if all else failed , he could have raised interest rates . To make interest rate hikes more effective , he could have told the markets that he was explicitly targeting the bubble . For example , he could have promised to raise rates until nationwide house prices fell back to their 2000 level . Greenspan 's failure is history now , but we should demand that the Fed take asset bubbles more seriously in the future . There is nothing more important that the Fed can do . So , what now ? It should be apparent that housing is not a safe asset , even when we are not in a bubble . Those who advocate that everyone should be a homeowner are displaying their ignorance . Homeownership in many markets can be like putting all your savings in your employer 's stock . Ask an autoworker in Detroit if this is not clear . Another important takeaway is that older Americans are extremely ill-prepared for retirement . The median wealth for families between the ages of 55 to 64 is $ 179,400 . For families between the ages of 45 to 54 , it is just $ 117,900 . This is everything they own -- all their savings , retirement accounts and the equity they have in their home . The typical retiree in the next two decades will be almost entirely dependent on his or her Social Security check . Remarkably , in Washington , all the important people think the most pressing matter is finding ways to cut Social Security and Medicare . By detailing the economic slide of the average American , the Fed survey highlights a problem that is becoming increasing clear : growing inequality in our country . While most people are hurting badly , the very rich -- whose wealth and income have grown disproportionately big in recent times -- have largely recovered from the downturn . Americans should not tolerate a society where the rules are rigged to redistribute income upward . Otherwise , expect to become poorer . The opinions expressed in this commentary are solely those of Dean Baker .
Federal Reserve released survey showing average family losing 38.8 % of net worth . Dean Baker : Few surprised that the average American is poorer than before . He says Alan Greenspan could have tried to contain the housing bubble . Baker : Americans should not tolerate a society in which wealth inequality widens .