Taking Stock of the U.S. Economy After Greenspan
January 31 marked retirement for Federal Reserve Chairman Alan Greenspan. As most people old enough to remember would agree, his 18 years on the job were pretty easy years compared to the previous 18. However, America’s past 18 years of “easy” living—provided by easy credit—have caused serious problems for the economy and have left the nation on the verge of collapse.
Just in case Federal Reserve Bank cheerleaders have convinced you that the American economy is all roses, here are some startling facts—condemning facts—from Bill Bonner, co-author of the Wall Street Journal bestseller Financial Reckoning Day, that much of the media has avoided covering. Mr. Greenspan isn’t necessarily the cause for many of these woes, but his retirement is good enough reason to take stock of how the American economy has fared these past 18 years.
Since 1987, when Mr. Greenspan joined the Federal Reserve Bank, government debt has grown from just over $2 trillion to over $8 trillion.
In 1987, America was a creditor nation, able to lend money from its surplus. Now, the United States has become the world’s largest debtor nation, with more than $11 trillion worth of assets in foreign hands. That is more than a 500 percent increase since 1987.
America’s personal debt has mushroomed too. During the same period, the total consumer debt of Americans has grown from $2.7 trillion to $11 trillion. Consequently, debt levels for the average household rose from $28,892 in 1987 to $101,386 in 2005. Mortgage debt rose a whopping 455 percent, from $1.8 trillion to a record $8.2 trillion last year. Personal bankruptcies and credit card delinquencies also rose steadily and are now at record levels.
The trade deficit (the amount of goods and services the U.S. imports in excess of exports) skyrocketed from $150.7 billion to $725.8 billion. In other words, last year, $725.8 billion more left the country through trade than came in—and next year this figure is projected to be even worse. Even billionaire investor Warren Buffett is warning that the trade deficit could turn the U.S. into a nation of “sharecroppers” (Guardian, March 7, 2005).
Decide for yourself how good America’s economy is—but from the Trumpet’s perspective, which is grounded in biblical prophecy, the “easy” times are almost over.
The mountains of “easy” money and subsequent debt created over the past 18 years are going to contribute to the crash of the U.S. economy. The housing bubble looks toppy, interest rates have been rising, inflation is much higher than reported and the dollar looks ready to drop like a dead duck.
It is no wonder Alan Greenspan politely declined President Bush’s 2003 invitation to stay on for another four years.