Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

From Boom to Bust: The Virtuous Upward Spiral Becomes a Vicious Downward Spiral

On the way up, these six linked economic bubbles helped co-create America’s booming bubble economy. In a seemingly virtuous upward spiral, the inflating bubbles helped the United States maintain its status as the biggest economy the world has ever known, even in the last few decades, when declines in real productivity growth could have slowed our expanding economic growth. Instead, these bubbles helped us ignore slowing productivity growth, boost our prosperity, disregard some fundamental problems, and keep the party going.

Not only did the U.S. economy continue to grow and remain strong, the rest of the world benefited as well. Money we paid for rapidly increasing imports poured like Miracle-Gro into developing countries like China and India, quickly expanding their burgeoning economies. The developed nations benefited as well. Because America’s bubble economy was booming along with the developing nations, Japan and Europe were able to sell lots of their cars and other high-end exports, which helped their home economies prosper. The growing world economy created a rising demand for energy, pushing up oil prices, which made some Russian billionaires, among others, very happy. Growing demand for minerals, like iron, oil, and copper, pumped money into every resource-producing country. China and India’s expanding appetite for steel boosted iron exports from the Australian economy. And on, and on. All combined, ...