Go read it in its entirety over at the MIT site, HERE.
Some highlights:
Greenspan is describing a process where a huge percentage of the American public (70% of all households according to one account) have in the past few years put their savings into stocks, bonds, CDs and other financial instruments. The average savings rate in the US dropped to a historic low of 3% of income, but it is now possible to borrow money in many more ways than ever before. Mortgage companies will lend you 125% of the value of your house. -- Yes, that is correct, the banks will lend you more than your house is worth! -- Mortgage loans, personal loans, credit card debt, revolving loans, car loans have provided the funds for the American worker to buy more and more of this ever increasing mountain of capital....
When we bear in mind that most of today's investors put their life's savings into this scheme in the expectation of being provided with income out of it upon retiring, we begin to realize what human tragedy lies in store for them. If we now consider that the Gross Domestic Product of the United States was only $7.61 trillion in 1996 (the last year for which we have data) and compare it with the $12 trillion of the "miracle money" accumulated just since 1994, we can see the scale of the disaster looming over the American and world economy. ....
