The second was the renaissance of American business, driven by a far-reaching change in the drivers of modern wealth creation. It cannot be an accident that communism, planning ministries throughout the developing world and large corporations run by command and control all ran into a brick wall in the same decade and had to be restructured. The combination of public prudence and private dynamism will stand us in good stead as a new century approaches. But as Goethe once said, the time when the light is brightest is also when the shadows are darkest. Complacency will be self-denying prophecy if it leads to unrealistic expenditure plans, excessive capacity creation, inappropriate asset valuations, or misguided credit expansion and acceptance of leverage.
Experienced bankers know that good loans are made in bad times, and bad loans are made in good ones.
Cutting the deficit has more than doubled our rate of national saving, to 7.5 percent in the first three quarters of last year. But that is still well below the rates we achieved in the 1950s and 1960s. And meanwhile the rate of personal savings has fallen to a 55-year low. Raising our national savings rate can reduce our dependence on foreign capital without reducing valuable investment here at home. That is one very important reason why it is so important that we address the long-term problems facing Social Security and draw down the national debt.