Financial Advisor Dennis Tubbergen Shares Excerpts From His Upcoming Book

Online, April 1, 2011 (Newswire.com) - Given the current global economic circumstances, Michigan-based financial advisor Dennis Tubbergen felt the need to begin work on a book that discusses his view of where the U.S. economy and markets may be headed.

Tubbergen has been posting excerpts from the upcoming book's introduction and posting them on his financial blog at www.dennistubbergen.com. In the second excerpt from the book, Tubbergen shares a chart with his readers which illustrates the level of debt in the United States, including federal, state, and local government debt combined with business and household debt.

"If you look at the chart, you can see that from 1997, it (total American debt) has increased from about $30 trillion to $57 trillion," explains Tubbergen. "Over that same time frame, the U.S. national debt has increased from about $5.5 trillion to $14.3 trillion. That means debt other than federal government debt has increased by an incredible $18.2 trillion."

Tubbergen believes one could make the case that the stock market bubble of the 1990s was driven by debt and that speculation with tax policy was the catalyst.

"In 2001, reacting to the recession, then Federal Reserve Chairman Alan Greenspan flooded the economy with money by reducing the Federal Funds interest rate - the rate at which banks can borrow from the Federal Reserve," notes Tubbergen. "His actions were applauded by many, who gave him credit for bringing the country out of recession."

Tubbergen disagrees.

"When examining the economic fundamentals, I believe the recession really didn't end, even though it appeared to end 'on paper,'" argues Tubbergen. "Greenspan's actions simply created another bubble, and when that bubble burst, it made the consequences that much worse."

And what is the bubble that Tubbergen refers to?

The real estate bubble.

"Greenspan reduced the Federal Funds rate from 5.75% in January 2001 to 0.75% in November 2002," states Tubbergen, and gives an overview of the rate from May 16, 2000 to August 10, 2004. Some of the rates are shown below:

Month and Year Fed Funds Rate
May 16, 2000 6.50%
January 4, 2001 5.25%
March 20, 2001 4.50%
May 15, 2001 3.50%
June 27, 2001 3.25%
November 6, 2002 0.75%
June 25, 2003 2.50%
August 10, 2004 3.0%

"For a period of three years, from 2001 to 2004, the Fed Funds rate was 3 percent or less," explains Tubbergen. "And during that time the real estate bubble was building."

Tubbergen shows another chart on his blog which illustrates the approximate point in time that the Federal Reserve reduced the Fed Funds interest rate.

"At the time that the Fed reduced interest rates, inflation-adjusted housing prices were at a high from 1970," claims Tubbergen. "Then look what happened to housing prices as a result of reduced interest rates. By the time the Federal Reserve increased the Fed Funds rate back to the 3 percent level, home prices had increased about 50% on average in only a 3-year time frame. Another bubble had been fueled by debt."

Visit Tubbergen's website at www.dennistubbergen.com to read more about his viewpoint on where the economy is headed.

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at the above website. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at www.everythingfinancialradio.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.