The notion that Americans could get something for nothing permeated the culture, with rising home prices and easy credit and the capricious spending of rampant consumerism. Even 9/11, Andersen said, didn't stop what he described as America's great winning streak.
"I think it's no coincidence that during these last 20 years casinos and legal gambling became ubiquitous in this country in a way that young people have no idea that it wasn't always this way. Until the late 1980s, only two states had legal casinos. Now 32 states have casinos and all but two states have legalized gambling," Andersen noted. "That's a new condition and part of this party-hearty spirit of the last quarter century. It's as if around 1986 we all decided that Mardi Gras and Christmas and bachelor parties were just so much fun let's just do it all the time and just live that way," Andersen said.
From the early 1980s to the peak in late 2007, Andersen noted, the average new home value doubled after inflation, the stock market rose 1,500 percent. Debt exploded and the average household savings rate went from 11 percent to about zero. Americans lived large, figuratively and literally.
"Twenty-five years ago the size of the average new house increased by half as the size of American families shrank. The average new car got 29 percent heavier 89 percent more powerful and two percent less efficient and the average American gained a pound a year," Andersen said.
But Andersen acknowledged that indeed things had gone well for America; communism was defeated, home prices kept rising, stock markets kept going up. It seemed almost magical and many, Andersen said, had an inkling that it couldn't go on forever.
"It's sort of like the way everybody I think knew that Barry Bonds and Roger Clemens weren't playing fair, really? Can they really be hitting that many home runs? But nobody wanted to be a buzz kill and say, hey maybe we should give them a blood test. Our state of denial was, if not universal, it was widespread. There were plenty of smart, rational people engaged in a kind of magical thinking. But this idea of the new economy, whatever that means, somehow it will all work out, is mythical," Andersen said.