Bill Bonner and Addison Wiggin are certain that Federal Reserve Chairman Alan Greenspan is, at best, incompetent. In their view, Greenspan has made the almost total transformation from an Ayn Rand disciple, a free market adherent ne plus ultra, to the consummate Washington insider, one whose overarching concern at this point is his legacy as a master economic Sherpa.

They note that Greenspan believed in the 1970s that government deficit spending was to blame for 80% to 90% of what was then rampant inflation. Once he assumed the reins of power, he became more sanguine about government spending, and is now more than comfortable flooding the economy with hundreds of billions of dollars in an attempt to entice consumers and businesses already in hock up to their eyeballs to keep spending.

Bonner and Wiggin have a simple answer for Greenspan's transmogrification: He learned that in Washington all of the prognosticating and proselytizing abilities in the world weren't worth a fraction of the ability to keep people happy. If that means keeping the printing presses on full blast, then so be it.

Bonner and Wiggin's view of the reeducation of Alan Greenspan is decidedly uncharitable: They think he had it right in the first place, contending that the end result of our government's debasing of the dollar and Americans' irrational consumerism can only end in total disaster. They call it a "Financial Reckoning Day," which they suggest will be our economic fate in the not-too-distant future. In their eyes, the choices being made by American consumers, businesses, and the government are dangerously similar to a number of historical events -- most recently, the stock and real estate bubbles in Japan. As you can guess, none of these end very well.

Admittedly, I'm not a huge fan of paying laser-beam attention to macroeconomic trends. In Beating theStreet, Peter Lynch made some fun of himself and his co-panelists on Barron's investor panels in the 1990s, where they each took turns decrying the debauching of the American economy and railing that debt levels, bankruptcy levels, earnings multiples, and what have you were completely unsustainable. Well, as the interim performance of the economy and markets have suggested, not only were they sustainable, whoever actually listened and pulled all his money out of the U.S. stock market in 1994 would be substantially poorer for doing so. Even if you get the eventual outcome correct, timing is far trickier. Heck, we've been on the verge of collapse since, oh, 1956, according to some.

In some ways, the authors can be accused of some spectacularly bad timing. When they penned the book (much of which is culled from their email dispatches), the stock market sat mired in the midst of a fantastic downturn brought on by the evaporation of technology shares. But the book came out this past fall during a stock market surge -- someone somewhere had refilled the punch bowl, and those who are suddenly getting wealthy again based upon the "resurgent economy" don't want to hear any doomsaying.

Anecdotally, I can confirm a phenomenal transformation in investor attitudes in the last year. We've seen near riots develop whenever we've highlighted dizzyingly overvalued companies such as Ivanhoe Energy (NASDAQ:IVAN) or Sirius Satellite Radio (NASDAQ:SIRI). There's no logic to it, just like there's no logic in holding stocks valued at 61 and 382 times sales, respectively, but these folks just don't want to hear it.

Bonner and Wiggin have a slightly precious term for such speculators: the lumpeninvestoriat. It's a simple concept: Crowds can only understand truths when they are so boiled down that they are no longer appreciably true. "People in China need air-conditioners" is something anyone can understand, but it ignores the fact that the reality on the ground is phenomenally complex. The underlying capital realities for the companies as they exist matter not at all -- just give me press releases, show up on CNBC, get "coverage." Make "the number," however possible. Grow. Sound familiar?

Into such an environment comes a book that purports that things are going to get much worse before they get better. Who wants to read something so negative as a treatise on how the U.S. economy is a house of cards? And again, how many times have we heard this before?

But it is exactly because things feel so great that this is an important book. Just as the time to worry about an earthquake is before one hits, the time to worry about a financial collapse is while the pressure is building, not afterwards. And as the authors describe, the pressure on the American economy, and therefore the global one, is phenomenal. We're overspending and simply counting on foreigners to continue demanding dollars -- more than 80% of all dollars is held outside of the United States. What happens when they don't want them anymore, and what would cause this to happen?

Again, it's one of those questions that cannot be answered in exactitude. But in principle, the answer is clear: Since Alan Greenspan took over as Fed chief, the amount of U.S. dollar instruments has trebled, and the rate of acceleration has increased. Why would anyone demand an instrument for which supply is unlimited? And further, is it really possible for Americans to get richer simply by spending more money that they don't have?

This isn't a perfect book. The promise of the subtitle is that it will show you how to survive "The Soft Depression of the 21st Century," though the closest the authors come to putting together a firm plan is to tell readers to buy gold and limit their exposure to real estate. What I appreciated about the book was the historical lesson, and the nature of the diatribe. Completely running away from every single company on the stock market doesn't really strike me as a plan, though. There are always companies that offer opportunity at low levels of risk. They just don't happen to be the companies that investors seem to be most excited about today. They very rarely are.

The math behind the caution is simple. Each month, investors and politicians alike anxiously await the magical consumer confidence number to determine the likelihood that we're going to keep spending. Given the level of indebtedness of the average American consumer, this number might be more accurately called the "consumer self-destructive behavior index." It should be obvious on an individual level that one cannot continually spend more than one makes.

The same goes on a national level. When the economy counts on ever-increasing spending, eventually the accumulated debts crowd out our ability to continue that spending apace -- too much of our total monthly income will have to go to debt servicing. The retrenchment, when it comes, will serve as a substantial shock to the economy, and the result will not be pretty. Further, the more the government encourages such reckless spending by the American consumer, the worse the eventual pain will be.

Of course, this message comes with a built-in conflict -- Bonner and Wiggin insist that the age of the dollar-dominated global economy is coming to an end, that the debasing of the U.S. currency will eventually cause the global economy to look elsewhere for its central medium of payment. In doing so, it will follow every other paper currency ever created. They just don't know when it will happen.

Financial Reckoning Day offers an excellent lesson in economic history written in an engaging and entertaining fashion. There's nothing new here, but that may be because that which has been predicted to happen for a long, long time -- a sharp retrenchment in the American economy -- has failed to occur. I doubt it will do so forever.

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Bill Mann, TMF Otter on the Fool Discussion Boards

And sometimes, there is lightning. Bill Mann owns none of the companies mentioned in this story. The Motley Fool is investors writing for other investors.