Alan Greenspan, former chairman of the Federal Reserve, said the global economy’s inability to produce goods and services efficiently is going to cripple the ability to pay for pensions and health programs for the elderly.

“We have a global problem of a shortage in productivity growth, and it is not only the United States but it is pretty much around the world,” he told Neil Cavuto at Fox Business. “Populations everywhere in the western world, for example, are aging and we’re not committing enough of our resources to fund that.”

Productivity, the measure of hourly output per worker, has declined as businesses have slowed their investment in plant and equipment to boost efficiency. Meanwhile, the massive increase in private and public sector debt that has helped to boost the economy in the past is now dragging on growth.

Greenspan says governments are going to confront another major financial crisis as economies struggle to pay for entitlement programs.

“Entitlements are crowding out savings and hence, capital investment. Capital investment is the critical issue in productivity growth and productivity growth in turn is the crucial issue in economic growth,” he says. “We’re running at the end of this period to a state of disaster unless we turn it around.”

Alan Greenspan we're headed towards a state of disaster

The U.S. government needs to get its fiscal house in order to cover social programs.

“We should be running federal surpluses right now, not deficits,” he says. “This is something we could have anticipated 25 years ago, and in fact we did, but nobody’s done anything about it and this is the crisis which has come upon us.”

He wants to see presidential candidates discuss reforms to entitlement programs.

“Until we can rein in entitlements which have been rising at 9 percent annual rate in the United States and comparable levels throughout the world, we are going to find that productivity is going to maintain at very low rate of increase,” he says.

“There is a very large migration from being a worker into being a recipient of social benefits. If we stay down at the 2 percent economic growth or less in the United States and elsewhere, we’re not going to be able to fund what we already have legally obligated to spend.”

Meanwhile, Newsmax Finance Insider David Stockman, former budget director under President Ronald Reagan, warns that the nation will plunge into recession by year’s end.

He said the Federal Reserve’s hawkish tone about hiking interest rates is bluster.

“When has the Fed ever gotten it right about the economy? Did it see the crash coming in 2000? Did it see the housing bubble? Did it see the Wall-Street meltdown in 2008, or the bubble it’s creating now,” he asked Fox Business Network. “The answer is no…it has no clear view of the future.”