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Deflation: How to Survive and Thrive in the Coming Wave of Deflation Hardcover – June 21, 1999

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Editorial Reviews

Amazon.com Review

Most people associate deflation with the 1930s: depression, unemployment, and a spectacular stock market crash. But A. Gary Shilling doesn't think that deflation is all that bad--in fact, he says, if you're prepared, deflation can be a good thing. In Deflation, Shilling outlines why he thinks we're about to enter a prolonged period of deflation and offers advice for businesses and investors on how best to position themselves and their finances and cope with the specter of falling prices.

Shilling sees several forces feeding the trend toward deflation, including the end of the cold war, reduced government spending, growing surpluses, the widespread adoption of technology, the emergence of the Internet, deregulation, and the recent Asian contagion. He also believes that the stock market is due for a severe correction that "would destroy enough individual wealth to chase consumers out of spending and into a saving spree," thereby slowing demand for goods and services and encouraging deflation even more.

Among the investments that Shilling recommends for deflationary times are treasury coupons and zero-coupon bonds, utilities, and U.S. stocks (after the correction, of course). Given Alan Greenspan's maniacal focus on fighting inflation, it might be difficult to swallow Shilling's deflationary forecast. Nevertheless, Shilling has done his homework, and it shows: he builds a case that's both convincing and easy to read. No one knows for sure what our economic future holds, but any open-minded investor would be prudent to hear Shilling out. --Harry C. Edwards

From the Back Cover

"In the early 1980s, Shilling was one of the first to raise the possibility of disinflation...At the time, he was considered extreme, but that's just what happened. Now he's considered extreme once again. We'll see..."--Terry Savage, Personal Finance Columnist, Chicago Sun-Times.

"You have to listen to Shilling, who is a consulting economist and columnist for Forbes. He was the first of the prominent U.S. economists to see the winding down of inflation...In 1973, he was almost alone in forecasting a deep, worldwide recession...In early 1988, he predicted that the 1990s in Japan would be like the 1930s in the United States--at the time, an astonishing forecast. It turned out to be right..."--Don Bauder, Financial Columnist, San Diego Union-Tribune.

"After tracking Gary Shilling for over a quarter century, I do not know of any economist who scored more bull's eyes on major turns in the economy--which ultimately affected the stock market. Ignore him if you will, and lament the ravages of deflation later."--Charles Allmon, President, Growth Stock Outlook.

"There are lots of economists making predictions these days about the future course of the global economy, but few are doing the research to get it right. With a clear sense of how the prospect of deflation is drmatically changing the economic environment for consumers, companies, and countries, Gary Shilling stresses the importance of growth."--Jerry Jasinowski, President, National Association of Manufacturers.

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Product Details

  • Hardcover: 352 pages
  • Publisher: Mcgraw-Hill (June 21, 1999)
  • Language: English
  • ISBN-10: 0071351817
  • ISBN-13: 978-0071351812
  • Product Dimensions: 1.2 x 6 x 9.2 inches
  • Shipping Weight: 1.8 pounds
  • Average Customer Review: 4.1 out of 5 stars  See all reviews (16 customer reviews)
  • Amazon Best Sellers Rank: #1,538,730 in Books (See Top 100 in Books)

More About the Author

A.Gary Shilling is President of A. Gary Shilling & Co., an economic consulting firm and a registered investment advisor. He has been a columnist for Forbes magazine since 1983, frequently appears on business news programs, and is quoted regularly in the print media. Shilling has been warning about the long-term threat of deflation for several years and has even created a board game, aptly title The Deflation Game. He received his bachelor's degree from Amherst College and earned his master's degree and PhD in economics at Stanford University. Previously, Shilling was chief economist of White, Weld& Co, Inc. and set up the economics department at Merrill Lynch, Pierce, Fenner & Smith, where he served as the firm's first chief economist.

Customer Reviews

Most Helpful Customer Reviews

24 of 25 people found the following review helpful By Dan E. Ross on July 12, 2002
Format: Paperback
Having left Wall Street over a year ago I am amazed at how little attention the media, Wall Street & the Fed have given to Deflation. In my opinion the probability of a deflationary scenario is higher than ever. This book helps you prepare for such tumultuous economic times. I rank it a 5 star book, an increasingly rare rating for me. I gave this book five stars due to the excellent analysis and insightful commentary about what occurs in deflation and, more importantly, the graphical depictions the book has throughout it. It would be ignorant to mention that Mr. Shilling has been talking about deflation non-stop since the late 80's - especially after the '87 stock market crash. Can anyone remember the story about the boy who cried "WOLF!" too many times?
Talking finance without graphs is tough for the reader so I give kudos to Mr. Shilling in this regard.
As I like to say (and Mr. Shilling points this out), the 1980's was the age of government spending. The 1990's was the age of the consumer buying binge as individual debt levels have soared. The average person has $8500 in credit card debt vs. 2500 in 1990 to put it into perspective.
Moving forward, what will drive top-line growth in worldwide sales? - Did you know that the G-8 countries account for roughly 80% of total purchases worldwide and, as a result, weakness in those countries dramatically affects the world economy?
Will we end up with too much capacity due to stagnant growth or a retraction in corporate spending?
What will be the catalyst to drive economic growth? - The government has over $5 trillion in debt, corporations and individuals are tapped out and factories are running at about 76% of their utilization right now.
Buy the book........Read the book........Anyone can learn from this........
Read more ›
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18 of 19 people found the following review helpful By Charles C. Dunlap on August 25, 2001
Format: Hardcover
I bought a bunch of investment books while on vacation, and this book by Gary Shilling was the last to be read only because of its relative size. First I looked at the date it was written, then thought about what he was saying, especially in his look-ahead comments, and he was "spot on" about today's environment. As a result, I moved 100% to the sidelines at the end of July, 2001, and have been smiling ever since. I then asked my wife to read it, and we both agree that Gary is most accurate in his assessment of economic trends. I was so impressed that I purchased his monthly "Insight" report. The book is a "must read", especially for those nearing retirement and must conserve their capital.
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11 of 11 people found the following review helpful By Gaetan Lion on May 28, 2003
Format: Paperback
I read this book years ago just when it came out (mid 90s). I did not pay that much attention afterwards. I thought at the time, it was mildly interesting. Man was I wrong. This book was right on the money half a decade ahead of time. In his book, he depicted perfectly well all the trends that would lead to a rather formidable deflation factor. At the time he wrote the book, Japan was probably close to entering its deflationary phase. But, no other country was. The rest of the World's central bankers were still busy fighting inflation.
Now, the picture has changed radically, and Gary Shilling anticipated current economic times perfectly
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9 of 9 people found the following review helpful By Edster on August 1, 2003
Format: Paperback
The author predicts certain economic conditions when the book was published in 1999. A stock market pullback has since happened. Rents in the Boston Market have declined for the last two years. Deflation pricing on goods that can be manufactured in the 3rd world. Quite remarkable.
He's wrong on some of the trigger mechanisms and admits that he may be. (Who could have predicted 9/11, or when the fed would raise rates..., or the bond rally causing a current real-estate bubble.)
Other authors try to scare you with hype or wave theory garbage. This book backs things up with hard data and graphs from different economic periods that run similarities. Then he explains the mechanisms at work that will drive the deflationary process. Also explains how much of it is beyond the control of the feds short term rate mechanisms.... Could be why the fed isn't jawing about it, just hoping it won't happen.
Five stars, read it. If it happens, you'll be prepared. If it doesn't happen, you'll be better educated anyways.
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9 of 9 people found the following review helpful By A Customer on July 19, 1999
Format: Hardcover
While this book is very much a re-publication of his original "Deflation" book, Gary has cut back on the number of graphs and charts, and added new content on recent developments.
While at first I wasn't too pleased to be re-reading the original book in new packaging, I found it very valuable to review the numerous points Gary makes along with some updates on his insights.
This book is currently the best on the subject and makes a lot of sense. Some have argued that Gary is out to lunch, but he is the only one I know who is prepared to address these issues intelligently.
And for those who complained that "Deflation" did not have an index, they'll be pleased to know that this McGraw-Hill edition does!
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18 of 21 people found the following review helpful By A Customer on July 7, 2003
Format: Paperback
This is a good book, but it is in need of a serious rewrite. Originally published in 1999, it misses the following events:
* Stock market calamity in 3/2000 and subsequent decline
* 9/11
* corporate accounting scandals
* The multitude of interest rate cuts
* Real Estate bubble
* War on Iraq
As a result, a lot of the information in this book has to be interpreted with these events in mind. For instance, a whole chapter is devoted to "The Strengthening Dollar" - which may have happened had the landscape not changed so drastically. Another example is a mention of Enron as an example of a company that might be a winner in the electric utility industry as utilities are being deregulated.
The above is not intended to be a slight on the author or the book. Who could've foreseen the events above? The point is that the landscape has changed a lot since this book was originally written.
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