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
"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.