This book reveals the fundamental drivers of the New Economy in the 1990s and sets the stage for a more clear understanding of the economic and investment environment of the next 10-20 years. By introducing some new theories and by challenging or tweaking some old ones, readers will be shown how to make some sense out of these confusing times. When the “good times” were happening, there was perhaps less urgency to understand exactly why they were happening. Now there is a greater need to know, and real answers will be offered. Perhaps even more importantly, it will be shown how rapidly advancing technologies can create economic conditions over the next two decades that could be almost as favorable as the ‘90s – if appropriate fiscal and monetary policies are pursued. Investors will learn what to watch for so that they can make important adjustments to their portfolios based on whether the proper policy decisions are made during the next few years.
Many of the inflation, interest rate and stock market theories presented in this book are brand new to the public. As most of the scenarios described are long term in nature, they should be particularly helpful for investors faced with the daunting task of planning for their retirement over the next ten to twenty years. After the sharp stock market downturn in the first few years of the new Millennium, some investors are questioning the value of investing in common stocks. Anxiety levels may remain high due to the absence of clear explanations for how the New Economy of the ‘90s arrived so mysteriously, setting records for growth and creating prosperity, only to suddenly disappear.
The process for developing the Theory of Digital Deflation started with unrelated theories on Demographics and productivity well before anyone was talking about the New Economy. As luck would have it, however, these theories established an absolutely critical foundation for researching and understanding Digital Deflation and how it uniquely drives the New Economy. With the benefit of growing Digital Deflation over the next two decades, the U.S. economy can attain higher growth without inflation, creating proportionately more real value and vastly more wealth than ever in the history of mankind.
There will be threats and challenges to overcome. Our fiscal and monetary policymakers will need to open their minds to using new theories and models to set the appropriate policies for the New Economy. Investors and corporate managers will have to learn new tricks to win in a brave new world where some rules will change and some won’t, but most assuredly, the New Economy will take share from the Old. It is hoped that this book will help all investors, large and small, as we may possibly be standing at the doorstep of the next multi-year bull market.
Graham Y. Tanaka