Major Messages

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 (1) Digital Deflation describes the new forces that really drove the U.S. economy in the 1990s, and why they will return to power the economy during the next two decades. 

 (2) New theories and revelations explain why inflation declined so dramatically in the 1980s and 1990s and why, remarkably, inflation is likely to be headed even lower over the next 10-20 years. 

 (3) Most people realize that economic data are often flawed.  It is revealed how, in ways unknown to the general public, the government has begun to institute new methods to measure more accurately the unique economic benefits of the Digital Revolution, reducing inflation by 0.3% per year thus far.  As the government extends these methods to additional key industries, it is shown how we are a lot closer to deflation than people think, with actual inflation as much as 2% lower than what is currently being reported. 

 (4) This book uncovers how rapid and recurring technology advancements and “faster, better, cheaper” products are reducing inflation – and boosting productivity at the same time.  It is explained how this phenomenon, Digital Deflation, will grow to become an even larger positive force over the next two decades, ushering in a new era of prosperity. 

 (5) The policy implications of better data to measure the benefits of Digital Deflation are enormous.  The book shows how the Federal Reserve has been too tight over the last few years, inadvertently causing a recession and unnecessarily high unemployment.  Further improvements in economic data will show the Fed that it can become more stimulative – and avoid the kind of deflationary trap that has plagued Japan recently and put an end to the Industrial Revolution in the U.S. in the 1930s.  A resurging economy during the next two decades will produce budget surpluses and provide a rare opportunity to address the looming Social Security and Medicare time bombs. 

 (6) Near zero inflation and very low interest rates coupled with a secular rise in productivity gains will create massive amounts of wealth during the next 10-20 years, with bond yields going to record lows and stock market P/E multiples going to new highs.