Digital Deflation : The Productivity Revolution and How It Will Ignite the Economy

Mysteries, puzzles, and paradoxes of the new economy -- Solving the mystery : missing productivity and the great inflation mismeasure -- The theory of digital deflation : faster, better, cheaper -- Why the old models didn't work in the 1970s and 1980s -- Why economists have difficulty explaining the new economy -- Redefining the new economy -- New models for the new economy -- The wealth in our future -- The new economy stock market -- Monetary policy : new "speed limits" for the FED -- Fiscal policy and better data in a digitally deflating world -- Wise investing in the new economy -- Digital democracy : globalization of the new economy -- Threats and opportunities : making the world a better place -- Closer to deflation than you think -- Fireside chat interviews with creators of digital deflation.;Robert Shiller's "Irrational Exuberance" contends that the stock market is a massive bubble. In "Digital Deflation", Graham Tanaka takes Shiller to task, flatly contradicting everything Shiller says. The author backs up his contention with hard evidence based on the numbers, using numerous charts and graphs to illuminate key points.; The digital revolution has changed everything in today's economy, dramatically increasing productivity and changing our lives in innumerable ways. Advances in digital technologies have created a new phenomenon the author calls "digital deflation", which is the improvement in price and performance of products and services due to advances in digital technologies. Digital deflation results from constantly improving technologies that give consumers better products faster and at less cost. This increasing productivity (performance has improved at a rate of 40% per year for the past 30 years) will continue for a least the next ten years and possibly longer. Unfortunately, the federal government uses old-economy yardsticks to measure this rapidly growing economy, inadvertently overstating inflation and understating economic activity and productivity, while at the same time making the digital effect on the economy difficult to measure and understand.; "Digital Deflation" explains this new economy, how we got to where we are today, and where the new economy is headed. The author shows that it is critically important to understand the drivers - the basic elements and technologies that are the foundation upon which this revolution is built. The book explains digital technology development cycles and why there is strong evidence that this pace of change will continue. The book provides a clear, concise understanding of how the new economy works and how these technologies will improve product cycles, thus affecting market demand, product development, manufacturing, sourcing, distribution and pricing. The book explores the massive implications of the digital revolution for business managers, consumers and investors.; Because of these changes, the digital revolution will have significant long-term effects for the stock market. Improvements in technology lead to higher productivity, which increases corporate profits and leads to higher stock prices. "Digital Deflation" discusses how to invest in this new, more volatile economy and it identifies the types of companies that will be the enablers and beneficiaries of the digital revolution. The author names specific companies to invest in: Intel (hardware), Microsoft (software), Cisco (optics), AOL (Internet) and GE (old economy company transforming itself). The author discusses the specific benefits this new economy will bring to individual investors and predicts what the next 10 to 20 years will bring for the economy and the stock market. The author also presents a new economic model and new methodologies for more accurately measuring real economic activity in the new economy, thus improving investment decisions. “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. It shows 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.”—From the PrefaceUnprecedented improvements in digital technologies and productivity have transformed the very foundations of our global economy, rendering 20th- century economic measurements insufficient—and often stunningly inaccurate—in tracking real economic growth. In the groundbreaking and solidly researched Digital Deflation, noted money manager and market analyst Graham Tanaka takes an up-close look at the new economic environment, revealing how far off base many of today’s most venerated statistical measures really are. Tanaka introduces models designed to help economists and corporate decision-makers quantify what is really driving productivity growth and corporate value, along with techniques investors can use to uncover and invest in today’s most high-potential, undervalued companies.Combining surprising new ideas and eye-opening analysis with convincing charts and graphs, Digital Deflation explains:Why inflation and interest rates are at their lowest levels in decades, and new economic realities that are likely to drive them even lower A unique and illuminating analysis of today’s “Productivity Revolution”—and what both developed and emerging economies must do to reap its greatest rewards How and why many of the forces that fueled the ’90s stock market growth are poised to return, along with guidelines investors can follow to profit from those forces In addition, interviews with Michael Dell, Gordon Moore, and other pioneers and leading players in the Digital Revolution spell out the history of Digital Deflation, what is happening behind closed doors today, and what economists, observers, and investors should expect in the coming ten to twenty years.For those who learn where to look, and what to look for, low inflation and rock-bottom interest rates will combine with technology-driven gains in productivity and product quality to create massive wealth over the next two decades. Digital Deflation reveals the economic measures that are being corrected to recognize and properly evaluate the drivers and realities of this New Economy, and how you can begin today to truly understand and profit from this more rewarding economic environment—one that future generations may look upon as the first great bull market of the 21st century.Graham Tanaka, C.F.A., is President, Chief Investment Officer, and Chief Economist for Tanaka Capital Management, Inc. and the TANAKA Growth Fund. In his more than a quarter century as an analyst and portfolio manager, Mr. Tanaka has held senior-level positions with Morgan Guaranty Trust and Fiduciary Trust Company of New York. He serves on the board of directors of TransAct Technologies, Inc., and received his A.B.-Sc.B. degrees from Brown University and his MBA from Stanford University. Further information can be found at www.digitaldeflation.com or www.tanaka.com.

Praise for Digital Deflation:

"Technology, productivity, deflation, and wealth creation. It's all here, and Graham Tanaka is right on target!"

—Lawrence Kudlow, CNBC's "Kudlow & Cramer."

"Whether you're bullish, bearish or in between, this is an important book for all investors to read!"

—Dr. Edward Yardeni, Chief Investment Strategist, Prudential Securities

"Once in a great while, an original and thought-provoking book comes along. Digital Deflation is it—a must read!"

—Thomas R. Schwarz, former president and COO, Dunkin' Donuts, Inc.

"Graham Tanaka has sensed, well ahead of most, the issues surrounding the possible emergence of 'deflation.' He demonstrates that our measurement processes, tuned as they are to inflation, are not picking up the declines in real prices that are occurring—and that we are missing the implications for our economy and corporate strategies."

—William C. Dunkelberg, chief economist,

National Federation of Independent Business

"Consumers spend on goods and services with the greatest quality improvement rather than merely responding to price information. Thank Graham Tanaka for laying out this and other valuable insights in Digital Deflation. Read it."

—Wayne Angell, former Federal Reserve Governor

How the "digital revolution" is driving today's economy—and its impact on corporations, government policy, and the stock market

New technologies have transformed how today's economy works. Digital Deflationexamines this new economic environment, from how we got here to where we are going. Eye-opening yet solidly grounded, it explains how low inflation and interest rates, coupled with technology-driven productivity gains, will create massive wealth in the coming decades, and benefit stock market P/E multiples over the long term.

Combining insightful analyses with convincing charts and graphs, Digital Deflationprovides a clear understanding of how digital technologies will continue to alter every aspect of business. Readers will discover:

• Why inflation declined so dramatically in the 1980s and 1990s, and is likely to head even lower
• New measures of economic activity and how they will affect policy
• The laws of digital deflation—how they work and what they mean for corporate decision makers

Annotation Praise for Digital Deflation: "Technology, productivity, deflation, and wealth creation. It's all here, and Graham Tanaka is right on target!"--Lawrence Kudlow, CNBC's "Kudlow & Cramer." "Whether you're bullish, bearish or in between, this is an important book for all investors to read!"--Dr. Edward Yardeni, Chief Investment Strategist, Prudential Securities "Once in a great while, an original and thought-provoking book comes along. Digital Deflation is it--a must read!"--Thomas R. Schwarz, former president and COO, Dunkin' Donuts, Inc. "Graham Tanaka has sensed, well ahead of most, the issues surrounding the possible emergence of 'deflation.' He demonstrates that our measurement processes, tuned as they are to inflation, are not picking up the declines in real prices that are occurring--and that we are missing the implications for our economy and corporate strategies."--William C. Dunkelberg, chief economist, National Federation of Independent Business "Consumers spend on goods and services with the greatest quality improvement rather than merely responding to price information. Thank Graham Tanaka for laying out this and other valuable insights in Digital Deflation. Read it." --Wayne Angell, former Federal Reserve Governor How the "digital revolution" is driving today's economy--and its impact on corporations, government policy, and the stock market New technologies have transformed how today's economy works. Digital Deflationexamines this new economic environment, from how we got here to where we are going. Eye-opening yet solidly grounded, it explains how low inflation and interest rates, coupled with technology-driven productivity gains, will create massive wealth in the coming decades, and benefit stock market P/E multiples over the long term. Combining insightful analyses with convincing charts and graphs, Digital Deflationprovides a clear understanding of how digital technologies will continue to alter every aspect of business. Readers will discover: Why inflation declined so dramatically in the 1980s and 1990s, and is likely to head even lower New measures of economic activity and how they will affect policy The laws of digital deflation--how they work and what they mean for corporate decision makers Praise for Digital "Technology, productivity, deflation, and wealth creation. It's all here, and Graham Tanaka is right on target!" --Lawrence Kudlow, CNBC's "Kudlow & Cramer." "Whether you're bullish, bearish or in between, this is an important book for all investors to read!" --Dr. Edward Yardeni, Chief Investment Strategist, Prudential Securities "Once in a great while, an original and thought-provoking book comes along. Digital Deflation is it--a must read!" --Thomas R. Schwarz, former president and COO, Dunkin' Donuts, Inc. "Graham Tanaka has sensed, well ahead of most, the issues surrounding the possible emergence of 'deflation.' He demonstrates that our measurement processes, tuned as they are to inflation, are not picking up the declines in real prices that are occurring--and that we are missing the implications for our economy and corporate strategies." --William C. Dunkelberg, chief economist, National Federation of Independent Business "Consumers spend on goods and services with the greatest quality improvement rather than merely responding to price information. Thank Graham Tanaka for laying out this and other valuable insights in Digital Deflation. Read it." --Wayne Angell, former Federal Reserve Governor How the "digital revolution" is driving today's economy--and its impact on corporations, government policy, and the stock market New technologies have transformed how today's economy works. Digital Deflation examines this new economic environment, from how we got here to where we are going. Eye-opening yet solidly grounded, it explains how low inflation and interest rates, coupled with technology-driven productivity gains, will create massive wealth in the coming decades, and benefit stock market P/E multiples over the long term. Combining insightful analyses with convincing charts and graphs, Digital Deflation provides a clear understanding of how digital technologies will continue to alter every aspect of business. Readers will Imagine that companies throughout the economy had access to new, better technology every year, and made better products without raising prices - in fact, while cutting prices. Now imagine that the regulators and policymakers used outmoded measurements and models that ignored these quality improvements and this downward price trend. Imagine that the Federal Reserve saw a risk of rising prices even when prices were falling. Imagine that the Fed kept tightening the economy unnecessarily, sending interest rates up, slowing growth, inducing stock market crashes and recessions, and doing the opposite of what it should. If you can imagine all this, you have a picture of U.S. economic reality as seen by author Graham Tanaka. It's a picture no one, especially investors, should disregard. getAbstract.com found his book immensely interesting - too long by half, with too many repetitious references to his previous publications (perhaps just his way of saying, "I told you so"), often tendentious and labored, but not to be ignored. Just be cautioned: this sounds somewhat like the bubble speak we heard at the end of 1999 and the beginning of 2000 - other times of strong growth without inflation Examines the economic environment, from how we got here to where we are going. This title explains how low inflation and interest rates, coupled with technology-driven productivity gains, create massive wealth in the coming decades, and benefit stock market P/E multiples over the long term. It also combines analyses with charts and graphs.