Deflation: How to Survive and Thrive in the Coming Wave of Deflation
By A. Gary Shilling
McGraw-Hill, 1999 - 342 pages

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. Schilling 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……..By the way, bond prices have already soared so the easy money in bonds has been made………

Dr. Shilling is President of A. Gary Shilling & Co., Inc. In addition to his forecasting record, his portfolio management, and his column for Forbes (click for forbes columns), which he has written since 1983, he is also known for his well-received books concerning economic themes and investment strategies, and for his numerous articles on the business outlook and techniques of economic analysis and forecasting. He is a member of The Nihon Keizai Shimbun (Japan Economic Journal) Board of Economists. He appears frequently on radio and television business shows.  Recognized as an effective and dynamic speaker, he often addresses national and international conventions of various business groups, including the Young Presidents' Organization. 

His first book, Is Inflation Ending?  Are You Ready?, was published by McGraw-Hill early in 1983.  In 1986, he wrote The World Has Definitely Changed:  New Economic Forces and Their Implications for the Next Decade, and in early 1988, published the sequel, After the Crash:  Recession or Depression?  Investment and Business Strategies for a Deflationary World.  His next book, published in June 1998, was entitled Deflation: Why it's coming, whether it's good or bad, and how it will affect your investments, business, and personal affairs, and was subsequently translated in China and Korea.  A year later, McGraw-Hill published Deflation: How to Survive and Thrive in the Coming Wave of Deflation, which was translated for readers in China.  Dr. Shilling is also the creator of The Deflation Game, a board game that illustrates and reinforces his long-term forecast that deflation is a greater threat than a return to high inflation. 

Dr. Shilling is well known for his forecasting record.  In the spring of 1969, he was among the few who correctly saw that a recession would start late in that year.  In 1973, he stood almost alone in forecasting that the world was entering a massive inventory-building spree to be followed by the first major worldwide recession since the 1930s.  In the late 1970s, when most thought that raging inflation would last forever, he was the first to predict that the changing political mood of the country would lead to an end of severe inflation, as well as to potentially serious financial and economic readjustment problems, and a shift in investment strategy from one favoring tangible assets to emphasis on stocks and bonds.  Subsequently, he has become known as  "Doctor Disinflation." 

The January 22, 1993 edition of The Wall Street Journal reviewed the track records of interest rate forecasters polled semi-annually by the Journal since 1981 and said, "The economist with by far... the best record in picking when to buy long-term bonds:  A. Gary Shilling, who heads an economic consulting firm and manages money.  During the 1980s, Mr. Shilling... saw sharply lower interest rates ahead.  ...investors who bet on his rate forecasts by putting their money in long-term bonds did very well." 

The July 7, 1997 edition of the Journal stated that "Mr. Shilling... had the best overall forecast" of the economy, interest rates, exchange rates and inflation "among the...57 economists polled in the latest survey." 

Dr. Shilling received his bachelor's degree in physics, magna cum laude, from Amherst College, where he was also elected to Phi Beta Kappa and Sigma Xi. He earned his master's degree and Ph.D in economics at Stanford University. 

Before establishing his own firm in 1978, Dr. Shilling was Senior Vice President and Chief Economist of White, Weld & Co., Inc.  Earlier he set up the Economics Department at Merrill Lynch, Pierce, Fenner & Smith at age 29 and served as the firm's first chief economist.  Prior to Merrill Lynch, he was with Standard Oil Co. (NJ)--now Exxon-- where he was in charge of U.S. and Canadian economic analysis and forecasting. 

Dr. Shilling is on the Board of Directors of National Life of Vermont, the Heartland Group of mutual funds, Palm Harbor Homes and the Episcopal Preaching Foundation, Inc. of which he is Chairman.  He is also an Advisory Director of Austin Trust Co.