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

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.