Inflation is dead. All the recent concerns about rising interest rates, wages and soaring deficits may be significant, but they are overshadowed by more powerful long-term forces. Technology, globalization and demographics are conspiring against the pricing power of companies and individuals.

That’s the view of Ed Yardeni, who began his career as an economist when inflation was raging after earning a Ph.D. at Yale under Nobel laureate James Tobin. Advisors and investors who still fear inflation should ask themselves why deflation-obsessed central bankers around the globe have used every instrument in their toolboxes to rekindle nominal inflation for the last decade—and failed completely.

After spending 20 years as a chief economist, Yardeni shifted gears in 1999 and became a market strategist, but the training gives him insights most strategists lack. He recently published a remarkable book, titled Predicting the Markets: A Professional Autobiography, in which he shares lessons learned in a 40-year career as one of Wall Street’s few original thinkers. Yardeni will be a keynote speaker at Financial Advisor's annual Inside Alternatives and Asset Allocation conference in Las Vegas on September 24.

Via what he calls a Tolstoy, war-and-peace model, Yardeni explains that inflation can surge during wartime, when countries are not trading with enemies, when they are scrambling for raw materials among friends and foes and they are diverting parts of their labor force into the labor market. The peacetimes, which have dominated since the end of the Cold War, increase competition among all producers, and this has exerted downward pressure on goods and prices ever since 1989.

Remember the rolling recession of the 1980s, the bond vigilantes of the early 1990s, the paradigm of the technology revolution in 1993, just before the internet created its own revolution on Americans’ desktops? Yardeni was the observer who coined those terms and others.

Working over the better part of half a century, he started out as a realist. Experience, in turn, transformed him into an optimist. Viewed from the vantage point of a four-decade career that many see as one extended, secular bull market, it’s understandable. “When I got into this business, the Dow was [stuck at] 1,000,” he recalls.

Among the lessons learned, he now recognizes seminal events that were revolutionary game-changers, not mere evolutionary events. The end of the Cold War in 1989 ushered in the era of globalization as multinational companies saw the markets for their products expand dramatically. China’s admission to the World Trade Organization in 2001 was another.

Today, Yardeni believes America in particular is in the midst of an era when technology is transforming the economy in very different ways than it did in the 1990s. Back then, companies were making and buying more computers and that was driving GDP. Now the change is much more profound—and scary.

Technology is a bigger driver of dislocation than free trade, and there is “no business I can’t think of that doesn’t face the threat of being disrupted by a rival using technology.” As a small-business owner who started his own institutional research firm nearly two decades ago, Yardeni believes entrepreneurs are driven by insecurity, not selfishness or greed.

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