Gary Shilling is an economist with a spectacular 40 year track record of predicting macro-events. He called the fall of inflation in the early 80s, the US housing bubble and the subsequent financial crisis. The book focuses on explaining the deleveraging phenomenon and its impact on investing strategies.
Over the past 60 years (since 1952), every single sector of the economy has levered up. The financial services sector went from cumulative sector debt of under 20% to in excess of 120%. The story is similar for non-financial corporations (abet not as extreme). It's repeated across households to state & municipal governments and the Federal government.
The increase in leverage among households is mirrored by the decrease in savings. The savings rate of the American consumer fell from 12% in early 1980s to 1% in Jan 2008. Not surprising the decline in savings rate coincided with the beginning of the bull market in stocks in Aug 1982.
Shilling predicts an era of slow growth ahead. Driven by 2 key trends - increase in the savings rate and business cost cutting. He estimates that a 1% rise in savings rate will knock off 1% of real GDP growth. Businesses have been cost cutting by not hiring more employees and increasing employee productivity. These two trends suffer from the fallacy of composition. If everyone saves, who will buy stuff and generate demand? Overall the economy suffers. Similarly for business cost cutting.
The above 9 causes will take some time to work through the system, leading to slow growth ahead.