Investors should move to assets that benefit in reflationary times, like Treasury Inflation Protected Securities, gold (which Hartnett thinks will bottom in 2016), commodities and small-cap Chinese stocks, Hartnett said. TIPs have been around flat for the year, while gold has dropped nearly 2 percent and commodities overall are off nearly 13 percent.
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Easy-money measures have helped boost Wall Street, with the S&P 500 up about 200 percent since the March 2009 lows as companies have spent some $2 trillion on stock repurchases. Dividend payments also have soared during the period, with the second quarter's $105 billion increase the biggest in 10 years, according to FactSet.
Asset returns have jumped while global economic growth has been anemic in what Hartnett called "the most deflationary expansion of all time." Gross domestic product gains in the U.S. have averaged barely 2 percent during the post-Great Recession recovery, while some economists believe a global recession could hit in 2016.
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The clamor for some of that asset wealth to find its way into the larger economy is growing and giving rise, according to Hartnett, to populist presidential candidates like Donald Trump and Bernie Sanders in the U.S. and similar movements around the world.
"Deflation exacerbates 'inequality' of income, wealth, profits, asset valuations," Hartnett wrote. "The gap between winners and losers is being driven wider and wider by excess liquidity and technological disruption (trends synonymous with the 1920s, another period infamous for 'inequality')."
Income growth disparities have jumped in the past 10 years. The highest-paid 10 percent of workers saw inflation-adjusted wages increase 4.6 percent annually from 2003-2013, while the lowest 10 percent saw their waged decline 2.2 percent, according to data released last week by the Bureau of Labor Statistics.
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Consequently, the top 0.1 percent of the U.S. population now controls 22 percent of the wealth, from 7 percent in the late 1970s, while the bottom 90 percent of U.S. households control just 23 percent, down from 36 percent in 1986, according to BofAML.
Policymakers will take advantage of interest rates that, while rising, will remain low, and slumping commodity prices in what will amount to an "optimal time to finance infrastructure spending," Hartnett said. The $3.7 trillion muni bond market has seen its lowest issuance for transportation, infrastructure and state spending since 1997, Hartnett said. The total muni market has grown just 1.7 percent in 2015.
Investors expect the Fed to raise interest rates either later in 2015 or fairly early in 2016, though a date for liftoff has been a moving target. Futures traders believe the most likely date for the first hike in nearly 10 years to be March 2016.
Fed officials, though, have said repeatedly that even after the first increase, the pace of tightening afterward is likely to be slow.