We've trained the population to expect that prices will increase at 2% annually, while a diversified portfolio will increase 6+% (with little risk and a central-bank safety net). I believe this creates the perception that utility of saving exceeds that of consumption.
Add government and central bank backstops to financial asset values and you end up with a stock of "wealth" that greatly exceeds the size of the economy. This creates negative real rates, pushes down future returns on all financial assets, etc. The big losers will be those just beginning to accumulate assets - we've essentially engineered a massive one-time wealth transfer to people who accumulated assets years/decades ago.
With $2.35T in profits (likely to grow as the economy ramps back up) and a market price of $44.2T you have an earnings yield of 5.3%. Compared to the 1.24% yield on a 10 year U.S. bond, that doesn't seem all that crazy.
We've trained the population to expect that prices will increase at 2% annually, while a diversified portfolio will increase 6+% (with little risk and a central-bank safety net). I believe this creates the perception that utility of saving exceeds that of consumption.
Add government and central bank backstops to financial asset values and you end up with a stock of "wealth" that greatly exceeds the size of the economy. This creates negative real rates, pushes down future returns on all financial assets, etc. The big losers will be those just beginning to accumulate assets - we've essentially engineered a massive one-time wealth transfer to people who accumulated assets years/decades ago.
With $2.35T in profits (likely to grow as the economy ramps back up) and a market price of $44.2T you have an earnings yield of 5.3%. Compared to the 1.24% yield on a 10 year U.S. bond, that doesn't seem all that crazy.