Link here (with link to the original CNBC interview of Shiller within).
I'm disinclined to believe Robert Shiller is missing obvious points like the fact that passive funds aren't 100% passive or that active investor activity drives passive fund composition.
There are millions of people across the country who couldn't even tell you what a yield curve is and are nevertheless dumping billions of dollars into passive funds expecting a 10% YoY nominal return. In an economy growing at a 3.5% nominal rate (at its maximum) with interest rates approaching 2% the only way for this to work is for corporate earnings to encompass an increasingly large share of GDP. Shareholders are inclined to drive profits higher at all costs and investors must accept more and more expensive valuations. This is of course good for people who have assets and bad for people who don't, which drives inequality to greater and greater levels. But the average person doesn't recognize this. They are all inadvertently feeding the beast by dumping more and more of their cash into equities.
Submitted November 14, 2017 at 03:45PM by UrbanIsACommunist http://ift.tt/2yCDrYa
