It also has become a leading export item, as the administration tries to push the American model on Japan, Europe and the rest of world, with the strong arm of the IMF acting as a sales agent in the less-developed countries. There is a major problem with this picture. By any reasonable measure, the stock market is hugely overvalued. Typically the ratio of the price of a share of stock to the earnings per share has been about 14 to 1. Currently it is more than 30 to 1.
Investors can bid up stock prices in the same way they can bid up prices of rare paintings.
But ultimately people value shares based on the earnings they generate, not how pretty they are. This means that stock prices would have to fall 50 to 70 percent to allow stocks to offer a return that is competitive with other financial assets, such as bonds. Furthermore, when the stock market crashes it is not going to bounce back like it did in 1987, when the market wasn't nearly as overvalued. After the fall, stock prices are likely to grow at about the same rate as the economy, around 2 percent annually after adjusting for inflation. This is an issue of logic and arithmetic, not ideology.