Corporations borrow money through bond sales and elsewhere to buy back their stock and make their share prices rise. This enables many of their officers and employees to exercise stock options at a fat profit. Corporations practice financial engineering and other gimmicks rather than building plants and investing in new equipment. Mergers, acquisitions, downsizing, stock buybacks and stock speculation are often more rewarding than manufacturing and producing goods. You can make more money with your stock than you can with your business.
Massive capital flows into stocks cause savings rates to turn negative.
If all the money winds up in the stock market, including everybody's retirement money, a crash can exterminate the wealth of America. This lack of diversification is imprudent. Putting money into an over-valued internet stock is not the same as a savings account as some would have us believe. The stock market wealth effect promotes a consumption boom and increased borrowing for consumer goods and services. Consumers are borrowing and spending like the world is coming to an end.