> ...
but it seems clear from the stock market average that stock prices have been growing much faster than the historical average for the past 5 years.Where does cash have to go? In Germany/Europe you have a culture of saving, so everyone stashes in "safe" accounts, and so government bond yields are at zero or even negative. Those folks would do better, both financially and for the health of the economy, to go with equities. German/EU governments would do well to spend more as well.
In the US people seem to be more culturally tuned to spending, and is "the" market to invest in world-wide, so a lot of folks are putting their money there. Potentially bidding up prices.
This is why Krugman is calling for a "permanent stimulus":
> OK, if you’re still with me: I hereby propose that the next U.S. president and Congress move to permanently spend an additional 2 percent of GDP on public investment, broadly defined (infrastructure, for sure, but also things like R&D and child development) — and not pay for it.
> The starting point for my argument is the astonishing drop in interest rates over the past few weeks. They were historically very low even a year ago, but at the time of writing the 10-year rate was only 0.76 percent. That’s below the rates on Japanese debt during the Lost Decade:
* https://www.nytimes.com/2020/03/07/opinion/the-case-for-perm...
* https://archive.is/Z2TMK
Borrowing is cheap, so if the US is going to run deficits anyway, instead of 'tax cuts for the rich', there's a lot of infrastructure that's aging that could be rebuilt.