My latest essay is on stock prices and interest rates.

So this time is different because interest rates, after adjusting for inflation, have declined to record levels. For example, the interest rate on inflation-indexed Treasury securities is negative.

The decline in the real interest rate is the subject of a paper by Atif Mian, Ludwig Straub, Amir Sufi. They write,

The evidence suggests that rising income inequality is the more important factor explaining the decline in r*. Saving rates are significantly higher for high income households within a given birth cohort relative to middle and low income households in the same birth cohort, and there has been a large rise in income shares for high income households since the 1980s. The result has been a large rise in saving by high income earners since the 1980s, which is the exact same time period during which r* has fallen.