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Are Americans investing or speculating on a bubble?

With the stock market at all time highs, some expert observers are voicing concern that another speculative bubble is in the works, driven by low returns on safe investments and a belief that the Federal Reserve will continue to prop up the surge.

This year's Nobel Prize winning economist Robert Schiller, who won the prize for research on market prices and asset bubbles, says he is not yet sounding the alarm, but it does sound like he's keeping his finger poised on the button.

“I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets,” Shiller told Sunday's Der Spiegel magazine, as reported in Reuters. “That could end badly.”

“I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable,” he said.

The root of the stock market surge, many experts argue, is Federal Reserve policies that have kept traditional safe investments such as bonds down, forcing investors into more speculative terrain in search of returns.

“The reality is that the climate of easy money pushed by the Federal Reserve has created this stock market bubble,” wrote stock market analyst George Leong at, “The Fed should be looking at reining in its monthly bond buying. … This would be a way of cutting the stimulus and avoiding the continued build-up of debt. It would also allow the economy to fend for itself a little more, rather than relying on the overblown stimulus. I hope the exiting Chairman Ben Bernanke or incoming Chairwoman Janet Yellen will start the process.”

Some experts are less worried. Syndicated columnist Robert Samuelson observes that “stock prices reflect present and future profits, and — despite a sluggish economy — corporate profits have increased impressively. By government figures, they're up 39 percent from their 2006 pre-recession peak.” Profit margins, Samuelson notes, are high, giving plausible grounding for the surge.

But even Samuelson is far from giddy, noting that profit margins do not equal long-term productivity and job creation. “What's clearer is that stocks and the 'real economy' of jobs and production have become disconnected,” he writes, “and that this cannot continue indefinitely. There are practical limits to how much companies can improve profits without stronger economic growth and higher sales.”

“Many technology entrepreneurs and venture capitalists say there is little to worry about,” writes Nick Bilton at the New York Times. “Which tells you something about bubbles and Silicon Valley. It is difficult to know when any bubble is going to pop until it does. And in Silicon Valley, with its inherent optimism in brighter tomorrows, the view tends to be that the way is always up.”

“Margin debt on the New York Stock Exchange is currently at its highest level ever,” writes Mike Whitney at Counterpunch. “It’s even higher than before the crash in 2007. When investors borrow a lot of dough to buy stocks, you’re in a bubble, right? Because that’s what a bubble is, tons of credit pushing up prices. And when something bad happens, like the Lehman Brothers default, then all the over-extended borrowers have to dump their stocks pronto, which causes fire sales, panics and financial meltdowns. Been there, done that.”