wither the economy?
One hypothesis, clipped from
Historically, equities were seen as very risky assets with significant potential for principal loss. Therefore, investors demanded high dividend yields to help balance this risk. After all, they had to get cash out before a crappy manager tanks the company some years or decades hence.
However, once economists could scientifically prove that equities were not super-risky and those risks could be quantified and balanced, then the equities could be viewed as a “normal” asset. Meanwhile, the previous four decades of global war and empire collapse had proven that “low risk” assets, such as sovereign bonds were not necessarily as low risk as everybody thought.
With the gold standard, inflation was generally a localized phenomena that required active, intentional debasement of money or a major disaster like war that tanked the economy. The following decades also saw the rise of international fiat currencies, so a financial arms race began to outgrow assets faster than inflation could chew them up. Late in that process, executives began to get gargantuan options as compensation instead of cash for tax reasons, so the ability to grow the stock value at the expense of dividends became a personal quest with a huge pot of gold at the end of the rainbow for the lucky ones.