Do lower risk-free rates justify higher share prices?

The bears claim that US equities will hit the skids soon because Shiller’s cyclically-adjusted price/earnings ratio (CAPE) for the S&P Composite is now more than double its average since 1881 of 14. But their claim is based on a misconception that this average is a normal level to which the ratio will inevitably revert. It fails to recognise that investors’ required return from US equities has fallen.