Mr. Shiller also said he thinks the U.S. economy is "teetering on the brink of deflation." Deflation occurs when the general level of consumer prices falls, as was the case in the Great Depression. He said the U.S. is ill-prepared for such an event because of the lack of "indexing" in contracts.

In addition, the co-creator of the Case-Shiller Home Price Index said he is worried that housing prices could decline for another five years. He noted that Japan saw land prices decline for 15 consecutive years up to 2006.

Mr. Shiller said the biggest problem for the economy and the national psyche currently is unemployment, and he called on the federal government and local government to create jobs. Specifically, he suggested that schools employ an additional person in each class room as a teacher's aide.

Thats exactly the opposite of what most school systems are doing...