Shouldn't some of this be corrected for inflation? I don't think anyone could claim that in today's environment (with the Fed aiming for 2% inflation) that stock prices should be so low as to reach the 15% earnings yield reached in 80's.

All of the historical prices and dividends and earnings I've mentioned are adjusted for inflation.
Then all of them are cyclically adjusted. Unsurprisingly, over the long haul, the correlation between net after-tax aggregate corporate earnings and GDP is pretty close. Both of them trend pretty well over the long run.
The growth trend for all of them is remarkably linear over time, once adjusted for inflation. (except for the long run trend that real prices have risen faster than real earnings)

So---
The going price for a given number of dollars of "on trend" real earnings was very much lower back then than it is now. And it was quite a bit lower on average in the last century than it is now.
The question is, why would the high inflation in a particular decade back then make much of a difference to that observation?

I think the main take-away is that market valuation levels don't really correlate very well with inflation or interest rates, other than the occasional stretch that inflation is so high that the economy breaks. People tend not to want to pay a lot for stocks when the economy is broken, which makes some sense. But thankfully that's a very rare occurrence and doesn't make much of a contribution to the short, medium, or long term average valuation levels.

The bigger observation is that sometimes people (for whatever justification) pay a whole lot for each dollar of (cyclically adjusted) earnings per year, and sometimes they won't pay very much at all. The reason doesn't matter much. But over the millennia, the range tends to be almost always from $5 to $25*, and more often closer to the middle of that range than at the extremes. Purchases done near the bottom end of that range tend to lead to good medium to long run returns, and purchase done near the top of that range tend to lead to below-average medium to long run returns. It was ever thus, and (I presume) ever shall be.

Jim

* Average trend EY in the US since 1916 equates to a multiple of 13x. Average trend EY in the US in the last 50 years equates to a multiple of 16x. Average last five years and also current, 30x.
Maybe multiples will stay this high. I'm not saying they won't--the future hasn't happened yet. But I for one sure wouldn't wager money on it.