Basically stating that inflation is understated. He thinks because there is higher inflation, the required return, r, in most equity valuation models are too low. Therefor, higher r = lower P/E ratio (I was actually shocked that I knew he was talking about). So, in the US, P/E’s are overstated by about 10%. Valuations/PE’s are better in countries where inflation is correctly accounted for. People actually use this (r-g) crap? 
I would say inflation “had” been understated, especially considering how little of the housing run-up is incorparated into the measure…but that isn’t the case at the moment.