ROBERT SHILLER: I think Janet Yellen did the right thing

On Thursday, markets are still buzzing about Janet Yellen's comment on Wednesday that said stock market valuations look "generally quite high."

Since this comment, many have asked if Yellen just had her own "irrational exuberance" moment, recalling then-Fed chairman Alan Greenspan's comments in 1996 that asked, "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?"

In an interview on CNBC, Yale professor Robert Shiller, who wrote a book about the dot com bubble titled "Irrational Exuberance" said that he thinks Janet Yellen did the right thing by making her comments about the stock market.

Shiller thinks Yellen was right to make her comments for two main reasons:

1. Stock prices, in Shiller's view, are high.
2. It's the Fed's job to "disturb the tranquility" of markets.

In his comments, Shiller also noted that Greenspan's comments were an isolated event, and said that Yellen's were mostly in the same spirit.

And while these comments about the stock market, or "jawboning" as many observers call them, might upset markets, Shiller thinks that making market participants uncomfortable from time to time is part of the Fed's job.

Shiller was on CNBC with Rick Santelli, who is unabashedly not a fan of the Fed's current policy stance, and Shiller told Santelli that overall, he sees Yellen as someone who still believes in the fundamental purpose of finance, which is to make things happen in the economy.

After sliding for two straight days, US stocks were up slightly near 11:10 am ET, with the Dow up 38 points, the S&P 500 up 3 points, and the Nasdaq up 13 points.

And as for that valuation, Shiller's PE ratio is currently near its highest level since the dot com bubble.