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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (36195)7/16/2005 11:07:55 PM
From: Mike Johnston  Read Replies (3) of 110194
 
The can't invert that much as it would lead to a global depression.A major slowdown by the American consumer of last resort would be a disaster.


The Fed has created the situation where there are only two choices: disaster now or a worse disaster later.

IMO whether the curve would invert or not would not be as important, because for some reason long term yields are artificially low.
Normally, when the curve inverts, recession follows, but that assumes that inflation rate is lower than long term bond yields and therefore short term yields.
Now however, even if the curve inverts, both long and short rates are still below inflation which is stimulative.

Of course all this makes sense only if one believes as i do, that a true inflation rate is somewhere between 6-8% and not 2% as maintained by the government and that the bond market is somehow manipulated.
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