Author Topic: Why will yield curve inversion NOT be followed by a recession?  (Read 4277 times)

effigy98

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Re: Why will yield curve inversion NOT be followed by a recession?
« Reply #50 on: October 09, 2019, 08:49:17 AM »
We will see a recession, if nothing else it will be causation from everyone knowing about the indicators. Make sure you are diversified (gold, commodities, emerging, long term treasuries, etc) and you will not notice it much and your perpetual money making machine can keep on working over the long term.

ChpBstrd

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Re: Why will yield curve inversion NOT be followed by a recession?
« Reply #51 on: October 09, 2019, 09:59:04 AM »
There's nothing to suggest that this will lead to price controls. Anyone telling you this is either being disingenuous or doesn't understand macro-economics.

The Fed arbitarily determines the single most important price in the economy: the price of money. Anyone telling you otherwise is either being disingenuous or doesn't understand macro-economics.

The cost of money is interest minus inflation. While the fed has demonstrated a strong influence on interest rates, they have been unable to exceed or even hit their own 2% inflation target with any consistency since it was established in 2012. “Control” is perhaps too strong a word.

There has been much discussion about the flattening of the Phillips Curve and the economy’s deflationary drag during the past decade. Some explanations revolve around market expectations for inflation. If the fed has to react to changing market expectations for inflation, is that “control”?

On another note, haven’t “Austrian economists” been calling for economic collapse, hyperinflation, and $10,000 $100,000 an ounce gold since... well... forever? At what point does an economic theory that has been proven defunct, with literally multiple human generations of wrong calls, lose the status of “economic theory”?

bwall

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Re: Why will yield curve inversion NOT be followed by a recession?
« Reply #52 on: October 09, 2019, 11:12:52 AM »
I think it might be a good time to define some terms here.

Price stability = prices set by the free market, but very little change in nominal terms (or real terms).

Price control = prices set by government mandate, not the market.

The Fed's mandate has been employment maximization and price stability. They work to achieve these goals by manipulating the Federal Funds rate, which in turns affects the price of money. By making the cost of money either cheap or expensive, they can either spur the economy or reign the economy in.

The main economist of Austrian economic school for decades was Joseph "Creative Destruction" Schumpeter. In fact, he was even on Austria's currency for a long time even though he had emigrated to the USA and lived his last two decades there, teaching at Harvard. Von Mises' career was less distinguished.

PDXTabs

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Re: Why will yield curve inversion NOT be followed by a recession?
« Reply #53 on: October 09, 2019, 05:53:52 PM »
The main economist of Austrian economic school for decades was Joseph "Creative Destruction" Schumpeter. In fact, he was even on Austria's currency for a long time even though he had emigrated to the USA and lived his last two decades there, teaching at Harvard. Von Mises' career was less distinguished.

Absolutely, but he isn't Jesus. Much like Thomas Robert Malthus theorized in a manner that explained his time Schumpeter could not have been expected to get everything right in perpetuity.