Inverted Yield Curve
When I’m not interviewing authors, I actually think about economics. I am writing a paper for a Liberty Fund colloquium and part of my task is to discuss the yield curve in light of Austrian business cycle theory.
One of the stylized facts is that since at least 1960, every recession has been preceded by an inverted yield curve. Moreover, except for one debatable false positive (where there was a slowdown that didn’t quite get classified as a recession), an inverted yield curve has always been followed by a recession.
So here’s my point right now: If in fact we are entering a “double dip,” then that means this will be the first recession since 1960 that wasn’t preceded by an inverted yield curve, right?
(Let’s stipulate for the sake of argument that “recession” is exactly how the mainstream economists define it, meaning that the “Great Recession” ran from about December 2007 through about July or August of 2008. I of course think this has been one slow-motion train wreck since 2007, and will only get worse.)
I suppose the question is whether the economy ever came out of the first dip. If the “W” was actually a long “U” punctuated by massive stimulus that pulled up the headline GDP without representing a secular recovery then we’d be looking at a single recession indeed featuring an inversion.
The Yield Curve is a blackhole many never recover from…
The yield curve has inverted the last 2 days….
What makes you say that?