The inverted yield curve’s length of tenure is a confirmation of stagflation but something dreadful is happening behind the scene
Joe Weinman
Jan. 7, 2007

When the yield curve got inverted last year I pointed out that it will stay that way for along time because of deflation. The ‘big money salaried’ economists were convinced nothing will happen and there is no inflation in the economy as the economic growth accelerates fast. They were wrong again. These economists (professors in Universities and highly salaried ones in the financial institutions) did not understand stagflation! Their economics 101 textbooks do not mention it the way it has happened. Now they are calling for a slow soft landing. They are wrong again – stagflation is changing to deflation with bond yield rising (a strange phenomenon) because Asian central banks are reluctant to buy bonds.

Something dreadful is happening. Interestingly the yield will become normal and very steep. Although short-term rates are going to around 5%, the long term yields are going to skyrocket – perhaps as high as 9%. That is exactly what happens when stagflation is followed by deep deflation.

After a short but powerful renounce in hosing prices, deflation will take control of the economy at end of the year. The stocks market and gold will collapse like never before. Bonds will suffer badly as long term yields skyrocket. The Federal Reserve will lose control over the economy. The world wide multi-decade depression will start.

Housing will collapse to levels of 1970s or 1980s. The commercial real estate will totally collapse as cash starved businesses migrate to cyberspace.

The inverted yield curve’s length of tenure is a confirmation of stagflation but something dreadful is happening behind the scene
Joe Weinman
Something dreadful is happening. Interestingly the yield will become normal and very steep. Although short-term rates are going to around 5%, the long term yields are going to skyrocket – perhaps as high as 9%.
READ MORE>>

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