OK, lets try a prediction based on the current yield curve. I would say it looks the way it does no because it predicts a deflation of ten year inventories. A deflation that is not yet complete. The short end is predicting an inventory build up and attempt to inflate. I would say the prediction is two years out, and the bankers are sampling a one year term.
So what is it predicting? A ten year bear market in something, and that something looks an awful lot like local and state government, and various sovereign defaults. If we think this thing is a result of some positive shock, then I would expect a rapid attempt to inflate at the short end, since technology will bring results in a shorter term. Predicting out two years out with a six month error band.
What is the industrial mechanism for rapid recovery?
Local metropolitan regions will grasp the most valuable resource, street traffic space, and withhold it from federal mandates in a rebellion. Technology allows this. This technology decorrelates from the problems of government and private monopoly.
How does a positive shock cause this?
It causes the economy to back off of some production in favor of new production, this is a deflation, followed by inflation. The major deflationary shocks come from information technology placing stress on transportation.
No comments:
Post a Comment