How predictive is a Yield Curve?

If we consider the shoelace yield curve, measured in shoe laces, from raw materials to the household spare shoe lace, how do we measure it and how predictive is it? We measure in shoelaces along the production line, focusing on inventory. And the laws of mass dictate that it is nearly predictive out to a short future. The raw materials and partial products have to go somewhere. But supply chain equalization can change rapidly when raw materials or malfunction occurs. Why can it change rapidly? Information about inventories along the channel are revealed rapidly, the channel equalizes. The channel deflates more rapidly than it inflates. In the inflated states mismatches in production cause slow depletion of inventory. The channel is stuck, a deflation step is back to a known way of doing business, and suddenly inventories increase because of channel mis matches. The compelling push in markets is toward maximum entropy along the chain. Supply chains are often very good at this, which makes them predictive.

If you look at the bankers yield curve in mid 2007, it was flat line, predicting a sudden change in Fourier terms. [ flat frequency response transforms into delta function] The crash bottomed in early 2009, six quarters later.

An inventory framework says that mid 2007 there was sudden release of excess inventory to the market, at all term points. [Inventory depletion demands return of inventory claims, debt payments]

I get confused about the sequence between interest moves and real goods inventory moves. Inventories which suddenly begin depleting cause a return of inventory claims which was issued on the surplus inventory. High interest rates occur when previously excess inventory released at the deflated rate (larger lots, less often). Real goods deflate in distribution then interest rates jump.

What was going on in mid 2007? OK, I admit to bias, but lets look at actual oil imports. It was a peak, the second actually the earlier being somewhere in 2006. Oil hits the constraints and everyone sheds inventory. First trial was nice, the second was a very efficient deflation, as if everyone was listening to the same Hidden Ear.