Many in the free-market camp view yield-curve inversion in the way that vampires view light. Supposedly inversion correlates with “recession.” But even if true, the alleged correlation (seemingly one that didn’t hold this time around) would logically be coincidental.
To believe otherwise is to believe that wise central planning by people with names like Bernanke is required for the economy to grow, or not grow. It would be to believe that absent Treasury extracting precious resources from the private sector that are handed to people with names like Pelosi and McCarthy, that people with names like Powell would be blind to how to plan the cost and amount of credit. It would also imply that market actors wouldn’t profitably work around the Fed’s central planning.
The simple truth is that if the Fed were as powerful as the various religions want it to be, the U.S. economy would always be in decline. Yield-curve obsession is powerful on the score of nothingness.
Read the entire article at Forbes