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The Yield Curve Has Not Been This Flat In 10 Years, And Many Believe This Is A Sign That A Recession Is Imminent

Michael Snyder
November 20th, 2017
The Economic Collapse
Comments (8)
Read by 1,844 people

This article was originally published by Michael Snyder at The Economic Collapse

recession2018

Whenever we see an inverted yield curve, a recession almost always follows, and that is why many analysts are deeply concerned that the yield curve is currently the flattest that it has been in about a decade. In other words, according to one of the most reliable indicators that we have, we are closer to another recession than we have been at any point since the last financial crisis. And when you combine this with all of the other indicators that are screaming that a new crisis is on the horizon, a very troubling picture emerges. Hopefully this will turn out to be a false alarm, but it is looking more and more like big economic trouble is coming in 2018.

The professionals on Wall Street take the yield curve very, very seriously, and the fact that it has gotten so flat has many of them extremely concerned. The following comes from Business Insider

In the past, including before the Great Recession of 2007-2009, an inverted yield curve, where long-term interest rates fall below their short-term counterparts, has been a reliable predictor of recessions. The bond market is not there yet, but a sharp recent flattening of the yield curve has many in the markets watchful and concerned.

The US yield curve is now at its flattest in about 10 years — in other words, since around the time a major credit crunch of was gaining steam. The gap between two-year note yields and their 10-year counterparts has shrunk to just 0.63 percentage point, the narrowest since November 2007.

If the yield curve continues to get even flatter, it will spark widespread selling on Wall Street, and if it actually inverts that will set off total panic.

And with each passing day, even more of the “experts” are warning of imminent market trouble. For example, just consider what Art Cashin told CNBC the other day…

Investors may want to take cover soon.

Art Cashin, UBS’ director of floor operations at the New York Stock Exchange, says a “split personality” is manifesting itself in the stock market, and it could hit Wall Street where it hurts at any moment.

“We’ve been setting record new highs, and often the breadth has been negative. We’ve had more declines than advances,” Cashin said Thursday on CNBC’s “Futures Now.”

When the financial markets finally do crash, it won’t exactly be a surprise.

In fact, we are way, way overdue for financial disaster.

Since the last financial crisis, we have been on the greatest debt binge in human history. U.S. government debt has gone from $10 trillion to $20 trillion, corporate debt has doubled, and U.S. consumer debt has now risen to nearly $13 trillion.

Debt brings consumption from the future into the present, and so it increases short-term economic activity at the expense of long-term financial health.

But we simply cannot continue to grow debt much, much faster than the overall economy is growing. I have never talked to anyone that believes that our debt binge is sustainable, and I doubt that I ever will.

The only reason why we have even gotten this far is because interest rates have been pushed to historically low levels. If the average rate of interest on U.S. government debt even returned to the long-term average, we would be paying more than a trillion dollars a year in interest on the national debt and the game would be over. Unprecedented intervention by the Federal Reserve and other global central banks has pushed interest rates way below the real rate of inflation, and that has bought us extra time.

But now the Federal Reserve and other global central banks are reversing course in unison, and global financial markets are already starting to decline.

The only way we can keep putting off the next financial crisis is if we continue our unprecedented debt binge and if global central banks continue to artificially prop up the financial markets.

Of course more debt and more central bank manipulation would just make the eventual financial disaster even worse, but that is what we are faced with at this point.

Most people simply don’t understand the gravity of the situation. Nothing was ever fixed after the last financial crisis. Instead, we went on the greatest debt binge that humanity has ever seen, and central banks started creating trillions of dollars out of thin air and recklessly injected that hot money into the financial system.

So now we are in the terminal phase of the largest financial bubble in human history, and there is no easy way out.

We basically have two choices. We can have a horrific financial crisis now, or we can have one a little bit later.

Usually the choice is “later”, and that is why our leaders have been piling on the debt and global central banks have been recklessly creating money.

But it is inevitable that our bad choices will catch up with us eventually, and when that happens the pain that we are going to experience is going to be absolutely off the charts.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

GetPreparedNow-MichaelSnyderBarbaraFixMichael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream

If you want to know what is coming and what you can do to prepare, read his latest book Get Prepared Now!: Why A Great Crisis Is Coming.

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Author: Michael Snyder
Views: Read by 1,844 people
Date: November 20th, 2017
Website: http://theeconomiccollapseblog.com/

Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information.

8 Comments...

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  1. Paranoid says:

    We did it before and we can do it again.

  2. Tobey G. says:

    Money is pouring into U.S.equities from Europe and Asia as those countries Implode . There is no other place to put cash at this time .

  3. Survive on your own says:

    Another Monday sky falling at shtf. All I have to say is let’s roll

  4. bb in GA says:

    If these things are able to be either controlled or influenced by the Globalist Elite, I’m sure they want any economic downturn to affect the Rs, in general, and Pres Trump in particular.

    To hurt the Rs, the sooner the better for 2018.

    Mr Trump has been gleefully taking credit for the runup in the Stock Market that has paralleled his Presidency.

    If there is a crash/correction, his critics (both establishment Rs and Ds) will be able to blame him just as gleefully whether or not either the up or the down has anything to do with him.

    <bb

  5. Concerned-Citizen! says:

    Is it me or what – they learned nothing from 2007-2008? And then turn around and do the same thing, actually worse than before. WTF is wrong with this picture folks?

  6. watching and waiting says:

    Well, regardless, keep prepping.
    I think we are going to see more than just a financial disaster. I think we are going to see natural disaster and a collapse of order within society itself. It seems we are on the verge.

    • Heartless says:

      w ‘n w, there’s a part of me that hopes you’re right. Don’t misunderstand me, I do not want harm to come to others. Far from it. It is just that I don’t see any other way around what is needed to set humanity back on a proper course but for an extraordinarily catastrophic change. So, I agree that all of us should keep setting back what we can, learning what we need to, practicing and increasing our skills to be ready best we can for what promises to be right around the next bend.

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