[Marxism] Yield curve still indicating downturn

Sabri Oncu soncu at pacbell.net
Mon May 9 18:04:17 MDT 2005


Marvin:

> Some economists surveyed by the Journal, though, say that 
> the yield curve is no longer a reliable indicator. They argue 
> that bank lending has effectively been displaced by corporate 
> bonds and mortgage backed securities in the credit market, and 
> that low rates at the long end in these asset classes
> will continue to support consumer and business spending. 


I also agree with the claim that "the yield curve is no longer a reliable
indicator", at least, not as much a realiable indicator as it was in 1970s.
But I think this is not because of the above but because of the following
change in policy: the ongoing inflation targeting through management of the
yields as opposed to the earlier management of money supply (a hopeless
activity in these days). 

In this "centrally managed" economy, what the shape of the yield curve
suggests might be even worse that what it used to suggest in the 1970s or
vice versa. 

Best,

Sabri  





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