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FALSE START! Inverted Yield Curve has not Predicted a Recession

For the past few months there have been swarms of PhDs, economists, and strategists buzzing to a hypersensitive media about the dire straits portended from the inverted yield curve. It only seems appropriate we share more of our thoughts and observations on the matter. As a primer, a bond is a loan that is to be repaid at prespecified date when the bond/loan matures. The borrower/bond issuer pays interest to the lender/bond holder as compensation. For the purposes of this general essay, the terms interest rate and yield are used interchangeably, and inflation is assumed to remain subdued. What is the yield curve? [endif]--The yield curve is a chart of the interest rates that are paid to borr

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