Josh Sigurdson talks with author and economic analyst John Sneisen about the recent warning by Chris Flanagan, the head of securitization at Bank of America.
According to Flanagan,
“Unemployment is low, and probably headed lower, and the Fed is intent on raising rates to stave off future inflation; we’ve seen this movie before and it typically ends with a flat or inverted yield curve. Based on history (and gravity), we think the most likely path forward is that the 2y10y spread reaches zero or inverts sometime over the next year or so and that recession of some kind follows in 2020 or 2021.”
Now when one looks at the yield curve data, it seems to coincide perfectly with recession and bubble bursts throughout history, going negative in the late 70s, early 80s, late 80s, during the dotcom bubble and of course in 2008. The cliff looks incredibly volatile and risky heading forward, at a rate we haven’t exactly seen before.
John Sneisen clarifies the issue in question…
“The yield curve in question is the 2 year bond which the US Treasury issues every time they get into debt and the 10 year bond which is longer term debt which you hold for a longer period of time. It’s like a 25 year mortgage vs. a 30 year mortgage.
This yield curve they’re talking about is when the 2 year rate is at a higher rate than the 10 year rate. In finance, the longer you borrow money for the higher interest rate you have to pay because there’s more risk.”
As we see bubbles pop up in real estate, bonds, the derivative induced stock market, the crumbling fiat monetary system, especially in the United States, this whole domino effect is about to start falling and the contagion is something people need to take seriously. This affects the average man or woman in the United States as it’s a sign of the times to come. Hyperinflation, poverty, debt. This is why the individual must seek personal and financial responsibility and self sustainability. People must prepare themselves. You cannot have freedom without responsibility, so to understand this crucial issue is to understand the negatives and make them positives.
This video breaks down the story you won’t hear on television.
Stay tuned for more from WAM!
Video edited by Josh Sigurdson
John Thore Stub Sneisen
Graphics by Bryan Foerster and Josh Sigurdson
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