The Importance of the Treasury Yield Curve

During the latter part of 2018 the Treasury yield curve started to invert as economists call it. The shorter term maturities, 1 month (1M), 3 month (3M), and 1 year (1Y) yields were all higher than the 2Y, 3Y, 4Y, 5Y, 7Y and 10Y Treasury yields. Only the 20Y and 30Y maturities remain higher. As you can see, with the two prior years, the yields of the various maturities were normal in that the short term Treasury yields were lower then the longer term Treasury yields, which is the way they should be in a good and/or normal market.

So what is the significance and importance of the partial inversion of the Treasury yield curve? 1. It means the Federal Government is having to pay more interest to investors who buy the Treasuries that fund the $1 trillion+ annual deficits the U.S. is now consistently having to borrow to fund our government. 2. Historically, in every single occasion this has occurred, the U.S. was soon in a recession. Today now only is the U.S. economy slowing, so is most of the rest of the world, according to numerous indicators and high profile sources.

It is important to understand, that the debts of both the private and public sector are much higher today indicating that the recesssion will most likely be deeper or longer than the great recession of 2008, potentially even another great Depression.

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Equality and Equal Justice Under the Law

Men don’t treat women as equals and women don’t treat men as equals because we’re not.  If two male engineers are not equal in their abilities and motivations, neither are any two women. Whether right or wrong, men and women discriminate against one another and women in various situations even discriminate against other women. Why because we’re different. Scientifically there are at least 50 differences between men and women and a lot of it is genetic. We know the obvious ones. Women can multitask, take fewer risks, verbally communicate better and are often more focused than men and men are generally physically stronger, take more risks and can create and build just about anything. We’ve developed defined roles between men and women but that’s where our differences often create conflict, especially in leadership roles. Of course, everyone wants to be the boss because they generally make more money, have more power and control and are granted more privileges and accolades. You are not likely to see a woman beat Tiger Woods in a round of golf and you are not likely to ever find many men who can care for a young child like a woman can. Women like pictures of kitty cats and babies of every species and men like trucks and weapons. These are the roles we have been forced to take, in part, by nature itself.

We surely do not like to see the repressive discrimination and sexual predation by either gender. Women use their sexuality if they can to manipulate their world just like men use their money and strengths. I think it’s the unethical practices by both genders that is most disheartening. Men using their money and power to manipulate women and women using their sexuality or psychological manipulations such as making false accusations against men they are trying to harm socially or in their relationships. We all know how unethical both genders can be so let’s stop pretending there are saints among us. 

I often write that humans are not as ethical as our rule of law requires and until we can improve upon both our institutions and integrity, I’m afraid our human weaknesses seem to have causes perhaps even a digression in our evolution. It appears as if we are stuck on a plateau with some points in time better than others and some worse. We made a huge leap in the development of mankind late in the 1700s when we overthrew the Monarchs of Europe and much of the world and abolished slavery within 75 years later, both of which had been going on for millenniums.

Can we really say or prove that suffrage or any of the other political mandates after that have made our world better since the abolition of slavery?  Scientists have now proven that we are an oligarchy, providing the evidence our experiment as a democratic republic, which Benjamin Franklin questioned upon its ratification, has failed. The majority have little or no influence over the social policies being created and we are being ruled over by a relatively small group of people; that’s what an oligarchy is.

Yes, the power, controls and unethical activities within our society are subtle but increasingly blatant as the oligarchy keeps gaining more and more powerful. Sadly, the majority is stuck in the middle of two dominant warring factions fighting over political power and money. Suggesting that if either of these two factions prevails the world will be better off, is logically weak if not totally false. The problem is systemic. An oligarchy cannot possibly take us to the next level in any progressive evolutionary manner. How is it that a Constitution and Bill of Rights created to restrain the size and scope of government has failed and provided just the opposite? We can of course experiment with a direct democracy but the working mechanisms and problematic issues of that are perhaps even more difficult to overcome. I do not want my neighbor to be able to vote against my liberties any more than I do of elected representatives.

History tells us that our world progressed the most when governments had the least power and after the defeat of the European Monarchs and our founding fathers tried to politically institutionalize our newfound liberties with a Constitution and Bill of Rights as did many societies around the world.  It hasn’t worked very well though. The governments today are equally as powerful, with many of the same systemic problems the monarchies offered. We’re very close in many situations, considering the diminished individual liberties, as those defeated by our revolutionary forefathers, but it has been very subtle and took almost our entire history to come full circle; dominated by an oligarchy but now tiered even higher with international organizations such as the World Bank, INF and United Nations giving military and financial support to the many oligarchies ruling our world.

The English Tories were the primary adversaries of the founding fathers. Those entrenched in the political, religious and commercial interests of the church and crown. We thankfully eliminated the religious persecution by protecting religious liberties with the 1st Amendment. What we have failed to protect, are the economic liberties. As the government has gotten more powerful, so has the required revenue increased through a plethora of taxes and regulatory fees. We may have religious liberty, but the State (now an oligarchy) has taken all our economic liberties. Those who are well off, as were the Tories of old, under our current system vote for its maintenance, stifling any major changes as those who are not well off, are finding it increasingly difficult to survive.

If the 1st Great Revolutions failed to protect the individual liberties essential to the majorities prosperity, another revolution will over time result in the same losses of liberty and resultant problems. Another revolution is obviously not the solution until such time as we can come up with a superior way in which to protect our economic liberties. Does anyone with a brain really want to try socialism with eventual communism again? Look at all the problems all the social policies enacted just over the last 100+ years have caused. Right now, millions of people cannot earn enough money to even feed themselves and thus require government assistance. Our economic system is badly broken, and it is simply because we have allowed the government to tax our incomes, property, sale of goods and services, exports and a plethora of over 110 different taxes and regulatory schemes.

It’s a systemic problem; it’s the system itself. We need to create a system that truly protects the individual’s rights to property and our earnings. Who is going to build the roads? If the rights to property and income are protected from taxation the oligarchs will be forced to pay for them if they want us to travel to their businesses and to buy the good and services, they produce. Taxation is truly the power to destroy and it is destroying the middle class. So how do you force the oligarchs, those in power to pay for anything? They are greedy and they are going to pay for whatever it takes, including any infrastructure, to be able to get you to buy the goods and services they produce. There is more than enough money in society to pay for those things that are beneficial and necessary for the majority to prosper. If you take money and property from those that cannot afford it, it takes away their ability to survive. The oligarchs dangle the proverbial carrot in front of the majorities noses to motivate them, why not dangle the carrots in front of their noses. History tells us that when taxes were low or non-existent, the wealthy did, in fact, build much of the infrastructure of their day. Just think with all the technologies today, what could be, if the government did not tax and misallocate so much of our financial and material resources. So, I don’t want or really even care about equality. I know that there are going to be people who do better and worse in life than I do. I just want equal justice under the law and my rights to my justly earned property protected. If we kill this systemic problem, perhaps other systemic problems will also be alleviated. Power has the ability to corrupt and political power is the worst, because it is not earned; it is most often achieved by force, coercion, cronyism or fraud.

The Top 10 Worst Predictions of the 2008 Financial Crisis

Many people did not see the 2008 debt collapse coming yet many others did. We don’t like to think that a nation with this much prosperity can have such problems. Much of the prosperity however has been financed. The greatest credit collapse in American history occurred because we had to much debt, and now we even have much more debt, both private and public. It is estimated to be $37 trillion total with over $22 trillion being Federal Government debt.

In 1973, the rest of the oil producing nations forced the U.S. off the fixed gold price of $35.00 per ounce and over the next decade with saw consumer prices more than double. A barrel of Oil was $3.00 and now it is >$60.00 per barrel. Gasoline has gone from about 40¢ a gallon in the early 1970s to nearly $3.00 today.

What most people do not really understand is the severity of the credit collapse in 2008 because of how quick and successful they were in solving the problems. Of course, we still have tons of home foreclosures in process and numerous indicators are suggesting another recession is imminent. The economy is not doing as well as is being reported by the mainstream media, perhaps not wanting to scare the public even more. The facts are prices continue to rise and any real wage improvement is minimal. And those in positions of power have not done anything significant to solve the debt crisis and it is a crisis because it has more than doubled since then.

The Top 10 Worst Predictions of the 2008 Financial Crisis