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Comment by marvin | Hacker News Reader

Complete layman's take here, but wouldn't a simpler explanation be that bond yields have been artificially manipulated by central banks for the last 12 years, and that they thus don't truly represent the market's expectations for the future of the larger economy?

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People have always been saying that the bond market is manipulated, that it shouldn't be trusted, etc. It's up to you to interpret the data. I think it is actually remarkably accurate. Yield curve inversions work like a charm to detect slowdowns and recessions (not just in the US), and if you think for a second then a yield curve inversion is exactly what the market should price in if there's an "air pocket" ahead in nominal gdp. Then, there's the story of Japan, which was predicted early on (1995) to be in stagnation for decades. And guess what, over 2 decades later it turns out the JGBs were right!

There are times when the bond market is very explicitly manipulated, such as towards the end of WW2 in the US. The country's economy was getting seriously inflationary and rates were pegged at 2% (the rate should have been probably over 10% without the manipulation). Thankfully there was much collective sacrifice and the country managed to win the war in time before its economy imploded. Then the typical post war recession and later the baby boom solved everything.

You can detect such situations by things like: wage freezes, rationing, shelves not completely full in shops, large premium on gold bullion particularly small coins, the politicians' talk of "great effort", things like that

I'd like to learn more about how to understand all of this. Is there some resource you can point me to so I can begin the journey to have this intuition?

The tips I would give are: 1) focus on correlations in hard data, there's a lot of bullshit out there and wishful thinking, but as we know causation means correlation, 2) look at further away situations - your own country 100 years ago, 200 years ago, historic empires, other major economies, minor economies. Human behavior is similar across time and space and political arrangements.

Also, reach out to the source. Want to know if "China is hoarding dollars?" Well try to verify it yourself via Treasury data or IMF data. Want to know how does Apple actually make money? Read their statements at sec.gov

Also, if you want names:

Ray Dalio puts out a lot of good research for free as a means of building his legacy. Robert Shiller wrote a lot of good econ. As far as investing goes it's really tough to beat the common sense logic of Warren Buffett and co. and Benjamin Graham and co. The true masters of speculation include George Soros and Jesse Livermore.

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