Steep Yield Curve: Inflation or Growth?

Economics Economics Questions
1

Came across this article at ZeroHedge: http://www.zerohedge.com/article/why-contrary-chairmans-lies-record-steep-yield-curve-may-be-most-bearish-indicator-available

Naturally, having an Austrian economics background and having read Bob Murphy’s latest article, I’m of course going to argue that across-the-board inflation is on the horizon (or closer than the horizon) and that the steepness of the yield curve is foreshadowing rising inlation. But I was a little underwhelmed with the arguments of that article, which I felt didn’t adequately explain why exactly “this time is different” and why the steep yield curve is not a harbinger of economic growth (as the historical record would indicate). Would anyone like to help fill in the gaps?

2

It could be both. A lot of investors are expecting higher price inflation, but at the same time, we could witness a last-ditch boom.

3

The answer is that it has been historically an indicator of growth and there is an argument based upon logic to say so. The real issue is what is the growth. Inflation, and stagflation, are showing their ugly heads. So this indicator could be (I believe that it is) an indicator of increased GDP based purely upon increases in prices. Which means that it is an indicator of misery and the loss of realy productive capacity.