Let's zoom in on this most recent case[0] where it was the treasury came down. We can see that there is a point where the 30 year was not only below the upper b

Let's zoom in on this most recent case[0] where it was the treasury came down. We can see that there is a point where the 30 year was not only below the upper bound of the target rate, not only below the effective rate, but below the lower bound. We can see that the effective rate almost always stays within the bounds, and only moves outside of the bounds right before the Fed is about to move rates. As they give dot plots signalling that they are about to move rates, this makes sense. The market is simply smoothening out the transition. Let's look at more yields[1]. You want to get a feel for how they work with each other. An easy way to understand it is through a dog-leash analogy. The Fed funds rate has no leash. When they move it, it moves. When they move it the 30 year does what it wants, it's a very long leash. The 3 month? It's got a short leash and therefore mostly tracks against the Fed funds rate. The 10 year is, as you can see, mostly in between those two extremes. > There's no decent explanatory theory for any of the yield curve inversions causing a recession. I agree with you here, that there is no economics research papers directly showing A -> B. But there was also no science showing that smoking causes cancer until decades later, and still very little science that proves that sugar causes weight gain. I'm not saying we can't trust research, but we should look at what research is being funded and by whom. Is the sugar studies funded by Kellog's and Nestle? At the very least this is a large enough topic that there should be significant negative papers being released, but I have not seen any. If you could link them, I would appreciate it. We know what happens when the Fed brings rates up too high. We know that by not reacting during the Great Depression they made it worse. I don't think it's an unbelievable stretch to question that Fed funds above 30 year treasury causes recessions. I'm a programmer and spend a great deal of my time trying to understand systems. I have a feel of how chaos occurs when one fundamental thing is wrong, it causes many small issues that is often very tricky to point it back to that one thing. My intuition is tingling. To me it's obvious that the Fed caused the 2008 recession by raising rates in 2006 causing the adjustable rate mortgages to default, and the housing market was simply the biggest naked swimmers, just as the S&L crisis was the biggest naked swimmers in 87. We've got naked swimmers today, and they'll be blamed once again, but it was always the Fed. [0]: https://fred.stlouisfed.org/graph/?g=H36U https://fred.stlouisfed.org/graph/?g=H36U [1]: https://fred.stlouisfed.org/graph/?g=H37v https://fred.stlouisfed.org/graph/?g=H37v