Short answer: it isn’t. A good answer to this question could easily be a finance or economics dissertation and I’m pretty sure a bunch of them are out there. E

Short answer: it isn’t. A good answer to this question could easily be a finance or economics dissertation and I’m pretty sure a bunch of them are out there. Economics and finance are complex non linear systems with feedback. When a rule is uncovered, it changes the system in ways that can invalidate the rule. The answer, thus, is it depends. Examples: 1. In the late 70s inflation in the US was raging largely due to the cost of fighting the Vietnam war while pursuing LBJs Great Society and not raising taxes to pay for it. To fight it, the fed raised short term rates to 20% which had the effect of creating deflation in the since that it brought inflation down rapidly. 2. The US had an inverted yield curve for several years in the early 90s due to Greenspan trying to keep a lid on the punch bowl. It never caused deflation, but instead assured investors that inflation was under control.