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Comment by geysersam | Hacker News Reader

> and the attacks of September 11th

Were they predicted by the yield curve inversion? Amazing. Those bond traders really know what they're doing.

I suspect there is a lot of heavy sarcasm in this thread, but just in case people following along can't read it ... the 9/11 attacks probably didn't have any particular economic effect at all. The already-going-to-happen economic impacts were blamed on 9/11 and the US government's unhinged overreaction to 9/11 was possibly motivated in part by the signalling in the bond market.

Just like the high inflation caused by the war in Ukraine, not the trillions of moneys printed over a decade.

The printed money is funnelled to assets “not inflation”, the war affects bread and butter (literally) “inflation”.

I mean.. at a loss for words..

Agree to disagree I guess.

Read my “ as fingers in the air…

The 12-month inflation rate was already 8% prior to the invasion in Ukraine. Gas prices nearly doubled between March 2020 and February 2022. Blaming inflation on the war in Ukraine only makes sense if you ignore the previous two years.

> Gas prices nearly doubled between March 2020 and February 2022.

The months you selected are pretty much peak lockdown vs peak recovery, and are a reflection of demand for gas, not an oracle of some deep economic truth. Franky, I'm surprised the gas price difference is so small, considering the US economy shut down in March of 2020.

You're telling me the demand for gas went up during the time period when people were mandated to stay home? That doesn't make any sense.

No, I am not.

Demand (and prices) went down in March 2020, but had significantly risen in line with increased economic activity by February 2022.

Consequently, it shouldn't be surprising that there was a large price increase over the period bookended by those months.

I am not in the US, but I was very much at home in March 2020, homeschooling kids, and very much out and about in Feb 2022, taking them to birthday parties. I am in the "lockdown king" country of Australia, maybe only second to New Zealand in the zealousness of lockdowns.

Yes and no.

If I buy a house with a mortgage, that's a risk. If interest rates shoot up to 10%, 20%, or I get made redundant, I lose my house and the risk hasn't paid off.

Yes you could point to the fact that I bought the house as the reason why I am now bankrupt and homeless, but I don't think that tells the whole story.

There's always risks that could turn into something worse, quite often they don't though. I think it's reasonable to point to 9/11 as a cause of the following recession because if that hadn't have happened we wouldn't have had the recession (if you accept that assumption).

The joke here is that the bond traders could not foresee 9/11 and did not predict the response to 9/11. They were forecasting the recession based on predictable indicators.

And 9/11 itself couldn't possibly have caused a recession. 2 buildings just isn't enough damage to be measured in a system as large and complex as the US economy. If you want to argue that the Afghanistan invasion contributed to the recession I am sympathetic to that idea, but the general consensus seems to be that war is helpful for the economy (which I don't hesitate to argue is a stupid consensus - but it is what it is).

No. 2 buildings collapsing doesn't cause a recession.

But are you really saying 9/11 is just 2 buildings collapsing?

There's a lot of psychology in the markets.

Believe it or not, there were some traders that seemed to predict 9/11.

https://www.jstor.org/stable/10.1086/503645#metadata_info_ta...

I believe they seemed to predict 9/11.

The point of the paper is they had inside information, so they did predict it.

Bin Ladin might have traded before the attack, it's possible. But that has nothing to do with the yield curve inversion as indicator of approchong economic downturn.

Believe it or not, the bond market predicted covid months in advance with another yield curve inversion.

How do we know there's a casual connection? Sure, the yield cure was inverted, but if you asked an economist about that in late 2019 they could have given you plenty of reasons for that, but Covid would not have been one of them.

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