Recession or No Recession? Is THIS Time Really Different?
Economic expansions do not die of old age. They usually die when interest rates are raised enough that economic activity slows down as a result of the increased cost to expand. This is because large projects are typically funded with debt and as the cost of debt increases (via higher interest rates) the expected returns of the projects decline or become unprofitable. As central banks raise short term rates eventually these become higher than longer rates (the yield curve inv