USA Could Face Dangerous Inverted Yield Curve IF World Doesnt Recover

[Economy 52,882]

http://mobile.bloomberg.com/news/2014-11-19/yellen-inherits-greenspan-s-conundrum-as-long-rates-sink.html

Several Economists are warning that if the world doesnt recover, and foreigners want a safe place to stash their cash and choose US tresuries (Government debt Bonds) the US could face an inverted yield curve like it did from 2005-2007

Basically what that is, is when longer term bonds pay less interest than short term bonds. A 2 year Government Bond paying more interest than a 10 year bond would be an inverted yield curve which is rare

This is actually really bad because Government Bonds influence the market for Corporate Bonds (1 of the many sources banks acquire capital from)

Because loans are financed by short term debt... If long term debt yields less, banks wont wanna lend. That started to happen closer to 2007 and is often an underlooked contributing factor to the crisis... In fact inverted yield curves often lead to recessions

Should this occur again, The US Central Bank could attempt to fight this by selling long-term bonds it bought with QE and forcing rates up in the market