In economics there is a sector called the tradable sector. https://en.wikipedia.org/wiki/Tradable_sector
This makes it possible to have inflation and deflation at the same time. Deflation in the tradable sector and inflation in the non-tradable sector.
The yield curve reflects expectations about the future monetary policy in response to economic conditions. There are people here looking at it every day and night in the hope that it keeps on steepening, a sign according to their interpretation not of better days lying ahead for the economy, but a sign that the end is coming and we should grab a gun and run for the hills as the indiscriminate shooting by the bond vigilantes is about to start with terrifying consequences for Australia.
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/treasury-yield-curve-steepens-to-4-year-high-as-investors-bet-on-growth-rebound-62067561
When the WW2 ended there were fears of the demobilization of hundreds of thousands of people and the end to the war effort would
cause a massive economic downturn. But in the end Rita the riveter went home to become a house wife in her new suburban house, with a car at the front and all sorts of domestic appliances inside.
https://www.ct.gov/kids/cwp/view.asp?a=2731&q=331160dcx
Central banks seem to have a target for inflation of between 2% to 3% but the big question is: are they willing to engineer a quick recession if need be, that is, if that is required to keep it withing the target range? A fiscal and monetary stimulus is undoubtedly expansionary and this time they seem to have accept that is better to err on the side of too much rather than on the side of too little.
Another aspect is that for some economists we seemed to have entered a period of secular stagnation.
https://theconversation.com/secular-stagnation-its-time-to-admit-that-larry-summers-was-right-about-this-global-economic-growth-trap-112977
https://www.copyright link/policy/economy/the-rba-fears-of-secular-stagnation-20190812-p52g5y
I have to go now with my wife to visit a lady that is dying from breast cancer. During the covid-19 crisis she fearing catching the virus decided to stop her periodical screening allowing the cancer to return unnoticed.
