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The Carry Trade Problem
The positive yield curve motivates credit creation and it creates leverage. inverted yield curve leads to credit destruction because people pull in banks are slowing down the pace of lending, for example. What is going to happen with monetary policy and the behavior of the Federal Reserve? Do they want to stamp out inflation at the risk of creating more risks? Or do they want to reflate the banking system by lowering interest rates? Those are the two things to watch to understand what happens from here.