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Jerome Powell and the central bank will send the U.S. economy hurtling into contraction mode no later than the winter after next.

How can I be so sure of my claim? Well, one very reliable indicator is flashing red.

In fact, it's so dependable that since 1980, it has predicted the advent of every recession, right around a year to 18 months ahead of time.

And right now, it's approaching the critical level.

See, the Fed's raising of short-term rates is causing the yield curve to flatten. From there, it's a short trip to outright inversion. Once it inverts, two-year Treasuries will yield more than 10-year Treasuries.

Once that happens, a major peak in stocks – then a recession – is all but totally certain within the next year and a half.

Bell-bottom pants and disco weren't the only things to hate about the 1970s. In that difficult and turbulent decade, the United States was thoroughly bedeviled with a crippling economic condition known as "stagflation."

It's a weird (that's the only word for it) and intractable combination of stagnating growth combined with inflation.

And unfortunately, unlike Richard Nixon, stagflation's got a high likelihood of coming back.

If that sounds shocking, or maybe even unbelievable, I understand.

You see, before the stagflation of the 1970s, mainstream economists were actually convinced the condition was itself impossible. The academic consensus at the time was that inflation and growth were inseparable.

But as that decade proved, recession and inflation can absolutely happen concurrently. If you lived through the era, you'll agree it's no exaggeration to call it the worst of both worlds.

Of course, when you understand how it unfolded and devastated the U.S. economy in the 1970s, you'll immediately see why it'll likely recur soon.

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