tobltobs

I think I understand why inverted yield curves in the US or Eurodollar rates are supposed to be a sign for a coming recession. But I don't get why a lot of pundits say that it also mean deflation is coming and totally rule out a longer time of inflation.

Also I am not sure I get why this signal is supposed to be nearly foolproof. Doesn't it just rely on the wisdom of the crowd. If most traders think there will be a recession then the yield curves inverts, but the majority could still be wrong? Or is there another mechanism which inverts the yield curve?