Is constant fear peddling only making our economy worse?

A quick scan of recent headlines regarding declines in the stock market and economic woes here and abroad turned up these words to describe the situation: meltdown, panic, collapse, catastrophe, train wreck, crackup and blood bath.

Pretty descriptive stuff.

I wonder sometimes if it is too much. Does constant droning on how horrible things are, or will be, just create more horribleness? Is the media partly to blame.

I took a peek at my own 401k account just the other day, after reading that the market took another “free fall” and instantly regretted it. I was bummed out at how much money I’ve lost in the last couple of months in the stock market. And I’m a small fry to the investment game, so if I’m down in the dumps, I know there are others ready to pitch themselves out the nearest window.

Every day I read that things are getting worse; markets keep dropping, huge companies want government bailouts to stay afloat, credit markets are in shambles, etc. I think all this talk of misery and woe causes people to go into a sort of “bunker mentality” mode, hording money and pinching pennies because they are receiving the message time and time and time again that things are bad, even though they may not necessarily be THAT bad in their particular household. It’s a natural reaction to danger – hole up and hide until it passes. But it is exactly the opposite of what needs to happen if our economy is to ever heal.

I find it is true in our home, so I’m sure others are experiencing it as well.

I think it is a very real phenomenon.

Say, for instance, you get a new puppy. You think it is a beautiful puppy. Your neighbor comes over one day and says, “AAAAHHHHH! That is one ugly mutt. Is it yours? I feel sorry for you.”
You may think your neighbor is just an insensitive jerk, and you may be right. But then, your mother in law shows up.

“That puppy is U-G-L-Y!” she tells you, in only the way a mother-in-law can. You may still think nothing of it.

But then one person after another, your best friend, your preacher, the encyclopedia salesman, Mormon missionaries – they all shriek in horror when they see your puppy and tell you how ugly it is. Pretty soon, you start to doubt. Is this an ugly puppy? Maybe I should get rid of it.

Constant harping on something works on your mind.

If we still lived in the days where financial or political news often took weeks or months to get, I wonder if there would be the same type of panic we are seeing today? Perhaps up-to-the-nanosecond, in-your-face, round-the-clock gloom and despair begins to work on us mentally. It makes a bad economy worse because constant fear peddling locks up the natural flow of consumer spending.

During our most recent presidential election, an economic advisor for then-candidate John McCain made this comment about the economy – “You’ve heard of mental depression; this is a mental recession … We may have a recession; we haven’t had one yet … We have sort of become a nation of whiners … You just hear this constant whining, complaining about a loss of competitiveness, America in decline … We’ve never been more dominant; we’ve never had more natural advantages than we have today.”

Those comments were made in July. He was roundly criticized for them. Given the events of the last few months, it does seem like a silly thing to say.

But maybe there is a kernel of truth to it. I think predictions of dire economic times become self-fulfilling because people, out of fear, end up unwittingly doing all the things necessary to make it happen.
Maybe one old President had it right to start with when he told people, in the midst of depression and on the brink of war (kind of like today) “we have nothing to fear but fear itself.”