Barney Frank, Paul Krugman, and the Apocalypse

It is a safe argument that congressional irresponsibility is a cause of the present recession. A rarer argument is that the irresponsible use of language by Democrats in congress is a cause of the recession. Accordingly, I'll fill the void and make it: the grossly inaccurate language of Democrats in politics, economics, and the media comparing the present economy to the Great Depression is a cause of the economy's problems, or at the very least stands to exacerbate them.

Consider that the short-term prosperity of the economy is foremost a function of consumption, and consumption is a function of consumer confidence and consumptive ability. Consumer confidence reached an "all-time" low in December since the Consumer Confidence Index was created in 1967. Yet consumptive ability, roughly measurable by the unemployment rate (6.7% in December), is only slightly worse than it was during the first recession of George Bush's presidency (6.3% in June 2003).

What are the determinants of consumer confidence? The economic condition of individuals is certainly a gauge consumers use, but given the disparity between consumptive ability and confidence, in this case it has clearly been overwhelmed by other barometers. It seems clear that two extraordinary conditions have primarily driven the extreme lack of confidence. The first is the erratic and dramatic behavior of the stock market during October and November. The second is the pervasive, apocalyptic language comparing the economy to the Great Depression among Democratic politicians and the media. The Dow has stabilized, but the apocalypse continues in relentless media reports.

If the nature and frequency of such reports continue, it stands to reason that consumption will be hindered by depressed confidence beyond that which it would if characterizations of the economy were accurate by Democrats and the media. The economy will suffer in the short-term as a result.