Real Information and how it Died

If you are like the rest of us you are sitting back this Memorial Day Weekend, enjoying some well-deserved family time.  Not unlike every other day you are still being bombarded with news from multiple outlets that are all basically aggregated together and reiterated throughout the main legs of the social media complex.  But where is the real news about our economy and the policies that go along with it?  Are they really out there or are they pushed aside by the public sentiment and the constant regurgitation of the same concepts.    Are our economic policies being changed by the sentiment coming off of social media?

To put a finer point on it, when was the last time you actually had a distinct conversation with someone about the economy as they see it, or their interpretation of a specific economic policy?  Probably not in a very long time.  As a group who writes about the economy and politics constantly, we find ourselves sifting over lots of information.   A lot of that information is good insightful economic theory.  The rest is a culmination of mountains of the same thing simply restated or retold if you will, with the website’s or individual poster’s own take here or there.

In the age of “Fake News” one has to ask the question if these sources are actually true or are they just restating someone else’s concept.   Are people reading these ideas and making them their own without really knowing the difference between real economic concept or possible ones?   What has become apparent is that the government here in the United States has for the passed fifteen to twenty years taken lots of surveys and tried to gauge the overall economic feeling of the public on the results.   What is disturbing in today’s world is the possibility that respondents to the surveys are actually just reiterating information they have gleaned from social media sites.   They are not exactly sure whether or not this information is real or more importantly, if they agree with it.   Additionally, there is the question of whether or not the information can be relied upon at all.

While social media is an amazing invention and marketing companies can tell you which pair of shoes is trending currently, it has created the inevitable collateral damage. That is we are inundated with information about social, economic and political situations.   This constant in your face news cycle has created a whole new generation of Americans who are not used to a regular news cycle.   They are also not used to the actual time and ability it takes to decipher the tealeaves and figure out the direction of currencies, stock, bonds and other securities.   Which is what is filtered down into economic policy for central bankers.    Or at least it used to be.

Even the instantaneous market snippets on CNBC have become suspect.   Head lines like, “Dow down for the first time in 5 sessions” or “Down up by 150 points at the high”; are meaningless statements that are designed to sensationalize the market.   These statements do not reflect any known economic or trading metric other than the concept of continually pushing out information for the sake of having information out there.   It is understandable from the media company’s standpoint.  If they do not put some kind of information out someone else will.   Or someone else is putting information out there anyway so in order to stay relevant, they have to be out there too.  But this information only causes more confusion and people who are not in “the know” reiterate that information which finds its way into market data that governments and banks review.

Reliance on market data and survey data that comes from the populace who are not just listening but permanently wired into the constant data stream could put markets at risk.  Imagine, for instance that the Federal Reserve (the “Fed”), who makes monetary policy in the United States, listens to this data.   Now, remember in a global economy that is so intertwined in today’s world that we mind as well all be in the same economy; anything done to United States monetary policy effects other countries.  If not all countries.  So if the information the Fed is getting is not exactly accurate, policy could be decided that would affect the global economy in a particular way.  Another words, it could be a self-fulfilling prophecy.  For example, if we believe our own hype about the economy or current economic conditions, we may make the decision to accelerate the rise of interest rates too soon for the real economic conditions.   The result could be extremely disastrous.

What is the solution? Unfortunately there is no specific solution, as part of the analysis that must be done has to take into account where the information comes from in the first place.  What economists must do is make sure the sampling of information is correct.  That means that it has a broad enough cross section of society that takes into account multiple channels of information verification.  Our society also must not rest its future just on what is trending on social media.   Real economic analysis from verified pieces of information is a must when looking at overall economic and financial policy.




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