Remember back in September of last year when banks like WAMU got taken over by the US government and people were lining up in droves in the days and weeks before they folded to withdraw their cash? Remember how much that hurt the perception that banks were safe and that the economic recession was slowly growing into a real monster, perhaps on par with the Great Depression? It was very frustrating to see, since millions of people seemed to be ignorant of the fact that due to some of the effects of the Great Depression, the FDIC was created to insure personal bank deposits up to hundreds of thousands of dollars. This event, which I believe added to the national panic about the national economic health of banks, caused undue and unfair strain on other banks whose books and investments were being overseen wisely. Had the public been better educated and informed about the guarantees the FDIC offers, the worldwide perception of a huge recession monster looming around the bend may have been either deferred or even quashed in September.
Modern economies are so complex and so giant that it is really tough to fully understand and therefore fully blame any one factor for creating or worsening a recession. However, I believe that the public perception of the economy directly before and during a large recession like America currently finds itself in can go a very long way in helping to end the recession as well as prolonging or even exacerbating the situation. Public perception when it comes to the economy is a very fickle thing, and since most average Americans do not have the educational background that many economists, armchair or otherwise, may possess, it is easy to buy into the herd mentality that we’re all going down in a hurry in a sinking ship. Whether or not the American public will ever learn from history or pay attention in class when subjects like the Great Depression and the FDIC are brought up is questionable, but at least for another generation or two, Americans should now be better informed on these subjects.
If Americans would stop believing the hype, and most of the news and information surrounding the recession that was coming out in September was just that- hype, the public’s role in turning the economy around could be a positive and even proactive one. I am not arguing that denial of a recession or sticking our heads in the sand when there is real trouble and real work to be done is in any way a solution. But I am saying that if people were a little more educated and less prone to a completely ignorant knee-jerk reaction like we saw in September with people lining up to withdraw their savings due to unfounded and fallacious fears that it would disappear overnight, we might be in a better position to meet the current economic crisis head on. Perception is a very powerful tool in business and life in general, and the sooner the public can come down off of their hysteria high and begin to have faith in the economy again, the more positive the effect they can have on the actual recovery. All the government stimulus in the world can not help an economy whose citizens are not willing to have faith that rebuilding and regenerating will soon occur. For Americans, doom and gloom is just too sexy.
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