I have mentioned to audiences for several years now that if you are watching Fox News or MSNBC for more than seven minutes a day, not only are you wasting your time but you are also causing yourself mental and emotional damage. I watch a lot of CNBC, and it is subject to the same issues.
One problem with the media is that they try to make everything into a crisis. Another is that sometimes government and businesses use the same media to gloss over real problems and pretend they don’t exist.
For example, back in 2008 the Federal Reserve tried to convince Americans that the problems in the credit market were contained in the subprime residential lending market. That was completely untrue and was designed to keep the public from panic. Unfortunately, if you were an investor and made decisions based on this announcement, you would have lost a lot of money.
Just 15 months ago the fixed-income market dropped dramatically because then-Fed-Chairman Bernanke mentioned the word “taper.” He suggested the Fed could begin to withdraw from purchasing Treasury bonds and mortgages in the near future. Interest rates on Treasury bonds and residential mortgages went up quickly and sharply. The commentators worried on the airwaves that rates could go up substantially by the end of 2013 and into 2014 as the Fed ends its intervention in the bond market.
They further speculated increased rates could really hurt the housing market and impact the value of commercial real estate. All of this was eventually a flash in the pan. Rates actually have fallen since the turn of the year. Another red herring.
For the past five years, “analysts” have been screaming about coming runaway inflation. By showing half of a story, they can build that case. Yes, the Fed’s balance sheet has increased by trillions of dollars. But what you never hear in the news is that the massive decline in the velocity of money has offset any inflationary pressure in consumer prices. Here is another example of how investors who were swayed into buying gold at $1,900 per ounce were poorly served.
In early 2014, commentators explained that U.S. stocks were going up for several reasons. One was that Europe “had turned the corner.” Europe was supposedly on the rebound and would soon be buying goods and services from U.S. firms. But at the same time, Mario Draghi with the European Central Bank was sending an entirely different message. By lowering interest rates on reserves to an unprecedented negative rate, he was clearly signaling that Europe was far from turning any corner.
Financial and general news broadcasts continue evolving into a propaganda outlet for people to influence behavior of others who don’t have the time or the skills to ferret out the truth. Currently it seems that if you can make some outrageous “forecasts,” you can be a famous media darling for 15 minutes. If your lucky guess turns out to be right, then you could be famous for several years.
What is the takeaway here? Take everything you hear coming through media channels with a huge grain of salt. The urge to offer sensational “news” appears to be overwhelming. In an era of declining newspaper and magazine readership and declining TV ratings, the urge to produce continuous crises is understandable. If there isn’t a crisis brewing, Americans would prefer to do something else with their time.
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