Economics or marketing?
The subject of financial bias and media propaganda is a Financology staple. If not for the pervasive marketing and misinformation in the media about economics and the financial markets, this site might not even exist. It’s here because the mass financial media are so bad.
Just some examples we’ve highlighted in the past include the promotion of stocks over alternatives like gold. You can watch financial television and read countless words touting “stocks for the long run” without ever seeing a mention of the fact that they’ve shamefully underperformed gold so far this millennium. Yet a quarter century is a pretty good sized chunk of an investor’s investing career to dismiss as short term.
Why might this be? It’s difficult to think of any other explanation than the media’s purpose is not to enlighten its readers and viewers about what is good for them, but to influence their behavior in a way that’s good for Wall Street and the financial elite.
Another example is the carpet bombing of viewers with hype about impending rate cuts. This has gone on at least since the Fed stopped hiking rates … day in … day out … for over a year. But the actual substance? Nothing has actually happened. It’s all talk. The fed funds rate hasn’t budged. The message – usually implicit but sometimes explicit – buy stocks now because when the Fed cuts rates they will take off!
About as subtle as a used car salesman or late nite infomercial.
That this is rarely if ever accompanied by reminders that the Fed slashed rates all through the last two major bear markets in stocks while prices were cut in half is clear indication that this stream of hype is intended to help sell stocks. At premium prices. Any story that has even the remotest connection includes mention of rate cut expectations – employment reports, inflation data, Zimbabwean oil painting – is not permitted to pass without including some reminder that rate cuts are coming. Whatever else it may be, it’s sure not dispassionate reporting of fact.
The latest example is Jackson Hole. The big story? Powell reaffirms what we already knew about rate cuts. In other words, no real news here, just another instance of what we already knew.
Today brings a new twist though. Supposedly this re-re-re-re…reaffirmation is responsible for a 1% loss of the dollar in forex markets. For those unfamiliar with currency trading, 1% is a pretty big move for one day.
Now let’s juxtapose that with the educational-sounding information that unspecified “economists” are united in panning tariff proposals as “inflationary”. No, only money creation can be inflationary. Other price increases are real. And no effort is made to draw a distinction between tariffs that simply increase the total tax burden and those that are offset by reductions elsewhere. The net cost of the latter can only be zero. Yet it’s apparently just assumed that adding to the existing tax burden is the only possible implementation of tariffs.
But no matter. Let’s assume, just for the sake of argument, that tariffs are inflationary. Then why is there no mention of the inflationary nature of a rate-cut-inspired 1% decline in the value of the dollar in the currency markets? Not a peep. Yet that 1% increase in the cost of US imports – one that isn’t merely theoretical or prospective but actually just happened – manages to escape any and all scrutiny for inflationary impact.
There just aren’t many possible explanations for this disparate treatment of potential tariffs and Fed rate cuts aside from the simple one that the broadcaster likes rate cuts and doesn’t like tariffs. This isn’t news; it isn’t education; it’s marketing a political agenda.