If a prediction of a recession causes the market to crash, can it be said that the prediction itself is part of the cause of the recession? Like a self-fulfilling prophecy?

Question

If a prediction of a recession causes the market to crash, can it be said that the prediction itself is part of the cause of the recession? Like a self-fulfilling prophecy?

In: Economics

Answer 1

Absolutely. The recession happens because people lose faith in the market. Articles telling you to lose faith in the market cause panic and make people sell. Prices drop, which makes more people sell. Suddenly everyone’s selling and no ones buying. The rich make money by floating and the common people buy high and sell low.