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
There is a theory that when it comes to large scale human behavior as soon as you start to measure something, the measurement loses some of its value. You want to measure how well your business is doing? Measure quarterly profit and instantly the company will start to do weird shit to boost quarterly figures in the short term.
However just because measurements corrupt things doesn’t mean that they are useless. Everyone has been eyeing the market thinking that it is behaving oddly. Valuations on assets are sky high, unemployment is low, yet inflation is low and wages are not rising. People have been watching these bond yield numbers for a year now seeing them flashing danger signs and this is just the straw that broke the camel’s back in terms of convincing people there is a real challenge here.
The fundamentals of the market are fucked up right now.
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