Many who read the financial media, with its hype and implicit prognostications, are inclined to the doom and gloom school of thought. They see risks of financial crises and catastrophes for the economy around every turn, both here, and, if that is not enough, abroad, too. Everything is thought to be out of macro kilter and careening toward collapse. Normal, in the back of their minds, is thought to be when everything is stable and sustainable. A never, never land state. The core problem is neither they nor the financial media they read understands economics or the economy very well.

Specifically, they don't understand 1.) the public debt, how it works, and why it is not a problem; 2.) private debt debt and why it can threaten; and 3.) the scope and magnitude of the real economy and how it adjusts. They think too short term and have no coherent economic model of the real economy in mind at all. They wait for crises to be triggered by this and that short coming with no conception of the adjustments involved, their magnitudes or the mechanics of change.

Almost invariably they think high public debt is threatening and bad, regardless of whether it is of a sovereign fiat currency country with good debt servicing. They don't understand or believe modern monetary theory or how stock consols can make the public debt disappear over night. They ignore the data that all financial crises for such advanced sovereign countries ensue not from public debt problems, but from servicing problems for private domestic debt in the aggregate of large dollar amounts. And they don't understand why the impacts on the US economy of foreign crises and calamities are minor and relatively small.

A financial crisis abroad cannot likely cause a real or serious financial crisis in the US. The financial interdependencies are substantial but not sufficiently large. The collapse of China's credit and stock markets last year is proof of that. So is the collapse of world commodity markets, especially oil, last year. So the US oil patch has problems. So what. Foreign calamities that spill over into the US just don't have the muscle to cause large macro problems.

The belabored stimulus effort worldwide is certainly noteworthy, but from the US the financial sector it does not have nearly the impact on the US real economy that people think it does, especially those focused on Wall Street which lives in its own bubble. Demographics matter more. People misunderstand US economics because of all the noise and flapping around by the financial sector which listens mostly just to itself and grabs all it can. It churns not only its own markets, but also the financial news. The real economy is different.

Major foreign events can have an impact, yes. But create a real US financial crisis, no. Again, not even China's credit and stock market crash last year, nor the world collapse of commodity markets created a US financial crisis. It is hard to imagine larger events. Sure, our stock markets twitched, but then they twitch all the time to some degree anyway. The '29 stock market crash, people forget, occurred because of margin calls that "investors" couldn't meet. Market debt was too high to be serviced with those calls. It did not occur because stock prices were too high as most think.

The real economy is far removed from Wall Street and finance. We can have one or many sectors of our financial or real economy in one or another degree of stress or collapse (e.g., oil recently) without it materially affecting the real economy much at all. America's income deficient lower half is still in recession -- a huge real economic problem -- but it is no financial crisis for the macro economy.

The income inequality and distribution problem just places us in a lower low than we could be in, but it does not crash our economy or create a financial crash. The real economy is very resilient because people continue to get up in the morning and go to work and produce good and services and it is very hard to get them not to do that. Wall Street certainly can't very well.

Only if businesses, government and consumers stopped buying goods and services and many workers were laid off do we then really run into real problems. But that usually happens only after a financial crash, such as in 2007 which was a private debt crisis on Wall Street. Liquidity collapsed and even overnight inter-bank lending stopped because the books of the big investment houses were fraudulently keep and could not be depended upon. Too much was off book. They collapsed from their private debt that they were unable to service. The entire shadow banking industry was wiped out. Only the national banks were saved by a big government cash infusion or bail out..

Too many simply don't understand the economy or economics.