It would be unfortunate for you to be an American and forgotten what today is.  Tragic events in the history of this young American.  I will always remember that day because I watched the second plane hit, live, and watched both towers fall in the library at school.  Those images cannot be lost.

I’m not here to talk about the events of that day; there are books, movies, websites and interviews all devoted to the facts and conspiracies surrounding 9/11.  I’m here to talk about the awful events that came because of it.  Before that though it would be a disservice to the Weakonomics philosophy to not first point out more people will die in the time it takes you to read this post than died in 9/11, and more will die in some tragic or unfair way in the time it took me to write this post than in 9/11.  No death is more tragic or less significant, just need to point out these observations.

Now, what I want to talk about is the economic implications of 9/11.  Most of us know the stock market tanked in the days afterward.  What also occurred was the Federal Reserve started decreasing rates faster than before (as in accelerated the move towards 0).  Concerns about recession were abound from a shaky post dot-com bubble to the new concern about an uncertain economic stability in the wake of the attacks.  Before 9/11 the interest rate was at 3.5%, by the end of the year it was 1.75%.  Though rates were already headed downhill it’s possible they would have stopped before reaching these new lows.  As a result, these low interest rates contributed to the real estate bubble that was about to form.

But the real economics of the events of 9/11 are in government.  The invasion of Afghanistan would have never occurred without it.  It’s likely (but not guaranteed) that the invasion of Iraq would also have not occurred.  This is because the invasion was first supported under false assumptions and public support rang in the name of national security.  Military matters may now sound like an economic concern until I remind you military spending accounts for about 1/3 of all federal government spending; this is not to be confused with the budget as the wars are financed outside of the federal budget.  This spending has increased considerably since 9/11, as has the national debt.

The consequences of all this spending have yet to show themselves.  We might be able to pay back all the debt over time if we ever stop spending.  But we will likely see increased taxes, serious inflation, or some other economic tragedy as a result of the country having no money.  Imagine that you’ve got 5 credit cards carrying a balance of $50,000 on September 10, 2001, and on the 11^th you start maxing out 5 more.  Maybe you can last and pay it off, but probably not.

Do I blame 9/11 for all of this?  No.  However it was a significant event in recent history that does play a not-insignificant role in our economic situation today, and tomorrow.

To end, I want to remind you that I’m not some insensitive ass who has forgotten what happened that day.  There are enough sites that cover those things though and so my attention is best placed on what happened as a result of that day.

Though a Google search will give you anything you want on 9/11, I wanted to link to two sites I’ve been reading.  The first is Wikipedia’s timeline of the events of 9/11, the second is CNN’s memorial page to those that died.  Browse through them, remember the events, and attach some faces to the memory.

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics.

categories: economics, government