It's never too early to get your facts straight about the economy. Many people, even the leaders of powerful countries, still get them mixed up. Using the wrong terms, like U.S. President George W. Bush did this week, can create a lot of confusion for everyone.
Bush made a huge snafu during his visit to Tokyo to meet Prime Minister Junichiro Koizumi. The two had just spoken behind closed doors about ways to rescue the Japanese economy, which is in the midst of a recession -- in other words, the economy is shrinking instead of growing, with people losing jobs and spending less money, and companies suffering losses because their products don't sell.
Bush told reporters that he had spoken to Koizumi about devaluation. Unfortunately, it seems he got it all wrong. What Bush meant to say was that he had spoken to the Japanese prime minister about deflation. But for a few chaotic hours, the market believed the president. Currency traders hit their panic buttons and started selling yen. Luckily, things didn't get out of hand because some clever person asked the president's aides for clarification. Without that, Bush's mistake would have cost the market a lot of money.