Fiscal Versus Financial

Via Brad DeLong, Felix Salmon observes that John McCain doesn’t know what kind of crisis we’re in:

The number of undecided voters who understand the difference between financial and fiscal is minuscule, and the number of those who think that the difference actually matters is probably zero. But from a technocratic standpoint, the fact that McCain twice referred to the financial crisis as a “fiscal crisis” is telling. It means (a) that he doesn’t really understand it, and (b) that insofar as he does, he thinks that government is at least as much part of the problem as it is part of the solution…

This is, admittedly, a wonky distinction. But you might think that twenty-eight years in congress would be enough time to master federal policy jargon. I’m only 27 years old, after all, and I’ve got this straight. But suffice it to say that a “fiscal crisis” would be a crisis involving the budget deficit being too large. A “financial crisis,” by contrast, is what we’re looking at — a problem in the financial markets. It’s a mistake anyone could make. Unless that person had been, say, discussing an ongoing financial crisis with aides who were bringing him up to speed on the situation. A person like that would have all the fresh jargon he needs.