This column is to appear in the Augusta Business Chronicle (October 2001). Shooting ourselves, too? What will be the economic ramifications of the terror attack on New York City and Washington, DC on September 11? Writing on the day after the event, here is my take. As usual, I am guided by fundamental principles of economics. First, while the gruesome reality is that thousands died, that two big buildings collapsed, and that many other buildings and infrastructure were badly affected, the reality also is that relative to the nation as a whole, the death and damage is minor. The nation consists, after all, of over 280 million people and their daily production, and Manhattan and the Pentagon building, important as they are, are small in relation to the United States as a whole. The country's overall capacity to be productive is unaffected. Taking a long-run perspective, the estimate of $10 billion worth of damage is thus not much as compared to our nearly $10 trillion economy. To many a reader, this may sound heartless, cynical even. Perhaps. But this sort of calculation is just as real as are the death and destruction we have witnessed. Also note that the country's financial functions are essentially unaffected by the attack. Banking functions as before, and your money's still in the bank. The computerized financial records that were kept in the World Trade Center were backed up nightly and are fully available as well. The Federal Reserve Bank made clear that there is no monetary crisis, and as an independent observer and economist, I fully concur.  Second, the short-run economic effects depend completely on how economic policymakers and ordinary people here and abroad react to the disaster. One can argue two ways: either that the US economy will go into a recession, or that it will move into a renewed growth-phase. The case for recession is that people panic: fearing worldwide economic repercussions. They stop spending and save the money they otherwise would have spent in order to have a savings cushing for the expected "hard times." Overall demand would thus be reduced, and when there is lack of demand for goods and services employers will eventually have to lay off employees. If that happens then there will be even less money to be spent in the economy, and we enter a downward spiral. In economics, we call this the "paradox of savings." Additionally, in order to have ready cash in the bank, people may sell stock holdings, thus pushing down stock-market values. But panic-driven stock-market valuations would have little to do with the underlying strength of the companies. Indeed, for the long-term investor this would be an opportunity to snap up undervalued assets.  The other scenario is that people do not panic. Recognizing that the terror attack has absolutely nothing to do with our underlying ability to be productive we continue – as the President urged – to live our ordinary lives and go about our ordinary business. That means we continue spending, thereby providing employment for others, just as other people's spending provides employment for us. In addition of course we will spend some extra dollars to rehabilitate and rebuild Manhattan and the Pentagon and increase various sorts of security spending. Politics aside, this will boost the economy. And so, while we are immensely saddened, the economy can see a phase of renewed growth, especially if the tax-rebate checks that are now arriving are indeed spent, rather than saved. Even if you give your rebate check to charity – and that's worth considering in light of Tuesday's events – it will still be spent and thereby produce an economic stimulus.  In sum, in politics as in economics, terrorists succeed only if we validate their imposition on our collective lives. Through private and public efforts, let us help those in immediate need, and let government pursue, apprehend, and punish the terrorists. But meanwhile, let us not shoot ourselves in the economic foot as well. Let us not terrorize ourselves. Dr. J. Brauer is Professor of Economics at Augusta State University's College of Business Administration. He can best be reached via his web site (http://www.aug.edu/~sbajmb).