The Queen visits the Bank

Today the Queen visited the Bank of England, and asked why nobody saw the financial crisis coming – a question that many may also be pondering. Of course, a lot of people did see it coming, but it seems that Sujit Kapadia, representing the Bank during her visit, doesn’t know this.

From Sky:

He told her that financial crises were like earthquakes and flu pandemics and, because they are rare events, they are difficult to predict.

While the precise timing is indeed hard to predict, the fact that another crisis was coming was clearly forseen by those with the insights of the Austrian school of economics:

  • Congressman Ron Paul in 2002, 2003, and on video discussing his 2003 prediction:

  • Peter Schiff many times:
  • Gary North in 2005, Doug French in 2005
  • James Grant, who has predicted both this and the dot-com bust

Meanwhile Ben Bernanke, Chairman of the US Federal Reserve, had no such concerns in 2005.

Perhaps financial crises are only hard to predict when you work for the organisation that is primarily responsible. It doesn’t bring any comfort that in the UK, the Bank is soon taking over the regulatory role of the Financial Services Authority or that the ECB is planned to do the same for the eurozone. The distorting role of central banks in the economy means that they are the ones who should be tightly regulated, rather than trusting them to regulate others. Putting the fox in charge of the hen house is never wise.

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