Shortly before Obama took office, many American banks, including the largest ones, were given a huge amount of money by the Federal government (“bailed out”). Why? Because Secretary of the Treasury Henry Paulson, Chairman of the Federal Reserve Ben Bernanke and other economists (not necessarily independent of Paulson and Bernanke) predicted a second Great Depression if they weren’t. I didn’t believe Paulson et al. — their track records of prediction were terrible. They hadn’t foreseen the crisis. Why should I think they knew how to fix it? I believed their predictions of disaster were too confident.
At the time I didn’t know this bit of history:
The blood-curdling threats [now] being issued by Eurocrats should sound familiar to British readers. We went through precisely the same experience 20 years ago, when we were stuck with an over-valued exchange rate in the Exchange Rate Mechanism.
As in Greece, our leaders – all the main parties, the CBI, the TUC, the Bank of England – assured us that leaving the ERM would be disastrous. On September 11, 1992, John Major solemnly told us that withdrawal was ‘the soft option, the inflationary option, the devaluer’s option, a betrayal of our country’s future’.
Four days later, we left the system, and our recovery began immediately. Inflation, interest rates and unemployment started falling, and we enjoyed 15 years of unbroken growth
Those who don’t know the past are doomed to over-trust experts.