You would think he knows what he’s talking about. Charlie Bean, after all, is Deputy Governor of the Bank of England. In fact, he doesn’t. So why has he informed the Royal Statistical Society that it was not possible to forecast recession? Answer: because he wants to exonerate the Bank and persuade us that the Depression of 2010 was not its fault.
Mr. Bean had no choice but to confess that the Bank of England failed to foresee what others call the Great Contraction of 2008. But now that the Bank has been given sole responsibility for delivering future stability, he’s covering their tracks for when they fail to forecast the next boom/bust.
The next bubble can be predicted. Asset prices will inflate in the run-up to the recession of 2019. That’s the midway event through the 18-year cycle which will terminate with a land-led boom which will peak in 2026. The downturn will hit the trough in 2028.
How can I be so sure? After all, I don’t command the lavish resources of the Bank of England, which will steer the economy into the next “unforeseeable” crash.
The record of history tells us that my forecast will be proved false if, in the meantime, we engage in a world war. At present, that is not an event which needs to be factored into our calculations. Therefore, going on the theory I advanced in Boom Bust (2005), we can rely on my two new forecasts which I offer above.
Mr. Bean would not agree. He says that the models used by central bankers and forecasters are such that “The moral from this is that one should not expect to be able to predict the timing and scale of these sorts of events with any precision”. And yet, I am on public record as forecasting the 2008 crisis back in 1997 (in a book called The Chaos Makers).
The problem is with the way economists choose to view the world. Theirs is a pathological perception. They wilfully disregard one of the three markets in the economy – the one that regulates the price and distribution of land.
So Here We Go Again…
All the regulations and vituperation targeted against bankers will not stop those next bubbles and busts. And we can bank on the Bank of England failing in its legal duty of care. It will be shocked by the recession of 2019 and overwhelmed by 2028. We know this, because Mr. Bean says:
“The [Bank’s monetary policy committee] does not attempt to calibrate the probabilities associated with [unlikely] events precisely.”
But all is not hopeless. The Bank, Mr. Bean is happy to inform us, had done a good job of forecasting growth during the previous decade of growth! But isn’t that like telling us the sun is shining when we can see that the sun is shining? Do we really need to pay fat salaries for the experts to tell us what we can work out for ourselves?