Some
people believe that there is another financial crisis coming in 2017, they
could be right. Before each financial crisis in our history, there always were
some people who correctly predicted its coming. These people are usually the
minority. Why do people care less about these people's opinions in general?
Because they could predict the coming of a financial crisis, but they cannot
tell what will be the trigger and when it will come. People are generally
short-sighted: even if they also believe a financial crisis is coming, they
will still be as greedy as possible to maximize their profits before the crisis takes place. Moreover, no one will
know the exact trigger of a financial crisis before its coming. In other words,
if the central bank knows the trigger, the potential financial crisis will be
avoided. Only those which we do not know the triggers will eventually take
place. Unfortunately, we have not avoided a single financial crisis yet
(Soros's failed battle in Hong Kong might be seen as the only success
story). Why? Because there is no single event that can trigger a financial
crisis. Based on what we see from the past, a financial crisis is always
triggered by a series of inevitable "accidents". They are inevitable
because we see ourselves creating bubbles and we know one day bubbles will
burst. They are accidents because there is a probability for the bubbles to
burst. For example, why do bank runs occur? Because we believe the others will
take out their deposits, we have to run to our banks just like everyone else
in order to limit our losses. When most of us believe there will be a bank run,
then a bank run will occur. Though the chance of we believe it is very close to
zero, it still means a bank run could happen. More extremely, if one day most
of us suddenly want some cash from our banks, a bank run will also occur. To
conclude, there is always a probability
of a financial crisis, no matter how our economy is performing.
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