“When, more than 100 years ago, George Gilbert Williams, president of the famously conservative Chemical Bank, was asked for the secret of his success, he replied: “The fear of God.” You can have the fear of God or the socialisation of risk, but you cannot have both at once.”
- James Grant in the Financial Times, ‘Banks should rediscover the art of caution’.
The role of economists, writes Charles Gave, along with that of governments and central banks, is to promote a stable monetary and legal framework for the risk-takers (entrepreneurs, money managers etc..) to make their decisions as rationally as they can.
“Unfortunately, this has not
happened. Instead, in a new and improved declination of Friedrich Hayek’s
“fatal conceit,” we seem to be moving away from “scientific socialism” to
capitalism” – where the overconfident and overeducated
control-engineers are no longer members of the avant garde of the proletariat,
but plain, boring and well-meaning economists working in the entrails of the
world’s central banks. My intent is not to show why these economists will fail
(bigger and brighter minds such as Hayek, Mises, Friedman, etc. have already
done this) – but rather to review the
impact that the misguided manipulation of the price of money (exchange and
interest rates) is having on the notion of risk.”
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