House prices, commercial real estate prices, stock prices and bond prices are all very high. Remarkable asset-price inflations have been induced by the low, zero or negative interest-rates manipulations of central banks – needless to say, including the Federal Reserve. The U.S. Office of Financial Research recently warned of the systemic financial risks which accompany such low interest rates and elevated asset prices.

A century and a half ago, the great banking theorist Walter Bagehot quoted the saying that “John Bull can stand many things, but he cannot stand 2 percent.” When interest rates went as low as 2 percent, investors began to do foolish things which inevitably ended badly.

If 2 percent is a dire situation, how about 0 percent?

Will there be another financial crisis?  Of course there will. But when?  However much we speculate and however endless the talk about it, nobody knows. For although we can, by science, know with certainty and utter precision when and where the total solar eclipse will appear a year from now, no such science applies to the financial future.

Nonetheless, we can consider the long-term historical average, which is for financial crises to appear about every 10 years. As former Fed Chairman Paul Volcker so wittily said: “About every 10 years we have the biggest crisis in 50 years.” A decade is, it seems, long enough for human beings to forget the supposedly unforgettable lessons of the last crisis.

The last crisis peaked with the panic of 2008. Add 10 years to that, and you get the next crisis in 2018. That seems like a reasonable guess.

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