Ben Bernanke suggested in June that the pace of quantitative easing might slow by the end of the year. Global markets dropped by 4 per cent in two days. It has taken several weeks – and carefully reassuring congressional testimony from the US Federal Reserve chairman – to calm them.

Asset price movements of this kind are not unusual – but they are hard to explain with conventional economic theory. Sometimes they turn into financial tsunamis, like the 2008 crisis, which leave devastation and misery in their wake.

The 2008 meltdown led to calls for government intervention in financial markets. This idea is not new; it began with the inception of central banking more than 300 years ago, and was extended during the Great Depression. Following that crisis, financial regulations such as the US Glass-Steagall Act were brought in to help insulate the economy from the worst effects of market volatility by separating retail and investment banking. In the 1990s, however, many of those regulations were dismantled in response to an idea promoted by Chicago School economists: the efficient markets hypothesis. According to this idea unregulated financial markets promote economic efficiency and increase the welfare of all.