The Wizard World Lost The War

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This particular theory was thrown around on Reddit, and there seems to be plenty of evidence to support it. The Redditor responsible for the theory claims the wizards lost the war, otherwise the muggle world would be the ones in hiding.

One of the best clues to support this theory is from The Goblet of Fire, when it's revealed that the Ministry of Magic must get permission from Britain's Prime Minister to bring a dragon into the muggle realm. The Redditor believes this is proof that the wizarding world reports directly to the muggle world.