Hayek's Ghost Haunts the World. Jeffrey A. Tucker

Via Francisco Capella.

Extract:

Hayek gave a series of lectures based on his previous works in German that tried to explain that the ruling elite and their theoretical apparatus had it all wrong.

In a thousand different ways he said the same thing: "To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about."

Further, "because we are suffering from a misdirection of production, we want to create further misdirection — a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end."

He concludes, already in 1932: "We must not forget that, for the last six or eight years, monetary policy all over the world has followed the advice of the stabilizers. It is high time that their influence, which has already done harm enough, should be overthrown."

Note the constant focus: the root of the problem is to be found in the boom, not the bust.

And here we have the heart of the difference between Hayek and Keynes: one knew that markets work to give us the best of all possible worlds, while governments create and exacerbate malfunctions; the other imagined that governments were somehow capable of both perceiving and correcting malfunctions by means of the printing press, provided the right technocrats are in charge.

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