Justin Fox — More B*llsh*t On Hayek

The second-hand dealers in ideas constantly make a hash of things.  Justin Fox is a multi-time offender when it comes to spreading falsehoods about Hayek’s economics, and his latest is to get Hayek’s post-bust economics all wrong.  Hayek explicitly opposed allowing a secondary-deflationary downward spiral and he explicitly endorsed efforts by the central bank and the central government to act to stem a vicious downward spiral of contracting money velocity, contracting money supply, money hoarding, bank panics, and pathological system-wide declines in investment and consumption purchases — and Hayek explicitly said so as early as 1931, in every decade of his life after that.  In fact, Hayek always argued that central banks MUST act to prevent bank panics — that is the job of a central bank — and he argued this in the early 1930s and he argued this in the 1960s, and he argued it throughout his economic career.

So journalist Justin Fox is simply spreading false non-sense about Hayek when he bleats out the following in an interview with David Kuo at The Motley Fool:

David:

So if Friedrich Hayek was here today, what do you think he would recommend to governments to do?

Justin:

He would be saying, you should have let all the banks fail, and you should just let markets sort it out, and I just don’t think he’s completely right about that, I think there’s a huge amount of wisdom in Hayek’s work, but I just don’t buy that.

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