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Source link: http://archive.mises.org/9213/austrians-and-keynesians-agree-milton-was-wrong-about-the-depression/

Austrians and Keynesians Agree: Milton Was Wrong About the Depression

January 9, 2009 by

Believe it or not, Paul Krugman hits the nail on the head in his critique of the Friedman/Bernanke theory of the Great Depression:

Milton Friedman, in particular, persuaded many economists that the Federal Reserve could have stopped the Depression in its tracks simply by providing banks with more liquidity, which would have prevented a sharp fall in the money supply. Ben Bernanke, the Federal Reserve chairman, famously apologized to Friedman on his institution’s behalf: “You’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”

It turns out, however, that preventing depressions isn’t that easy after all. Under Mr. Bernanke’s leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.

Of course, Krugman’s conclusion is that the Keynesian diagnosis is better than the Friedmanite monetarist one. Matt Machaj argues that there is a third option, the Austro-libertarian position of respecting property rights. For those wishing a fuller analysis, see this blog post.

{ 35 comments }

Grant January 9, 2009 at 2:48 am

Out of curiosity, would LvMI still have a problem with the Fed’s actions if it was going to suck those reserves out again, and thus never allow the overall money supply to change significantly (as I’ve heard some people say free banking would do)?

To me, it seems like the Fed is doing its job (mostly; being a monopoly it obviously cannot really “calculate” the demand for money). Its responding to the demand to hold money; the overall money supply hasn’t changed very much and so economic calculation isn’t severely disrupted. I expect it to royally screw up by not removing those reserves from the system once the multiplier starts to grow, of course causing serious inflation.

Brent January 9, 2009 at 4:56 am

Isn’t it funny that Friedman is known as Mr. Capitalism / Mr. Free Market, but was wrong about the one thing that will probably lead to capitalism’s death?

DS January 9, 2009 at 6:48 am

Krugman isn’t “right” he’s just as off base as Friedman.

The whole premise of trying to “fix” the great depression after the fact is a misunderstanding of economics. Once the the correction starts the only thing the government can do is spread out the pain to more of the population and elongate the period of unemployment – which the government did in spades for more than a decade during the great depression.

The only way the government could have “fixed” the great depression would have been to not create the giant bubble of the 1920′s in the first place. In 1929 it was already too late.

As Austrians we need to stop arguing on interventionist terms. There is no Austrian “solution” to a recession other than to let it run its course. The whole premise that recessions are bad and boom times are good is contrary to basic Austrian Business Cycle Theory. The only “cure” for a recession is to let all of the malinvestments liquidate so that capital can be redepoyed properly. The quicker the better.

DS January 9, 2009 at 6:49 am

Krugman isn’t “right” he’s just as off base as Friedman.

The whole premise of trying to “fix” the great depression after the fact is a misunderstanding of economics. Once the the correction starts the only thing the government can do is spread out the pain to more of the population and elongate the period of unemployment – which the government did in spades for more than a decade during the great depression.

The only way the government could have “fixed” the great depression would have been to not create the giant bubble of the 1920′s in the first place. In 1929 it was already too late.

As Austrians we need to stop arguing on interventionist terms. There is no Austrian “solution” to a recession other than to let it run its course. The whole premise that recessions are bad and boom times are good is contrary to basic Austrian Business Cycle Theory. The only “cure” for a recession is to let all of the malinvestments liquidate so that capital can be redepoyed properly. The quicker the better.

Curt Howland January 9, 2009 at 7:23 am

Grant, “sucking the money back out” is called a monetary contraction.

These happen for various reasons, but in spikes (like “suck it back out” implies) such as a collapse of a fractional reserve house of cards (1929, 2008), or the Bank of England calling in its loans (1836), etc.

These produce sharp recessions.

Dumping money into the system prolongs the agony, deepens the resulting depression, and prevents the correction from occurring.

Then, take the money back out, and you get _another_ recession.

The only non-destructive reaction is to let the correction occur no matter how nasty it might seem at the time or how much you might want to “do something”.

Julio January 9, 2009 at 8:02 am

Milton Friedman was right……….the depression could have been stopped by providing banks with liquidity. But a recession in 1929 was inevitable. It was a reduction in the money supply that made a 1929 recession a depression. I don’t see a contradiction there.

The current crisis was done because of too much liquidity in the financial industry. It can’t be cure by just doing the same thing.

Me January 9, 2009 at 8:03 am

Milton Friedman was right……….the depression could have been stopped by providing banks with liquidity. But a recession in 1929 was inevitable. It was a reduction in the money supply that made a 1929 recession a depression. I don’t see a contradiction there.

The current crisis was done because of too much liquidity in the financial industry. It can’t be cure by just doing the same thing.

Brian January 9, 2009 at 8:19 am

I think Friedman did a lot of good for capitalism and wouldn’t have advocated the policies that lead to the depression, but he was probably wrong about the fix. I wonder what he would have said today. I’m sure he wouldn’t be a traitor like Greenspan!

I Hate Taxes January 9, 2009 at 9:34 am

Brian wrote:
“I think Friedman did a lot of good for capitalism”

He did NOTHING, he was a parasite.

Those who really did a lot of good for capitalism were hard working honest Americans who saved their money, invested in businesses and made America go forward.

Yet, their efforts keep getting destroyed by government interventions.

J Cortez January 9, 2009 at 9:36 am

This is something I’ve only heard about in passing, so maybe I’ve misunderstood, so somebody please correct me if I’m wrong–-

Rothbard said that Friedman was incorrect that the Fed did nothing, that the Fed was trying to pump money in the system in the 1930s and it didn’t work.

Am I wrong? If I am, can somebody direct me to anything Rothbard said about Friedman’s 1930′s monetary contraction scenario? I would like more information on this. Thank you.

Curt Howland January 9, 2009 at 9:53 am

J. Cortez, you’re not wrong.

One of the biggest of the “Big Lies” that are circulated by the government is that the Great Depression occurred because “nothing was done”.

Everything was done. Money was dumped into the system, crops were burned, laws were passed on anything and everything that could be invented, “domestic improvements” were promulgated in huge numbers, even unto entering a world war.

None of it worked. All they did was make things worse, prolong the problem, or slow the correction.

So when anyone says that the Federal Reserve didn’t dump _enough_ money into things to stop the Great Depression, one must wonder what planet they’re talking about, or why they want to LIE.

J Cortez January 9, 2009 at 9:57 am

I Hate Taxes said: He did NOTHING, he was a parasite.

With respect, I completely disagree.

Yes, people on this site can have problems, as I do, with his view/role in central banking, the with-holding tax, the negative income tax, school vouchers, etc.

But Friedman had many great things to say about the draft, the minimum wage, socialism, tax subsidies, drug laws, licensure, regulation of industry and the greatness of capitalism in general.

With all its flaws, Free to Choose, to this day, is one of the best mainstream economic books to ever be written.

Friedman was not perfect. But he was a great economist and a promoter of capitalism.

Grant January 9, 2009 at 10:02 am

Curt Howland, I was referring to sucking out the monetary base while the multiplier is rising, thus keeping the money supply more or less stable. This is in contract to what the Fed is likely to do, which is not suck it out and let the money supply grow as the economy starts to re-leverage itself (i.e., a lot of inflation).

Russell January 9, 2009 at 11:52 am

Friedman’s Free to Choose video series was as good as the book and a valuable tool for promoting free markets.

It’s insane to say he did nothing and was just a parasite. Few people in history have done as much as Friedman to promote liberty, capitalism and free markets. That doesn’t mean he was right about everything…but he certainly did more than “nothing.”

Inquisitor January 9, 2009 at 1:23 pm

I agree, I don’t think it’s fair to say Friedman was a parasite or did nothing for liberty. Intellectually speaking, he did a lot, whatever his failings.

C. Evans January 9, 2009 at 2:12 pm

I have to agree with Russell, Inquisitor, J Cortez, and others. To speak ideas of liberty into the masses means that some people will find these ideas appealing and study them further. I believe that the criticisms against him in not going far enough are justified, but he was advancing liberty in an age of socialism and collectivism. I would not have found the Mises Institute or Lew Rockwell.com if I did not find Friedman’s Free to Choose video series on YouTube. He planted seeds of liberty in my soul which lead me to study these ideas and he is one of the reasons I am as radical as I am now.

J Cortez January 9, 2009 at 2:21 pm

Curt Howland: Re: 1930′s Friedman monetary contraction. Where did Rothbard take this on?

I read America’s Great Depression awhile ago and assumed it would be in there, but I don’t remember a direct answer for Friedman’s take on the problem. Of course, there’s a lot of information there and I would have to re-read to be sure.

Even if Rothbard was wrong about the Fed pumping, I can’t ascribe what happened to Friedman’s idea, which he places completely on the Fed’s shoulders. I think what Robert Higgs has said about that period is more to blame than deflation.

Niccolo January 9, 2009 at 4:02 pm

I really don’t understand this whole aversion to monetary equilibrium.

It seems that many “Austrians,” at least at the LVMI, understand equilibrium in everything except for money.

When the demand for money increases, supply should increase with it to maintain that equilibrium and prevent monetary distortions in the price of goods. That is not to say that banks – I don’t think central banks like the Fed should exist – should target the prices of other goods, as monetarists tend to mistake it, but that banks should target monetary prices.

cavalier973 January 9, 2009 at 4:21 pm

From my understanding, monetary equilibrium would be established by the price of money in the free market. If demand for money rose, then the price of money (the interest rate) would rise, giving incentives to some people to save rather than spend, thus increasing the money’s supply. At the same time, the price of money in terms of goods would also increase (I mean it takes more goods to buy a unit of money), which means that people need less money in order to purchase the goods and services they desire. It would not be necessary for a central bank or group of banks or the banking system as a whole to “fix” the price of money, or institute a target amount of money, in order to balance out the money supply.

Niccolo January 9, 2009 at 4:49 pm

Cavalier,

What you’re talking about with interest rates is just that, interest rates. That doesn’t really have much to do with the physical increase in the supply of money.

It seems then that you have to rely on the prices for goods. Which, I guess, is OK, but seeing that prices are sticky, I don’t understand why you would want to prolong corrections like that when the alternative is much easier and less painful.

Moreover, that would make prices for goods a hell of a lot more volatile, which isn’t the best thing for economic stability.

J Cortez January 9, 2009 at 5:20 pm

Niccolo said: What you’re talking about with interest rates is just that, interest rates. That doesn’t really have much to do with the physical increase in the supply of money.

Interest rates and money supply go together. Interest being the price of money, after which the laws of supply and demand take over. In the case of the Fed, they use repos to increase or decrease money supply, which then affects Fed Funds rate or the Discount rate.

Bruce Koerber January 9, 2009 at 5:31 pm

The ego-driven interventionists are in conflict! Which also means that the ego-driven interpreters are at odds. It is easy to describe the mindset of these pseudo-intellectuals – confusion! And that is the state of affairs – confusion!

In the grips of their egos these low lifes will stab each other in the back and try to claw themselves out of the pits to hell that they are creating!

What is the saying? “Its like shooting fish in a barrel!” If classical liberalism is given any ink or any airwaves the perverse economic charlatans will run home crying to their Mama.

But much to their chagrin their Mama will have to flee too because the present-day heros of liberty are making known to the world the names of the members of the inner circle of the unConstitutional coup. One by one these economic terrorists will run away from the justice seeking people around the world who want restitution.

cavalier973 January 9, 2009 at 6:01 pm

Sticky prices? I haven’t heard the term before (I had to spend time looking it up, drat it all), but is that anything that could happen outside of government interference; such as, say, inflating the money supply?

Gas prices don’t seem very sticky to me. A gallon of milk was right at or above $4 earlier this year, if I remember correctly. It’s less than $3.50 today, depending upon where you shop. Home prices apparently aren’t too sticky…
http://mises.org/daily/3266

And the interest rate represents the time preferences of people. If people are willing to forgoe present consumption, then the supply of money available for lending will be relatively large, which means a lower interest rate. If people prefer to spend their money now, then the supply of money available for lending is relatively low, which means a higher interest rate. At least, that’s what I understand the Austrian definition of the interest rate to be.

http://mises.org/daily/2810

ktibuk January 10, 2009 at 4:28 am

Interest rate is not the price of money. Interest rate is the price of time.

Price of money is the ratio of goods to money. Everthing has one money price, but money as billions of prices becuase there are billions of goods and services that trade against money.

The main effect of the change of supply or demand for money is on the purchasing power of money. Its effect on interest rates are secondary effects.

Change in moneys supply or demand, mimics a change in the price of time when there really isn’t one.

If the supply of money increases while demand stays the same this gives a false signal that price of time came down.

And that is the main reason bubbles get started.

ktibuk January 10, 2009 at 4:30 am

Interest rate is not the price of money. Interest rate is the price of time.

Price of money is the ratio of goods to money. Everthing has one money price, but money as billions of prices because there are billions of goods and services that trade against money.

The main effect of the change of supply or demand for money is on the purchasing power of money. Its effect on interest rates are secondary effects.

Because people save time in the form of money, a change in moneys supply (or demand), mimics a change in the price of time when there really isn’t one.

If the supply of money increases while demand stays the same this gives a false signal that price of time came down.

And that is the main reason bubbles get started.

Timothy foster January 10, 2009 at 4:49 am

“Niccolo
I really don’t understand this whole aversion to monetary equilibrium.”

I thought that the main reason that Austrians don’t like the FED/dollar is because they are a government monopoly, not because of monetary equilibrium.

If the fed was only a private industry (no government intervention) than it would be perfectly fine. It’s the lack of competition that makes “monetary equilibrium” impossible.

Inquisitor January 10, 2009 at 5:15 am

The interest rate is just an intertemporal price. Ktibuk has already noted this. It has no conceptual link with money (something Austrians demonstrate by recourse to the ERE, where money is unnecessary.) However, the way the money supply is increased is by credit expansion this gives the illusion of an expanded supply of credit.

Grant January 10, 2009 at 2:53 pm

I second what Niccolo is saying. When the demand for money increases (as it has lately), banks should meet that demand (under free banking they’d even have the incentive to do so). This is NOT the same thing as expanding credit. If banks oversupply this demand, we get credit expansion. If they undersupply it, we get credit contraction (e.g., the great contraction).

The Fed has the dual mandate to maintain stable prices and full employment, goals which are impossible to meet without credit expansion. I’m not trying to defend the Fed here, but I think it could actually do a decent job without those silly mandates.

newson January 10, 2009 at 7:34 pm

to grant:
banks are currently meeting the demand for money (ie. cash); the monetary authorities have forestalled any runs.

regarding the fed charter, of course the macro goals are silly, but allow maximum room to manoeuvre, so are sensible when viewed through the political prism.

in the good old days of the deutschmark, the bundesbank’s charter was to preserve the purchasing power of the currency. not for no reason was the mark one of the world’s favourite hard currencies.

ktibuk January 11, 2009 at 4:12 am

If the demand for money increases of course the supply would try to increase and meet the equilibrium point.

The question is who would be the suppliers. If it is a government monopoly or government mandated cartel this is what we get.

If we are talking about a free market money like gold, if the demand increases this means the purchasing power of gold would increase. And while this helps toward a new equilibrium point it also gives incentives to miners to dig and increase the supply of money to meet the demand.

Gil January 11, 2009 at 4:31 am

But ktibuk how exactly is money increase ‘demanded’? The two supplies of money is either some sort of credit or a commodity. The inevitable complaint against a credit system is that the creation of the credit is usually very small and the temptation towards hyperinflation is high. Whereas the commodity version is based on the ability of the commodity being rare enough in itself. Are gold miners fulfilling demand for more money (if gold weights were money) or are they looking for ‘free’ or ‘found’ money and don’t really caring what the value of an ounce of gold really is? If gold miners could find huge veins of gold such that the equivalent of high end inflation would they really care as they are getting the immediate purchasing power?

Nonetheless my mind blows a fuse trying to conceive the fact that gold atoms can only come into existence in large quantities via supernovae. 8(

Brian Macker January 11, 2009 at 8:27 am

“I really don’t understand this whole aversion to monetary equilibrium.”

It’s apparent that you don’t. That’s not a crime. I think from your other statements you are indeed having problems understanding certain aspects of economics.

“It seems that many “Austrians,” at least at the LVMI, understand equilibrium in everything except for money.”

This seems like a confused statement to me. Do “Austrians” at LVMI understand equilibrium in “everything”? Hard to tell because these are ambiguous words. I guess by everything you mean quantities of goods, supplies, because you mention that in your next paragraph. By “understand” do you mean desire? If that’s the case then the answer is NO they don’t.

You need to slow down and pick your words more carefully. Sometimes our confusion lays in the words we choose. If we choose words that have multiple meanings and switch between those meanings in a conversation we can talk past each other, or become confused ourselves.

I can’t tell what you mean by some of these words. By “understand” do you mean “agrees with me”. If so then how are we suppose to know what you think?

Regardless of what you mean I think you are mistaken. No Austrians do not desire the quantities of goods to reach an equilibrium. In fact, Austrian economics is based on the understanding that the world changes, conditions change and therefore an economic system is not going to reach equilibrium and trying to force it to is a BAD thing.

The reason it is BAD is that the whole point of not reaching equilbrium is to adjust to the changing conditions.

When you are driving down the road you certainly don’t want to reach equilibrium in your speed and direction. Otherwise you’d crash into a tree. You need to adjust to the changing conditions as you drive.

Likewise, the economy needs to be able to adjust to changes in conditions. Everything from weather changes, to new discoveries, to crop failures, all need to be adjusted for. Even changes in individual desires need to be adjusted for.

The price system is exactly the mechanism by which that occurs.

“When the demand for money increases, supply should increase with it to maintain that equilibrium and prevent monetary distortions in the price of goods.”

What do you mean by “demand for money” in this sentence? How do you measure this?

I know what I mean by an increase in a demand for money, and do not for a minute think that such an increase would cause “monetary distortions”. So I assume you are talking about something else. Are you assuming that prices should reach some sort of equilibrium and that any changes in prices are “distortive”?

As a matter of fact it is extremely important that prices be allowed to change in a free market. Prices send signals throughout the system and attempts to suppress such signals are disruptive to interpersonal plan coordination.

Money serves a different purpose than other goods in an idealized economic system. It is a medium of exchange. In so far, and to the extent that a commodity serves as money, it is not just like another good. Any increase in the demand for a medium of exchange can be served by a decrease in prices.

That you’ve bought into this idea that “prices are sticky” is also an intellectual hurdle for you. If this were true then they couldn’t serve their purpose in an economy, regardless of what you do. How do you determine which prices are sticky and how do you only effect those prices in your monetary interventionism? I would have a whole bunch of other questions and facts for you that should change your mind about “sticky prices” but I don’t want to drown you with them if you are willing to abandon this fallacy.

“That is not to say that banks – I don’t think central banks like the Fed should exist – should target the prices of other goods, as monetarists tend to mistake it, but that banks should target monetary prices. “

This is a befuddling sentence too. I’ll strip it down to “Banks should target monetary prices”. What exactly do you mean by “monetary prices” and how to do propose that banks measure this? Furthermore, without a central banks (and a fiat currency), how do you propose that banks, working individual, do this without going bankrupt? Why would any individual bank even have an incentive to operate this way? Where’s the profit?

Seems to me that you are trying to solve a non-problem with a non-solution.

My understanding is that increasing demand for money should cause a drop in prices and that does send important signals through the system that should not be suppressed.

The change in prices serves multiple purposes two of which are: 1) Adjusting the price structure to the quantity of goods traded. 2) Adjusting the price structure to temporary changes in the demand for savings, and other fluctuating demands.

The monetarists seem to think that you need to increase the money supply to keep up with increases in productivity, and population. That however is handled just fine by 1) above. The problem the monetarists face that the Austrians don’t is where to inject this new money without distorting the price structure, and how much to inject. The answer is that they can’t do so, and have no way of knowing how much to inject.

The free market, on the other hand, has a way. It can move between different commodity moneys. If platinum is literally to scarce to use as money then the market will move to gold, if gold to scarce then silver, if silver to scarce, then copper, if copper to scarce, then zinc.

There is no problem to “solve” here.

The true problem is fraudulent fractional reserve banking. That’s the source of our problems and the solution is to get rid of it.

This is merely a case of misidentification of the true source of the symptoms that people find objectionable. Fractional reserve monetary deflations happen rapidly, and expose distortions caused by fractional reserve monetary inflations.

These symptoms are not caused by a fixed money supply being unable to keep up with productivity increases. So it is a terrible mistake to think that inflating the money supply via a fiat mechanism will solve them.

Instead it merely provides a infrastructure for the politicians to fund their fool hardy projects and divert resources (steal) for themselves and their supporters.

Brian Macker January 11, 2009 at 9:26 am

Inquisitor,

“The interest rate is just an intertemporal price.”

Not true. The interest rate consists of multiple components of which the “time cost of money” is but one. Interest rates also reflect “risk” and “price inflation”.

Since increasing the money supply has an effect on prices it will indeed effect the interest rate. Interest rates go up during price inflationary periods.

“I don’t think it’s fair to say Friedman was a parasite or did nothing for liberty. Intellectually speaking, he did a lot, whatever his failings.”

I agree. He’s better than 99% out there.

Niccolo,

“What you’re talking about with interest rates is just that, interest rates. That doesn’t really have much to do with the physical increase in the supply of money.”

He’s right to the extend that the increase in the suppy of money increases prices above what they would be and therefore causes a relative increase in interest rates.

cavalier973,

If demand for money rose, then the price of money (the interest rate) would rise, giving incentives to some people to save rather than spend, thus increasing the money’s supply.

I agree with the others, I don’t see how it could be correct to refer to interest rates as “the price of money”. I’m not sure “the price of money” means anything. Prices are set in terms of money.

Again, I’ll point this out to you also, make sure you are using this phrase “demand for money” in a way you can clearly state. Otherwise you will not be able to communicate with others or think clearly. 1) Do you mean an increase in the demand for money due to an increase in the need for a medium of exchange? 2) Do you mean an increase in the demand to hold cash for the purpose of a store of value? Do you mean something else?

I’m thinking that by “demand for money” you mean demand from borrowers for loans. This is a completely different concept than others talk about when speaking of a demand for money.

I think that the “Demand for Money” concept is a bad one to use if you wish to think clearly. It lumps together way to many things, causes and effects, into one phrase. So I think the entire discussion is flawed. The phrase will not lead to a fruitful understanding of economics.

The phrase leads to equivocation, a fallacy in thinking where you get confused about what is being discussed and misapply logic. Here’s an example.

“A feather is light.
What is light cannot be dark.
Therefore, a feather cannot be dark.

Certainly, and increase in demand from borrowers will cause an increase in interest rates and lead incentives for savers, like you say. Borrowers are only going to demand more loans if they have judged that they have plans which makes the payments worth less than the immediate cash, to them. This will only happen if they can find a saver who sees things in reverse. So it’s a win-win trade for both the new borrowers and the new savers, where they trade freely.

But the phrase “Increase in Demand” includes a whole host of other things that have nothing to do with lending or borrowing. “Demand for money” theory is also called “liquidity preference” theory, and is straight Keynesianism. It’s not restricted to the demand for loans. So of course when you start using terms of theory from an incorrect theory you are going to be in trouble from the start.

Brian Macker January 11, 2009 at 9:33 am

BTW, I also dislike using the terms inflation and deflation in discussions about economics for the same exact reason that “demand for money” is bad. It leads to equivocation.

There are many different kinds of deflation, with different causes, likewise inflation. There are two broad categories for both price and monetary. But there are further subdivisions that are extremely important which include but are not limited to fiat, fractional reserve, commodity, productivity, etc.

You just cannot talk intelligently about an economic system if you confuse monetary inflation with price inflation, productity price deflation with fractional reserve price deflation, fiat monetary inflaiton with fractional reserve monetary inflation, etc.

Each is different and has different causes and effects. They have differences in benefit and harm. They have differences in rapidity of occurence.

shaneinwy January 11, 2009 at 10:42 am

We all know that Krugman is a better political lapdog than economist. I am not all that surprised to see him attacking the percieved leader of “free markets” and “capitalism”, particularly given the future political climate.

Regarding Friedman, I am luke-warm. As I understand, his contributions to economics consisted of little more than dusting off bottles of long buried Austrian wisdom and placing a “Made in Friedmanland” label on them, thus making them palatable to the ignorant or “eco-centric”.

Regarding the question posed by Niccolo, maybe someone can elaborate/correct me, I beliee that Mises held the position that there is no such thing as “equillibrium” in a current or future sense. One may easily deduce what would constitute equillibrium at any given point in history, but this is merely a reflection of how things should have been at that point in history and is in no way reflective of current or future circumstances. The problem of defining equillibrium in a policy sense is no different than the problem of resource allocation in a non-market setting. The information necessary is not available until it is too late to be useful and even if it were available, there is no way for one person or any group of people to
A) gather said data, and
B) make sense of it before it becomes a mere snapshot in time.

As I understand, equillibrium is little more than a thinly veiled excuse for central planning. The decision of what constitutes “equillibrium” is a necessarily arbitrary call.

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