Today is Friedrich Hayek’s birthday and it is an important year to celebrate his birth. Although the twentieth century was the century of Hayek, this year seems also to be the year of Hayek. As a country, we are belatedly remembering his warnings, and seeing the consequences of ignoring them for so long.
Hayek explained many years ago the problems with centralized monetary policy, over-regulation and interference with prices. He understood the danger of subsidizing risk and loss and feeding a boom with easy money.
He also understood that markets are a process, and the process is one of learning and discovery—for this reason, financial models that are uniformly imposed and expect perfect information are doomed to fail.