Wednesday, April 11, 2012

Governments Banking and a Famous Hayek Quote

Below is from a Tyler Cowen post:

5. Mind-numbing debates over banking, and a response from Krugman, and Nick Rowe.
It reminds me that our monetary and banking system is a great example of the famous Hayek quote:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
Back when Governments took over the monetary system even the experts did not understand much about it. Yet a government takeover in a democracy puts the monetary system under the control of the median voter. Yet the experts in the post do not completely agree.

In free banking even the bankers do not need to understand the system as a whole, with a Government controlled central bank the median voter needs to understand the Monetary system as a whole. How could that every work well?

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