Friedrich August Hayek Austria-Hungary 1899-1992

F.A. Hayek Economist & philosopher Classical free-market capitalism Austrian school of political economy where changing prices communicate signals which enable individuals to make plans. Nobel Prize winner 1974 1991 received US Presidential Medal of Freedom from G.H.W. Bush F.A. Hayek

Hayek v. Keynes Seven years after the onset of the British Great Depression, which began in 1925, Hayek suggested that private investment in the public markets was a better road to wealth and economic coordination in Britain than government spending programs, as argued in a letter he co-signed with Lionel Robbins and others in an exchange of letters with John Maynard Keynes. The global Great Depression formed a crucial backdrop against which Hayek formulated his positions, especially in opposition to the views of Keynes. Hayek claimed that: “The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process. In accordance with arguments outlined in his essay The Use of Knowledge in Society, he argued that a monopolistic governmental agency like a central bank can neither possess the relevant information which should govern supply of money, nor have the ability to use it correctly.”

Fear the Boom & Bust SING ALONG We’ve been going back and forth for a century [Keynes] I want to steer markets, [Hayek] I want them set free There’s a boom and bust cycle and good reason to fear it [Hayek] Blame low interest rates. [Keynes] No… it’s the animal spirits