Cryptocurrency: Banks and Politicians Will Always Fail at Policy

[grarpamp]

Because they will always have low knowledge and
are unnaturally meddling in natural market forces
that are far greater than them...


Oops! Our Bad! IMF Director Admits "We Printed Too Much Money"

https://fee.org/articles/the-use-of-knowledge-in-society

https://schiffgold.com/commentaries/oops-our-bad-imf-director-admits-we-printed-too-much-money/

Mostly we get lies, spin and obfuscation from central bankers,
politicians and bureaucrats. But every once in a while, one of these
people accidentally wanders into the truth.

IMF Director Kristalina Georgieva did just that during a recent panel
discussion hosted by CNBC. She conceded that central banks globally
“printed too much money and didn’t think of unintended consequences.”

    I think we are not paying sufficient attention to the law of
unintended consequences. We take decisions with an objective in mind
and rarely think through what may happen that is not our objective.
And then we wrestle with the impact of it.

    “Take any decision that is a massive decision, like the decision
that we need to spend to support the economy. At that time, we did
recognize that maybe too much money in circulation and too few goods,
but didn’t really quite think through the consequence in a way that
upfront would have informed better what we do.”

How this economic brain trust missed failed to consider that injecting
trillions into the economy would cause prices to rise is a bit of a
head-scratcher. This is economics 101. Expanding the money supply
pushes prices higher than they otherwise would be. I knew this would
happen. Peter Schiff knew this would happen. Heck, you probably knew
this would happen. But the people charged with running the global
economy didn’t?

These people are either wildly incompetent, or they are lying to you.

Either way, they are “bad economists” as defined by Frédéric Bastiat.

    Between a good and a bad economist this constitutes the whole
difference — the one takes account of the visible effect; the other
takes account both of the effects which are seen, and also of those
which it is necessary to foresee.”

Good on Georgieva, I guess. They say admitting your problem is the
first step on the road to recovery. So, you might think this
confession is a step forward. But I assure you, it’s not. The ego,
arrogance, and hubris that make these people think they can
micromanage the global economy remain firmly in place. They just think
they need to try a little bit harder.

Although Georgieva admits a mistake, the rest of her comment reveals
she hasn’t learned the lesson.

    We act sometimes like eight years old playing soccer. Here is the
ball, we are all at the ball. And we don’t cover the rest of the
field.

    “Our ability to deal with more than one crisis at one time is
very, very limited. and we have to zero in on the really big things
that could determine the future and keep our attention on them.”

Basically, she’s saying, “Oops! Our bad! We messed up because we
didn’t consider the unintended consequences. But we’re going to do
better next time because our focus is going to be right on point.”

Georgieva, Powell, Biden, LaGarde, and the whole lot of these central
planners don’t understand that it is impossible for them to take into
account all of the unintended consequences of a given policy
prescription. That’s why central planning is always doomed to failure.

Economist F.A. Hayek got to the root of the problem in his seminal
paper,  “The Use of Knowledge in Society.” In a nutshell, Hayek
concluded that central planning will always fail because it is
impossible for the central planners to possess all of the information
necessary to factor in all of the ramifications of any given policy.

    The knowledge of the circumstances of which we must make use never
exists in concentrated or integrated form, but solely as the dispersed
bits of incomplete and frequently contradictory knowledge which all
the separate individuals possess.”

Or as FEE put it in its introduction to Hayek’s work:

    Hayek points out that sensibly allocating scarce resources
requires knowledge dispersed among many people, with no individual or
group of experts capable of acquiring it all.”

Simply put, unintended consequences are inevitable in central
planning. No matter how hard the central planner try, they are going
to miss stuff. No matter how smart an individual or a group of
individuals might be, they don’t have all of the knowledge they need.
They can’t have it. It’s impossible.

The problem is that people like Georgieva don’t understand this. They
they their crew is smart enough, wise enough and that they care enough
to get the job done. If the make a mistake, they just need to try
harder.

And that’s where they’re wrong. They need to quit trying, get out of
the way and let the market function.