Newsweek Praises Hayek. Something to cheer or the kiss of death?

Cassandra Syndrome

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We are learning the hard way yet again that Friederich Hayek was right in his macroeconomic model of gradual savings induced growth as opposed to the standardised Keynesian short term borrow and spend and binge to the day you die model.

This time we have arrived at a situation that debt has become mathematically impossible to service and currencies are on the brink of an outbreak of hyperinflation (or even chronic deflation). Will it be a case of "must do is a good master" and the elite will have to throw in the towel and admit defeat or will the statist continue this charade to the point of wiping out or civilisation?

The problem with Hayek's model is that its not very bureaucratic and statist friendly, so what policy maker is going to be a martyr and implement it for the good of the people?

Last year the consensus opinion was that we are all Keynesians now. Virtually everyone in the commentariat believed that John Maynard Keynes’s solution for the Great Depression—heavy government spending to resuscitate the economy—was also the answer to today’s global downturn. The first cracks in the consensus appeared with the outbreak of the fiscal crisis in Greece earlier this year. Across the developed world, critics began to argue that government spending had reached the point of diminishing returns, and was producing an anemic recovery that mainly benefited special-interest groups. And the electorate listened. From Europe to the United States, as voters started to reward candidates focused on fiscal discipline and less government intervention, Keynesianism quickly fell out of favor.

One key exception was U.S. Federal Reserve chairman Ben Bernanke. Dissatisfied with the gradual recovery and a high unemployment rate, he let it be known that he thought more stimulus was in order, and realizing that was not in the congressional cards, he decided to take monetary activism to a new level by offering an open-ended commitment to pump as much money into the system as required to meet the Fed’s dual mandate of maximum employment and price stability
In a sign of the times, some of the most popular videos on YouTube this year are satires on economic policy; the latest lampoons the Fed amid a growing feeling that policymakers are committing what economist Friedrich Hayek called the “fatal conceit” in micromanaging the economic cycle. Hayek hated policy intervention of any kind. Keynes, Friedman, and Hayek were leading lights of the three most influential schools of economic thought of the last century. Hayek was associated with the Austrian school, ascendant in the 19th and early 20th centuries, which argued that the private sector should be left free to carry out the task of any readjustment in a downturn. Faith in the market’s purging power served the U.S. well in the 19th century, when the economy emerged stronger after each recession, but was taken too far in the policy mix of tight money and high taxes that led to the Great Depression and the rise of the Keynesians.
The systematic perversion of Keynes’s and Friedman’s thought is now resulting in a fall in their fortunes, leaving Hayek triumphant, once again.
A Return to Economist Friedrich Hayek's Ideas - Newsweek

Newsweek recently rated Cowen the 5th best leader in the world.

However this is a well written article and it is great to see Hayek being mentioned in the mainstream (the Economist magazine mentioned him for the very first time a couple of weeks ago), but these magazines have lost so much creditability, have they jinxed the rise of this genius?
 


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