Abstract
Inherent ignorance of and uncertainties about the future may translate into doubts about the overall viability of market mechanisms. However, these doubts are quelled by a broad empirical observation: market economies thrive. Hayek sometimes abstracted from such ignorance and uncertainties in order to identify the market mechanisms that are essential to thriving economies. His often-overlooked “interest-rate brake,” for instance, keeps the rate of implementation of new technologies in line with peoples willingness to save. A careful reading of macroeconomic history suggests that artificial booms often ride piggyback on genuine booms. During a period of technological breakthroughs, the central bank's adherence to the Real Bills Doctrine overrides the interest-rate brake and engenders an unsustainable boom.
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Garrison, R.W. From Keynes to Hayek: The marvel of thriving macroeconomies. Rev Austrian Econ 19, 5–15 (2006). https://doi.org/10.1007/s11138-006-6091-y
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DOI: https://doi.org/10.1007/s11138-006-6091-y