Taking Hayek Seriously

The Bottomless Ignorance of Jeffrey Sachs & Paul Krugman

As pointed out by an endless stream of leading academic specialists, Jeffrey Sachs & Paul Krugman are constantly making false and deeply ignorant claims about Friedrich Hayek and his work.

The latest false and ignorant claims of Jeffrey Sachs and Paul Krugman can be found in “Masters of Money – Friedrich Hayek” presented by Stephanie Flanders on the BBC.

Here is Hayek’s clearly stated view:

“I agree with Milton Friedman that once the [1929] Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation. So, once again, a badly programmed monetary policy prolonged the depression.”

F. A. Hayek, interviewed in 1979, from Conversations with Great Economists: Friedrich A. Hayek, John Hicks, Nicholas Kaldor, Leonid V. Kantorovich, Joan Robinson, Paul A.Samuelson, Jan Tinbergen by Diego Pizano.

“I think it is certainly true that ending an inflation need not lead to that long-lasting period of unemployment like the 1930s, because then the monetary policy was not only wrong during the boom but equally wrong during the Depression. First, they prolonged the boom and caused a worse depression, and then they allowed a deflation to go on and prolonged the Depression.”

F. A. Hayek, interviewed in 1977

In “Masters of Money” Sachs and Krugman flatly and falsely say that Hayek denied what he directly asserts just above.