Can anyone point me to a passage in which Mises argues that central banks cannot have sufficient information to appropriately set interest rates?
I’m thinking that might be more of Hayek’s line, e.g. Fatal Conceit.
Yes, a Hayek passage would work too…
Not what you asked for but I post anyway…
Garrison reviews a book about Greenspan’s legacy.
At times, however, Greenspan’s worries about the sustainability of the boom seem to have a distinct Austrian flavor. Using “bubble” to mean an unsustainable boom, Woodward summarizes Greenspan’s thinking: “There is no rational way to determine that you were in a bubble when you were in it. The bubble was perceived only after it burst…” (p. 217). Could he mean by this that, in an environment of central-bank activism, there is no way of knowing what the natural rate of interest is? What would the market-clearing interest rate be if the Fed weren’t intervening? And how could we know, except by watching the economy experience boom and then bust, that the Fed’s current interest-rate stance is too tight, too loose, or just right? The Austrians can see why Milton Friedman’s quip is about right: The Fed’s policy lag is about half a business cycle (p. 115).
Thanks, nir. I went ahead and used an application of Hayek’s principle by Doug French.