'..the knowledge of individual actors in the economy is widely dispersed, highly situational and local, and often tacit (i.e., non-verbal). It is simply impossible for a central planning body to even acquire this knowledge. Mises in turn had shown that even if it were possible for the planners to acquire this knowledge, they would not know what to do with it .. If the central planners try to resist the downside like we think they will, it’ll take a generation – or two – to purge the rot from the system.''In 1945 F.A. Hayek published his famous essay
“The Use of Knowledge in Society”. The argument had ripened in the course of the debates he and Lionel Robbins had with representatives of “market socialism” and “trial and error socialism” like Oskar Lange, Henry Dickinson and Fred Taylor in the 1930s. As Hayek argued, the knowledge of individual actors in the economy is widely dispersed, highly situational and local, and often tacit (i.e., non-verbal). It is simply impossible for a central planning body to even acquire this knowledge. Mises in turn had shown that even if it were possible for the planners to acquire this knowledge, they would not know what to do with it. The central problem of socialism was already made clear by Mises in his essay on the calculation problem: once prices for the factors of production no longer exist, economic calculation becomes impossible.
What central planners of all stripes discount is that an economy is made up of individuals, with individual preferences. In China’s case, the economy is made up of over a billion individuals. On any given day, these billion individuals will make thousands of discrete choices. .. The wisdom of bureaucrats is no substitute for market pricing.
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The Chinese yuan (or renminbi) .. has entered a downtrend in late 2014 – incidentally, precisely at the point in time when the US stock market’s
internals peaked, along with the Dow Transportation Average. This is not a coincidence..
Decades of green growth have ripened. Now, just like Kroc said it would, the growth is rotting. A yuan devaluation of 30 percent – or more – could transpire over the next six months. If the central planners try to resist the downside like we think they will, it’ll take a generation – or two – to purge the rot from the system.
- Acting Man,
China’s $6.6 Trillion Toxic Loan Problem, February 6, 2016
Context '..deflationary impacts..''..subjective knowledge treats knowledge as being tacit, private, subjective, and decentralized..'(Haptopraxeology) - Affective Human Action '..even from within the maternal womb.' (economics)'A multi-decade Credit Bubble is coming to an end .. It’s reminiscent of the buildup to the 2008 market crash..''Central banks in Japan, the U.S. and Europe tried multiple rounds of QE. That none of these programs were any more successful than their predecessors also points to empirical evidenced failure..''China now is a lot like Japan was in the 1980s, says Shilling..''..the Chinese government will simply let the debt party go on until it eventually collapses..''..A tightening of financial conditions portends Credit problems way beyond energy and mining..''The Chinese geopolitical reality is that it is an isolated country that is also deeply divided internally..''..Credit, inflationism and resulting central bank-induced monetary disorder.''..central bankers have blown the biggest equity and junk bond market bubbles in history..''..not only Brazil is in crisis, but also Russia, and that China is in troubled waters..''..the economic analysis of the necessary consequences of intervention in the free market by bank credit expansion.'