I had the privilege of meeting Friedrich von Hayek twice. He was a brilliant man.
In 1986, Gary North and I met with Hayek in his summer home in the Austrian Alps.
We discussed what made “Austrian” economists so different from the rest of the economics profession.
He noted that he and Ludwig von Mises, his mentor, had predicted the 1929 Crash and 1930s Depression, while eminent economists John Maynard Keynes and Irving Fisher had not. Keynes and Fisher had not thought there was any inflation in the 1920s — commodity and consumer prices were stable.
On the other hand, the Austrians (Hayek and Mises) always look beyond macro aggregate statistics and break the economy down into “micro” sectors. They noted that there was inflation in the stock market, real estate and industrial sectors.
I was able to use the Austrian model to predict the 1987 Crash and to get my subscribers out of the market six weeks before Black Monday, October 19, 1987 (my 40th birthday!).
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