SMP: Knowledge Problem in Central Banking: Part II

La segunda parte del comentario sobre problema del conocimiento en la banca central.

The previous post presented Hayek’s knowledge problem in the context of the economic calculation debate under socialism. We discussed the distinction (sometimes overlooked) between information and knowledge . To sum up, information is objective data such as quantities and prices. As a qualitative concept, information can be complete or incomplete. Knowledge is subjective data interpretation. As a qualitative concept, it is neither complete nor incomplete.

This distinction is not only key to understanding the Mises-Hayek argument against socialism, but it is also important in understanding where the central banking knowledge problem falls. Socialism deals with both information and knowledge problems, but central banks deals mainly with knowledge problems, including lack of competition, the big player effect, and the rule of law vs. the rule of experts.

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