Hayekian

Except to Hayekian fanatics, it seems obvious that the coordinated global stimulus of 2009 stopped the slide into another Great Depression.

Although Keynes focused on investment, not pricing decisions, the beauty contest analogy implicitly refers to the same key elements that govern departures from the Hayekian benchmark: forward-looking investment decisions which require agents to forecast future market conditions, complementarities that introduce a need to forecast other investors’ expectations, and the focus on stock markets in which there tends to be a significant and persistent common value component.

One morning in April, the S&P 500 jumped 6% after a viral rumour that Trump’s tariff policy was being paused – a rumour the Financial Times traced back to a pseudonymous X user named Walter Bloomberg, based in Switzerland, with no offline credentials whatsoever. A Hayekian might point out that the error was quickly corrected – the market dropped 6% again within the hour – but this was a manifestly stupid turn of events.