From Desai's article:
- "All this is so old-fashioned that it has been forgotten. On the eve of the Keynesian Revolution, Hayek was warning of mal-investments induced by the market rate of interest being below the natural rate for any length of time. This was the Wicksell model, tweaked by Ludwig von Mises and Hayek to accommodate bank credit in the Walrasian framework. It flopped spectacularly in the 1930s and was forgotten. But good ideas never die in economics. They only wait till their time comes. This is Hayek’s time.
- Sadly, in Hayek as in Marx, economics is not a policy science and there are no tool kits to fix the problem. Time will restore the equilibrium perhaps not at the old trend but a new one. When that will happen is not within economists power to predict. Just wait and see."
But it clearly shows that Mr Desai is confusing what Wicksell or for that matter Walrasian argued with that of Hayek and Mises views on regulating rate of interest at particular level in an economy. The underlying truth is that Mr Desai never got it right the original arguments of Hayek and Mises. Rather he always looks at them through the wild eyes of Keynes!