I believe that markets move in and out of balance on varying temporal horizons naturally. They overshoot and undershoot but become excessive in nature in a systemic way only when they are deliberately distorted.
Intervention in or manipulation of markets by the state is such a distortion. Its acts postpone the day of reckoning for years or even decades. It creates (a) false sense of equilibrium that ultimately gives way to disequilibrium and heightened instability. We have not experienced free markets — that is, the invisible hand — for decades. The recent failure of markets to predict uncertainty was not a failure of free markets but a failure of fiat money and socialism.
Ben Davies, CEO – Hinde Capital, London.
Fall Dinner Meeting of the Committee for Monetary Research and Education
Union League Club, New York
Thursday, October 21, 2010
Quoted in full at No Quarter
The whole speech is worth your time.