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(LRC) — Mostly we get lies, spin and obfuscation from central bankers, politicians and bureaucrats. But every once in a while, one of these people accidentally wanders into the truth.

IMF Director Kristalina Georgieva did just that during a recent panel discussion hosted by CNBC. She conceded that central banks globally “printed too much money and didn’t think of unintended consequences.”

I think we are not paying sufficient attention to the law of unintended consequences. We take decisions with an objective in mind and rarely think through what may happen that is not our objective. And then we wrestle with the impact of it.

“Take any decision that is a massive decision, like the decision that we need to spend to support the economy. At that time, we did recognize that maybe too much money in circulation and too few goods, but didn’t really quite think through the consequence in a way that upfront would have informed better what we do.”

How this economic brain trust missed failed to consider that injecting trillions into the economy would cause prices to rise is a bit of a head-scratcher. This is economics 101. Expanding the money supply pushes prices higher than they otherwise would be. I knew this would happen. Peter Schiff knew this would happen. Heck, you probably knew this would happen. But the people charged with running the global economy didn’t?

These people are either wildly incompetent, or they are lying to you.

Either way, they are “bad economists” as defined by Frédéric Bastiat.

Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee.”

Good on Georgieva, I guess. They say admitting your problem is the first step on the road to recovery. So, you might think this confession is a step forward. But I assure you, it’s not. The ego, arrogance, and hubris that make these people think they can micromanage the global economy remain firmly in place. They just think they need to try a little bit harder.

Although Georgieva admits a mistake, the rest of her comment reveals she hasn’t learned the lesson.

We act sometimes like eight years old playing soccer. Here is the ball, we are all at the ball. And we don’t cover the rest of the field.

“Our ability to deal with more than one crisis at one time is very, very limited. and we have to zero in on the really big things that could determine the future and keep our attention on them.”

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Basically, she’s saying, “Oops! Our bad! We messed up because we didn’t consider the unintended consequences. But we’re going to do better next time because our focus is going to be right on point.”

Georgieva, Powell, Biden, LaGarde, and the whole lot of these central planners don’t understand that it is impossible for them to take into account all of the unintended consequences of a given policy prescription. That’s why central planning is always doomed to failure.

Economist F.A. Hayek got to the root of the problem in his seminal paper,  “The Use of Knowledge in Society.” In a nutshell, Hayek concluded that central planning will always fail because it is impossible for the central planners to possess all of the information necessary to factor in all of the ramifications of any given policy.

The knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”

Or as FEE put it in its introduction to Hayek’s work:

Hayek points out that sensibly allocating scarce resources requires knowledge dispersed among many people, with no individual or group of experts capable of acquiring it all.”

Simply put, unintended consequences are inevitable in central planning. No matter how hard the central planner try, they are going to miss stuff. No matter how smart an individual or a group of individuals might be, they don’t have all of the knowledge they need. They can’t have it. It’s impossible.

The problem is that people like Georgieva don’t understand this. They they their crew is smart enough, wise enough and that they care enough to get the job done. If the make a mistake, they just need to try harder.

And that’s where they’re wrong. They need to quit trying, get out of the way and let the market function.

Reprinted with permission from SchiffGold.com.