Why Does Mike Maples Say Free Markets Work?

On Below the Line with James Beshara, Mike Maples says free markets work because they allocate capital and resources dynamically and correctly, without a central authority setting the price. Prices tell producers whether to make more or stop, and they tell consumers whether to buy more or stop. If the market-clearing interest rate would be 6 percent and the Federal Reserve sets it at 2 percent, he says, borrowing is artificially cheap and the low rate creates perverse incentives. He compares that to the government picking an arbitrary price for a drink and getting the wrong amount made. Money, he argues, is the most important price in the economy, and it is one we do control.