This view that the action of the Federal Reserve authorities in 1927 was responsible for the speculation and collapse which followed has never been seriously shaken. There are reasons why it is attractive. It is simple, and it exonerates both the American people and the economic system from substantial blame... Yet the explanation obviously assumes that people will always speculate if only they can get the money to finance it. Nothing could be farther from the case. There were times before and there has been long periods since when credit was plentiful and cheap -- far cheaper than in 1927-29 -- and when speculation was negligible. Nor was speculation out of control after 1927, except that it was beyond the reach of men who did not want in the least to control it. The explanation is a tribute only to a recurrent preference, in economic matters, for formidable nonsense.
John Kenneth GalbraithRelated topics
action authorities beyond blame case cheap control credit far federal men money nor nothing reach simple speculation substantial times view yetRelated quotes
The proof of the pudding is in the eating. There was a widespread myth of the 1970s, a myth along Tom Kuhn's (1962) Structure of Scientific Revolutions lines. The Keynesianism, which worked so well in Camelot and brought forth a long epoch of price-level stability with good Q growth and nearly full employment, gave way to a new and quite different macro view after 1966. A new paradigm, monistic monetarism, so the tale narrates, gave a better fit. And therefore King Keynes lost self esteem and public esteem. The King is dead. Long live King Milton!
Contemplate the true facts. Examine 10 prominent best forecasting models 1950 to 1980: Wharton, Townsend–Greenspan, Michigan Model, St. Louis Reserve Bank, Citibank Economic Department under Walter Wriston's choice of Lief Olson, et cetera. ... M did matter as for almost everyone. But never did M alone matter systemically, as post-1950 Friedman monetarism professed.
Paul Samuelson
...yet we are told that this great nation, with such a record of splendid achievements in the past and in the present, is unfit to make its own laws, is unfit to control its own finance, and that it is to be placed as if it were a nation of children or lunatics, under the tutelage and guardianship of some other body-and what body? Who are the guardians of this mighty people? Who are they? With all respect, I shall have to make exceptions; but I am speaking of them as a whole. ... They are men who have neither the training, the qualifications, nor the experience which would fit them for such a gigantic task. They are men whose sole qualification-speaking in the main, and for the majority of them-they are simply men whose sole qualification is that they are the first born of persons who had just as little qualification as themselves.
David Lloyd George
Keynes didn't make an all-out assault on Economic Man, but he often resorted to plausible psychological theorizing rather than careful analysis of what a rational decision-maker would do. Business decisions were driven by "animal spirits,” consumer decisions by a psychological tendency to spend some but not all of any increase in income, wage settlements by a sense of fairness, and so on.
But was it really a good idea to diminish the role of Economic Man that much? No, said Friedman, who argued in his 1953 essay "The Methodology of Positive Economics” that economic theories should be judged not by their psychological realism but by their ability to predict behavior. And Friedman's two greatest triumphs as an economic theorist came from applying the hypothesis of rational behavior to questions other economists had thought beyond its reach.
Paul Krugman
By straying from the text of the Constitution, substantive due process exalts judges at the expense of the People from whom they derive their authority. Petitioners argue that by enshrining the traditional definition of marriage in their State Constitutions through voter-approved amendments, the States have put the issue 'beyond the reach of the normal democratic process'. But the result petitioners seek is far less democratic. They ask nine judges on this Court to enshrine their definition of marriage in the Federal Constitution and thus put it beyond the reach of the normal democratic process for the entire Nation. That a 'bare majority' of this Court is able to grant this wish, wiping out with a stroke of the keyboard the results of the political process in over 30 States, based on a provision that guarantees only 'due process' is but further evidence of the danger of substantive due process.
Clarence Thomas
[On the attendees at the launch of Apollo 11] Those people were not a stampeding herd, nor a manipulated mob; they did not wreck the Florida communities, they did not devastate the countryside, they did not throw themselves, like whining thugs, at the mercy of their victims - they did not create any victims. They came as responsible individuals able to project the reality of two or three days ahead, and to provide for their own needs. There were people of every age, creed, color, educational level and economic status. They lived and slept in tents, or in their cars, some for several days, in great discomfort and unbearable heat; they did it gamely, cheerfully, gaily; they projected a general feeling of confident goodwill, the bond of a common enthusiasm; they created a public spectacle of responsible privacy - and they departed as they had come, without benefit of press agents.
Ayn Rand