“The theory of economic shock therapy relies in part on the roleof expectations on feeding an inflationary process. Reining in inflation requires not only changing monetary policy but also changing the behavior of consumers, employers and workers. The role of a sudden, jarring policy shift is that it quickly alters expectations, signaling to the public that the rules of the game have changed dramatically - prices will not keep rising, nor will wages.”

The Shock Doctrine: The Rise of Disaster Capitalism (2007)

Adopted from Wikiquote. Last update June 3, 2021. History

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Naomi Klein44

Canadian author and activist 1970

Robert Barro (1944) American classical macroeconomist

Source: Nothing Is Sacred (2002), p. 29

“An alternative “rational expectations” view denies that there is any inherent momentum in the present process of inflation. This view maintains that firms and workers have now come to expect high rates of inflation in the future and that they strike inflationary bargains in light of these expectations.”

Thomas J. Sargent (1943) American economist

Thomas J. Sargent, "The Ends of Four Big Inflations" (1981).

“On principle i relative prices will be lowered in the interests of external balance and domestic expenditure will be inflated in the interests of internal balance. Internal balance will be very quickly restored although there is no net change in external balance. Relative prices must, therefore, continue to be lowered, which will tend now to produce a boom at home. The inflationary financial policy must, therefore, be replaced by a deflationary policy. In the end relative prices will be substantially lowered, while there may be a small net inflation or deflation of domestic expenditure by financial policy.”

James Meade (1907–1995) British economist

Source: The balance of payments, 1951, p. 160; As cited in: Metaxas & Weber (2013, p. 22)

“Businesses have changed when the public came to expect and require different behavior, to reward businesses for behavior that the public wanted, and to make things difficult for businesses practising behaviors that the public didn't want. I predict that in the future, just as in the past, changes in public attitudes will be essential for changes in businesses' environmental practices.”

Jared Diamond book Collapse: How Societies Choose to Fail or Succeed

Source: Collapse: How Societies Choose to Fail or Succeed (2005), Chapter "Big businesses and the environment: different conditions, different outcomes", section "Businesses and the public" (Penguin Books, 2011, page 485, ISBN 978-0-241-95868-1.

“How quickly expectations can change one’s behavior, she thought.”

David D. Levine book Arabella of Mars

Source: Arabella of Mars (2016), Chapter 16, “Passenger” (p. 231)

“The growth in money and credit has outpaced both savings and economic growth. These inflationary pressures have been concentrated in asset prices, not consumer price inflation--keeping monetary policy too easy. This increase in asset prices has fueled domestic borrowing and spending. Government policy and the increase in securitization are largely responsible for this bubble. In addition to loose monetary policies by the Federal Reserve, government-sponsored enterprises Fannie Mae and Freddie Mac have contributed to the problem. The fourfold increases in their balance sheets from 1997 to 1998 boosted new home borrowings to more than $1.5 trillion in 1998, two-thirds of which were refinances which put an extra $15,000 in the pockets of consumers on average--and reduce risk for individual institutions while increasing risk for the system as a whole.”

Ron Paul (1935) American politician and physician

CONFERENCE REPORT ON S. 900, GRAMM-LEACH-BLILEY ACT, November 8, 1999 http://www.house.gov/paul/congrec/congrec99/cr110899-glb.htm <br class="br">1990s

“I refuse to start from the assumption that the role of monetary policy is to control and stabilize inflation. The only acceptable way to start is, I believe, to think of the goal of monetary policy, together with fiscal policy,as the maximization of welfare.”

Olivier Blanchard (1948) French economist

" Monetary Policy; Science or Art? https://economics.mit.edu/files/742" (2006)

“Balancing fiscal and monetary policies is a problem. If you do just one thing, it is not necessarily enough—neither monetary policy alone nor fiscal policy alone, and neither tax cuts nor expenditure increases alone. You need to mix policy. By having the right balance, you can get high employment and stable prices.”

Lawrence Klein (1920–2013) American economist

"Keynsianism Again: Interview with Lawrence Klein", Challenge (May-June 2001)

“Hitler also anticipated modern economic policy... by recognizing that a rapid approach to full employment was only possible if it was combined with wage and price controls. That a nation oppressed by economic fear would respond to Hitler as Americans did to F. D. R. is not surprising.”

John Kenneth Galbraith (1908–2006) American economist and diplomat

As quoted in Adolf Hitler: The Definitive Biography (1991), by John Toland, also quoted in "Repatriation — The Dark Side of World War II (1995) by Jacob G. Hornberger http://www.fff.org/freedom/0795a.asp

“If we continue to use industrial resources for other purposes – defence, housing, etc. thus preventing the diversion of resources to export work, the [exchange] rate will continue to fall. ... the basic idea of internal stability of prices and employment, which had dominated economic policy for so long will not be maintainable. It will not be possible to maintain stable internal prices and wages; it will not be possible to avoid unemployment. There will be a continuous process of change and readjustment and much of this will be painful.”

Rab Butler (1902–1982) British politician

Chancellor of the Exchequer
Source: Memorandum, 'External Action' (21 February 1952) advocating Operation ROBOT, quoted in Correlli Barnett, The Verdict of Peace. Britain Between Her Yesterday and the Future (London: Pan, 2002), p. 162

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