“People say monetary policy is easy and quick to implement. It can even be done overnight on the telephone, they say fiscal policy drags out in political and congressional debate in our country. It might take months to implement. But the point is that once fiscal policy is implemented, it might go to work much faster than monetary policy.”

— Lawrence Klein

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

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Lawrence Klein 15

American economist 1920–2013

Lawrence Klein (1920–2013) American economist

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

“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)

“Economic and monetary union…is incompatible with independent sovereign states with control over their own fiscal and monetary policies. It would be impossible…to have irrevocably fixed exchange rates while individual countries retained independent monetary policies…such a system could never have the credibility necessary to persuade the market that there was no risk of realignment. Thus EMU inevitably implies a single European currency, with monetary decisions…taken not by national Governments and/or central banks, but by a European Central Bank. Nor would individual countries be able to retain responsibility for fiscal policy. With a single European monetary policy there would need to be central control over the size of budget deficits and, particularly, over their financing. New European institutions would be required, to determine overall Community fiscal policy and agree the distribution of deficits between individual Member States…It is clear that Economic and Monetary Union implies nothing less than European Government…and political union: the United States of Europe. That is simply not on the agenda now, nor will it be for the forseeable future.”

Nigel Lawson (1932) British Conservative politician and journalist

Speech to the Royal Institute for International Affairs, Chatham House (25 January 1989), quoted in The View from No. 11: Memoirs of a Tory Radical (London: Bantam, 1992), p. 910.

“Keynes's idea was very simple. Monetary and fiscal policy should have a single goal, jointly pursued, of maintaining a full employment level aggregate demand.”

Robert Skidelsky (1939) Economist and author

Source: John Maynard Keynes: The Return of the Master (2009), Ch. 8 : Keynes for Today

“The historic terrain of macro-economic theory is the explanation of the levels and fluctuations of overall economic activity. Macro-economists have been especially interested in the effects of alternative fiscal, financial, and monetary policies.”

James Tobin (1918–2002) American economist

Source: "Money and Finance in the Macro-Economic Process" (1982), p. 12

“The usual and basic Keynesian answer to recessions is a monetary expansion. But Keynes worried that even this might sometimes not be enough, particularly if a recession had been allowed to get out of hand and become a true depression. Once the economy is deeply depressed, households and especially firms may be unwilling to increase spending no matter how much cash they have, they may simply add any monetary expansion to their board. Such a situation, in which monetary policy has become ineffective, has come to be known as a "liquidity trap"; Keynes believed that the British and American economies had entered such a trap by the mid-1930s, and some economists believed that the United States was on the edge of such a tap in 1992.
The Keynesian answer to a liquidity trap is for the government to do what the private sector will not: spend. When monetary expansion is ineffective, fiscal expansion—such as public works programs financed by borrowing—must take its place. Such a fiscal expansion can break the vicious circle of low spending and low incomes, "priming the pump: and getting the economy moving again. But remember that this is not by any means an all-purpose policy recommendation; it is essentially a strategy of desperation, a dangerous drug to be prescribed only when the usual over-the-counter remedy of monetary policy has failed.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 1 : The Attack on Keynes

“My appeal is to respect the people's intelligence and to put before them clear and unequivocal working programs and policies that will be implemented if (I am) chosen to lead the country in the upcoming general election.”

George Vella (1942) Maltese politician

Source: George Vella (2021) cited in " President urges politicians to 'respect people's intelligence' https://timesofmalta.com/articles/view/president-urges-politicians-to-respect-peoples-intelligence.921130" on Times of Malta, 13 December 2021.

“The policemen's faces glisten too, they're holding themselves back, they love this, it's a ceremony, they're implementing a policy.”

Margaret Atwood book Bodily Harm

Bodily Harm (1981)

“There is no doubt, and in this I agree with Milton Friedman, that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation! So, once again, a badly programmed monetary policy prolonged the depression! So, once again, a badly programmed monetary policy prolonged the depression. One consequence of this policy was, of course, the fact that confidence was destroyed.”

Friedrich Hayek (1899–1992) Austrian and British economist and Nobel Prize for Economics laureate

1960s–1970s, A Conversation with Professor Friedrich A. Hayek (1979)

“The central message is still that, as Keynes argued, fiscal policy is the answer to liquidity traps, financial or political. The arguments against fiscal policy in Japan, so far as I understand them are intellectually fallacious; they would receive failing grades in an undergraduate macro exam.”

James Tobin (1918–2002) American economist

"Reflections on Japanese Political Economy" (1999)

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