“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

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

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Ron Paul 148

American politician and physician 1935

Gardiner C. Means (1896–1988) American economist

Gardiner C. Means, "Notes on inflexible prices." The American Economic Review (1936): 23-35.

“The monetary history of the last four hundred years has been replete with financial crises. The pattern was that investor optimism increased as economies expanded, the rate of growth of credit increased and economic growth accelerated, and an increasing number of individuals began to invest for short-term capital gains rather than for the returns associated with the productivity of the assets they were acquiring. The increase in the supply of credit and more buoyant economic outlook often led to economic booms as investment spending increased in response to the more optimistic outlook and the greater availability of credit, and as household spending increased as personal wealth surged.”

Charles P. Kindleberger (1910–2003) American economic historian

Manias, Panics, and Crashes: A History of Financial Crises (1978), Ch. 13 : The Lessons of History and the Most Tumultuous Decades Ever

“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.”

Naomi Klein (1970) Canadian author and activist

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

“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)

“The role of expectations is not limited to monetary policy but is crucial in many areas of economics, as Bob showed in his later research on investment, unemployment, taxation, public debt management, and asset pricing. In all of these situations, the appropriate evaluation of policy takes account of the way that expectations would be rationally formed.”

Robert Barro (1944) American classical macroeconomist

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

“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)

“Could my right hon. Friend explain why the increase in oil prices is deflationary but the increase in all other international prices has apparently been inflationary?”

Enoch Powell (1912–1998) British politician

Question http://hansard.millbanksystems.com/commons/1974/feb/06/industrial-and-economic-situation#column_1232 to the Chancellor of the Exchequer Anthony Barber in the House of Commons (6 February 1974)
1970s

“The time has come to speak out. Britain is now locked in a vicious spiralling interest rates…The net result of completing the vicious circle is that prices have increased, the rate of inflation has gone up, the money supply has increased, unemployment has gone up, the rate of bankruptcies has increased, the industrial base has been further eroded, the Government's borrowing requirement has increased and as a result there is more pressure to raise interest rates yet again, to be followed inevitably by the same vicious circle. It is this that must be broken.”

Edward Heath (1916–2005) Prime Minister of the United Kingdom (1970–1974)

Speech to the Federation of Conservative Students in Manchester (6 October 1981), quoted in The Times (7 October 1981), p. 6.
Post-Prime Ministerial

“In fact, the only person to rival Friedman for policy influence in the twentieth century is John Maynard Keynes, who had a strikingly different view of the role of government. Keynes was influential because he advocated more government intervention into what he perceived as poorly functioning private economies caught up in the Great Depression. In contrast to Keynes, Friedman put the main blame for the Depression on government failures, especially of monetary policy. Hence, the Depression did not make Friedman a fan of big government. He also found in the Federal Reserve’s failure to prevent deflation an argument in favor of monetary rules. As the world evolved— with low inflation becoming the major mission of central banks and free markets and secure property rights becoming the main policies to promote economic growth—Friedman surely won the intellectual battle.”

Robert Barro (1944) American classical macroeconomist

Source: Nothing Is Sacred (2002), p. 2

“Real economic growth emanates from increased productivity, which tends to hold prices down.”

Peter D. Schiff (1963) American entrepreneur, economist and author

Quotes from Crash Proof (2006)

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