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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
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It is paradoxical that an administration that came to office rejecting the whole apparatus of Keynesian economics finds itself presiding over a stream of what threaten to be permanent deficits.
For policy, the central fact is that Keynesian policy recommendations have no sounder basis, in a scientific sense, than recommendations of non-Keynesian economists or, for that matter, non-economists.
What policymakers (and econometricians) should recognize, then, is that societies face a meaningful set of choices about alternative economic policy regimes.
I do not have a theory, nor do I know somebody else's theory that constitutes a satisfactory explanation of the Great Depression. It's really a very important, unexplained event and process, which I would be very interested in and would like to see explained.
Conversations with Economists (1983)
My published work is just a record of my learning. I'm sharing it with people so they won't make the same mistakes that I did. It's been a painful and slow process. My work is like a journey, a journey of discovery.
Conversations with Economists (1983)
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