Time is our ultimate scarcity. Isaac Newton can give us more electricity, but he can't give us more than 24 hours of the day of time. And so we're constantly having to sacrifice alternate activities to get the one that pleases us most.
From Paul Samuelson
There's nothing in Keynesian economics that would allow you to solve stagflation. But there's nothing in neoclassical economics that would allow you to solve stagflation, either.
Keynes's contribution was not just to advocate spending government money in the middle of a recession. Every government had done that going back to the days of the Irish potato famine. What he gave to us was a way of thinking about the magnitude and the dimensions and so forth.
In 1936, money had no important role. Interest rates were one-eighth of one-eighth of one per cent. I did some research, and I found that the interest on one million dollars of ninety-day Treasuries was $37. People didn't even bother to collect it. The Fed wasn't important.
It is dead wrong about necessary surplus of winnings over losings.
The remarkable fact is not how much government does to control economic activity, but how much it does not do.
The Keynesian idea is once again accepted that fiscal policy and deficit spending has a major role to play in guiding a market economy. I wish Friedman were still alive so he could witness how his extremism led to the defeat of his own ideas.
Today we see how utterly mistaken was the Milton Friedman notion that a market system can regulate itself... Everyone understands now, on the contrary, that there can be no solution without government.
In this age of specialization, I sometimes think of myself as the last 'generalist' in economics, with interests that range from mathematical economics down to current financial journalism. My real interests are research and teaching.
Avoiding inflation is not an absolute imperative but rather is one of a number of conflicting goals that we must pursue and that we may often have to compromise.
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