Economists From The United States

"I know you think you understand what you thought I said, but I'm not sure you realize that what you heard is not what I meant"

"We are going through a period with no precedent in American history."

"Much of the securitization took the form of collateralized debt obligations (CDOs) with senior credit tranches certified by rating agencies as AAA. It was the failure to properly price such risky assets that characterized the crisis."

"Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear."

"We generally did not talk about the stock market very much at the Fed."

"Treasury Secretary Brady didn't like the Fed either. He and the president were friends and had a lot in common-both were wealthy, Yale educated patricians and members of Skull and Bones."

"It's hard to overemphasize how important Ford's deregulation was. True, most of the benefits took years to unfold-rail freight rates, for example hardly budged at first. Yet deregulation set the stage for an enormous wave of creative destruction in the 1980s:..."

"It did not go without notice that Ayn Rand stood beside me as I took the oath of office in the presence of President Ford in the Oval Office. Ayn Rand and I remained close until she died in 1982, and I'm grateful for the influence she had on my life. I was intellectually limited until I met her."

"Modern dynamic economies do not stay still long enough to allow for an accurate reading of their underlying structures."

"The need for values is inbred. Their content is not."

"Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact."

"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief."

"Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this."

"I think Bill Clinton was the best Republican president we've had in a while."

"Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter. And I've had very good relationships with presidents."

"We had a bubble in housing."

"I really didn't get it until very late in 2005 and 2006."

"I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk."

"If you get beyond the political rhetoric [and assembled a group to solve Social Security] it would take them 15 minutes. It would take them 15 minutes only because 10 minutes was used for pleasantries."

"History has not dealt kindly with the aftermath of protracted periods of low risk premiums."

"The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances."

"That said, there can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels."

"[There are] signs of froth in some local markets where home prices seem to have risen to unsustainable levels."

"A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years."

"Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern."

"While local economies may experience significant price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity."

"Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged this position by now obviously is desirous of losing money."

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."

"Intensive research in recent years into the sources of economic growth among both developing and developed nations generally point to a number of important factors: the state of knowledge and skill of a population; the degree of control over indigenous natural resources; the quality of a country's legal system, particularly a strong commitment to a rule of law and protection of property rights; and yes, the extent of a country's openness to trade with the rest of the world. For the United States, arguably the most important factor is the type of rule of law under which economic activity takes place. When asked abroad why the United States has become the most prosperous large economy in the world, I respond, with only mild exaggeration, that our forefathers wrote a constitution and set in motion a system of laws that protects individual rights, especially the right to own property. Nonetheless, the degree of state protection is sometimes in dispute. But by and large, secure property rights are almost universally accepted by Americans as a critical pillar of our economy. While the right of property in the abstract is generally uncontested in all societies embracing democratic market capitalism, different degrees of property protection do apparently foster different economic incentives and outcomes."

"It hardly makes any difference who will be the next president. The world is governed by market forces."

"The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue."

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

"For some, the benign inflation outcome of 1996 might be considered surprising, as resource utilization rates--particularly of labor--were in the neighborhood of those that historically have been associated with building inflation pressures. To be sure, an acceleration in nominal labor compensation, especially its wage component, became evident over the past year. But the rate of pay increase still was markedly less than historical relationships with labor market conditions would have predicted. Atypical restraint on compensation increases has been evident for a few years now and appears to be mainly the consequence of greater worker insecurity. In 1991, at the bottom of the recession, a survey of workers at large firms by International Survey Research Corporation indicated that 25 percent feared being laid off. In 1996, despite the sharply lower unemployment rate and the tighter labor market, the same survey organization found that 46 percent were fearful of a job layoff."

"Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets.… But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?"

"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said."

"Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said."

"We are obviously all hurt by inflation. Everybody is hurt by inflation. If you really wanted to examine who percentage-wise is hurt the most in their incomes, it is the Wall Street brokers. I mean their incomes have gone down the most."

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves."

"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense—perhaps more clearly and subtly than many consistent defenders of laissez-faire—that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other."

"If something cannot go on forever, it will stop."

"Redundancy is expensive but indispensable."

"Jacobs has never been political in the sense of supporting one ideology or party over another. Larger ideologies, she firmly believed then and continues to believe, only obscure the realities, which are to be found by looking around, paying attention, and trusting your eyes over what people are merely saying. In that spirit, she always supported the right of labor unions and grass roots movements to exist. "I think it is good for us to have vociferous political minorities and to know how to live with them," she wrote. But her personal support of any individual cause was always based on her absolutely unbending principles."

"Privately run jails are a mark of American "reinvented government" that has been picked up by neoconservatives in Canada."

"I have learned yet again (this has been going on all my life) what folly it is to take any thing for granted without examining it skeptically."

"Beneficent spirals, operating by benign feedback, mean that everything needful is not required at once: each individual improvement is beneficial for the whole"

"In wretched outcomes, the devil is in the details."

"Advanced cultures are usually sophisticated enough, or have been sophisticated enough at some point in their pasts, to realize that foxes shouldn't be relied on to guard henhouses."

"Virtually all ideologues, of any variety, are fearful and insecure, which is why they are drawn to ideologies that promise prefabricated answers for all circumstances."

"Subsidiarity is the principle that government works best — most responsibly and responsively — when it is closest to the people it serves and the needs it addresses. Fiscal accountability is the principle that institutions collecting and disbursing taxes work most responsibly when they are transparent to those providing the money."

"One wonders at the docility of the students who evidently must be satisfied enough with the credentials to be uncaring about the lack of education."