"A lot of the Lucas critiques were the sort of thing that some of us used in debunking Friedman's positivism on the stable money supply. I thought that Lucas's Nobel Prize was richly deserved and even overdue. But it was not because of the boldness and the correctness of the New Classical theory and rational expectations (that there is some kind of expected value that a group mind gets as a result, and which is in some sense "correct"). I don't believe in macro efficiency of securities markets. I believe in their micro efficiency. Convertibles are priced about right. Black-Scholes derivatives are priced about right, because you can make a lot of money in correcting any deviation. You can't make money in a bubble, by fighting the bubble. You will lose your shirt. That means the bubble can go on, and bubbles go in both directions. Usually maybe they do not last as long in the downward direction because the correction is more severe. In fact, the supply shocks of the 1970s which made either fiscal or central policy very difficult to administer, gave poor performance to the macro system. And since the Keynesians had implicitly been boastful about the good performance, if you take credit for the sun you got to expect to be blamed for the rain. And not only was that puncturing the reputation of Keynesianism, but it was puncturing the self-esteem of economists and of Keynesian economists in particular. Because we always are looking in the mirror of the public to form our impression of how important we are."