Alan Blinder

"Economists have the least influence on policy where they know the most and are most agreed; they have the most influence on policy where they know the least and disagree most vehemently."

"Monetary policy decisions tend to regress toward the mean and to be inertial—and hence biased in just the same way that adaptive expectations are biased relative to rational expectations. But errors like that, while systematic, will generally be small and will tend to shrink over time. And, in return, the system builds in natural safeguards against truly horrendous mistakes."

"In central banking circles, it is viewed as obvious that the accumulation and destruction of reputational capital more closely resembles adaptive than rational expectations — it lags behind reality. Here, I think, the central bankers are closer to the truth than the economic theorists."

"The new arguments for rules take an entirely different tack. They are based neither on the ignorance nor the knavery of public officials and, in fact, assume that everyone knows how the economy operates—even the government! Moreover, the governments objectives are assumed to coincide with the peoples objectives, and everyone has rational expectations. Despite these seemingly ideal circumstances, modern critics argue that a central bank left with discretion will err systematically in the direction of excessive inflation. To remedy this distortion, they advocate a fixed rule."