Austrian Economics Newsletter: What do you see as the fundamental problem with the rational Expectations literature?
Gottfried von Haberler: Oh, they go much too far. They are saying, for instance, that monetary policy cannot have any effect because people immediately anticipate it; that, when they read in the paper that the money supply has gone up, everyone concludes that the price level is going up, and everyone takes immediate actions which make the effect nugatory. So they, in effect, assume that everybody is an accomplished econometrician, and a one hundred percent monetarist, which I think is simply not so.
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