It is better to have a cat and mouse game where the cat has the upper hand than a cat and mouse game where the mice are ruling. Because the latter means that the market participants are given free range. That was actually the big misconception of our national hero Ronald Reagan, who always talked about the magic of the market.

Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend and step off before it is discredited.

Money values do not simply mirror the state of affairs in the real world; valuation is a positive act that makes an impact on the course of events. Monetary and real phenomena are connected in a reflexive fashion; that is, they influence each other mutually. The reflexive relationship manifests itself most clearly in the use and abuse of credit.

My conceptual framework, which basically emphasizes the importance of misconceptions, makes me extremely critical of my own decisions. I know that I am bound to be wrong, and therefore am more likely to correct my own mistakes.

By creating the European Central Bank, the member states exposed their own government bonds to the risk of default. Developed countries that issue bonds in their own currency never default, because they can always print money. Their currency may depreciate, but the risk of default is absent.

We are trying to make the world a better place, but that is not necessarily what we accomplish. Many of the problems which preoccupy us are basically insoluble.

You need a government that believes in government. It also believes in markets and wants to give markets the best, the greatest opportunity, but is trying to govern well.