(MONEY Magazine) – Wars rage and recede, cultural fads arrive and depart, U.S. Presidents come and go. Somehow, John Kenneth Galbraith remains. Galbraith does not include "World's Most Famous Economist" on his Harvard stationery, but if he chose to, it would be difficult to make a case against him. Likewise, he does not seem much surprised when stock prices crest in a wave of speculative buying, as they did during the late 1990s, or when the indexes plummet drastically, as they did during the fateful weeks of mid-September when I visited him in his Cambridge, Mass. home. When you have monitored the market day in and day out for more than 70 years--"a lifelong habit that I couldn't possibly escape," says Galbraith--you come to expect such cycles. "Our experience now," he explains matter-of-factly, "is one of the basic features of the system."

This fall, Galbraith turns 93. Some Americans are apt to confuse him with John Maynard Keynes, the British economist who greatly influenced Galbraith and whose book The General Theory of Employment, Interest and Money laid the basis for much of this country's liberal economic policy in the years since the Great Depression. But the similarity between these two men lies mostly in three-part names and an abiding belief in the beneficial effects of government spending. In fact, Galbraith, a native of Ontario, has written some 30 books during a career that's included stints as a Harvard professor, editor and writer at Fortune (this magazine's sister publication) and ambassador to India. Along the way, he's worked as an adviser to several Democratic Presidents and presidential candidates, most notably Franklin D. Roosevelt and John F. Kennedy. All told, Galbraith has a unique understanding of government power, economic history and the India-Pakistan-Afghanistan region of the second half of the 20th century. And at a confusing political and economic moment in American history, he also has an abundance of an exceedingly rare commodity: perspective.

Two weeks to the day after the terrorist attacks on the World Trade Center and the Pentagon, on a humid September afternoon, I walked up to the porch of the Galbraith home in Cambridge and yanked an ancient doorbell. A chime rang faintly somewhere deep inside the huge Victorian house. Eventually, a housekeeper opened the door and brought me inside; a few minutes later, I was led up a grand oak staircase, past a collection of carved rosewood elephants from India, to Galbraith's room, where he sat placidly in an armchair, dressed in a blue oxford shirt, plaid pants, and slippers. While Galbraith's hearing has suffered in recent years, his wit and curiosity are undiminished. That day, he had just finished writing a newspaper piece on Asian geopolitics and was reading through a slew of books piled on the daybed next to him, including two new biographies of Winston Churchill and Richard Nixon. I began to wonder what it's like to read about history when you've seen so much of it happen firsthand. In fact, I was about to ask.

But Galbraith was immediately ready to talk about the economy. "So," he said, leaning back and crossing his legs. "What's on your mind?"

In his landmark 1958 book The Affluent Society, Galbraith maintained that "economic, like other social life, does not conform to a simple and coherent pattern. On the contrary, it often seems incoherent, inchoate and intellectually frustrating." Galbraith argued that in the face of these obstacles, human nature nevertheless demands an explanation--or at least an interpretation--of the market's behavior. "Neither man's curiosity nor his inherent ego," he wrote, "allows him to remain contentedly oblivious to anything that is so close to his life."

In many ways, this willingness to identify economic patterns and still hold a deep appreciation for the limits of economic knowledge continues to inform Galbraith's worldview. For instance, he believes--as do many others--that the attacks of Sept. 11 were for the most part a temporary shock to an already ailing economy. "My view is that this part of it will wear off, and maybe it already is doing so," he explains. On the day I visited, he pointed out that the stock slide that had begun two weeks earlier seemed to have stabilized. "We're seeing firms like General Electric actually having an increase yesterday," he added.

As Galbraith sees it, this is the good news about the market; the bad news, which is far more pervasive, started long before CNBC began around-the-clock updates on the Taliban. Several years ago, Galbraith was among the first of the doomsayers warning of a disastrous stock bubble. These days, such prescient thinking is a mark of distinction, but at the time, an octogenarian commentator had little credibility in the climate of investing bravado--even if he could offer historical examples and a famously gloomy book, The Great Crash 1929, to those wanting to believe that the U.S. had entered an era of permanent prosperity. "Anyone who heard that phrase 'New Economy' should have been wise enough to take cover," says Galbraith, shaking his head. "One of the tendencies of self-taught ignorance is to assume that each recession or depression--that's a technical distinction I don't make--is the last one. What we're seeing is the inevitable reaction to the wild speculation, including the trivial insanity in the technological world, and the sudden and comprehensive withdrawal of the investment and purchasing power that had been generated there. But there should be no doubt about the initiating factor: mindless optimism and speculation."

So will an extended recession--or perhaps a depression--follow next? Instead of making a prediction, Galbraith warns of market commentators who offer investors easy assurances one way or the other. "So complex and interactive and also extensively unknown are the forces moving the economy that there are only two groups of forecasters--those who do not know and those who do not know they do not know," he says. "I try to avoid public identification with either."

Still, the possibility of a fearsome economy through the winter and a difficult stretch of months (or years) thereafter makes for a grim scenario. Moreover, at the same time Americans are struggling through a domestic crisis, the U.S. will likely be engaged in an unprecedented military action abroad. What happens to a country's economy, generally speaking, during wartime? Actually, Galbraith says he's not prepared to accept that this is war. "There is an American political cliche," he explains, "where if [the government] wants to emphasize the importance of something and the remedy for something, it says, 'This takes armed action, this is war.'" In his recent experience, Galbraith has witnessed the government's war on crime, war on poverty and war on drugs; there was no mistaking any of those efforts, serious as they were, for World War II. "There is no doubt that those terrible events of [Sept.] 11 brought people to a willingness for a level of action by the government that was associated with [1940 and 1941]," he says. But, he adds, it is difficult at this point to equate our response with what followed from Pearl Harbor.

In any event, whether the U.S. retaliation becomes a full-fledged war or not, the economy has already contracted rapidly. Galbraith views the massive spending package passed by Congress in mid-September as a suitable way to help revive the country's economic engines. This should come as no surprise to anyone who knows his work; the professor has long championed the social and economic merits of government investment, much to the distaste of conservatives and free marketeers. He makes no apologies for Keynesian sympathies "that I won't try for a moment to disguise." Indeed, when I ask Galbraith what he would do if he were advising President Bush on economic matters, he says that he would urge the President to continue on an "orthodox" recessionary approach "and not worry if this involved deficit spending and government borrowing." Wouldn't such a switch be remarkable, though, for a President--and for a populace--that until recently cherished the idea of smaller government? "A year ago we would have been a little surprised [by] a several-billion-dollar bailout for the airlines," Galbraith says, "now it goes through without debate." But he is not astonished. Prosperity brings into power a certain kind of thinking and leadership, he remarks; adversity brings another.

Regardless of whether you agree with Galbraith's economic or political philosophy--and many, of course, do not--he has an extraordinary talent for reminding us of why, and when, we have been here before. Not only is a recession to be expected, he explains, so was the speculation--the "insanity," in his description--that preceded it. And we are, as investors, destined in any age to be seduced by comfortable thinking, or what Galbraith long ago described as "the conventional wisdom." We may have 24-hour markets and E-Trade and a wealth of new analytic tools at our fingertips; we may, moreover, prefer to think things are different now. Yet at least some of what we are experiencing is familiar and cyclical.

So, then, could the wild card that plunges the system into deeper disarray--into what is actually unfamiliar--be fear? In the week after I met with Galbraith, Princeton economist Paul Krugman published a provocative story in the New York Times Magazine that explored how fear could factor powerfully into a downward economic spiral. I wrote Galbraith a letter asking him what he thought about this. In his experience, how dangerous was fear, and how much damage could it do to the markets?

The next day, a faxed response appeared in my office mailbox. "I do think Mr. Krugman has a point in these matters," Galbraith wrote. "Fashions run strongly one way or another and some [investors], indeed many, rejoice in being with the crowd. And, as we know, such movement [in the market], up or down, can assure reward up to the point where reality overtakes insanity; then, of course, the rush to get out." Whether Galbraith thought this panic would come to pass he didn't say--though one might safely assume he thinks such a prediction cannot accurately be made. Perhaps, then, this is a good reminder not only of how complex and uncertain the market now looks to the brightest minds but also of how complex and uncertain it has always been. When I asked Galbraith why so many accomplished thinkers could have been so mistaken about the New Economy, he waved me away and said, "The capacity of economists to be wrong should never be understated."

Of course, as an economist himself, he may be incorrect in this observation. But for some reason, I would bet that he's right on the money.