Even if the dollar does decline during the coming months, the delays in the response of exports and imports to the more competitive dollar will mean that the increase in aggregate demand from this source may not happen for a year or more.

We are particularly poor at the open economy issues.

Even if the dollar does decline during the coming months, the delays in the response of exports and imports to the more competitive dollar will mean that the increase in aggregate demand from this source may not happen for a year or more.

Domestic inflation reflects domestic monetary policy.

We pay some price when necessary to bring down inflation but that price is temporary and is not large relative to the permanent gain from reduced inflation.

After all, an overvalued dollar gives us the ability to buy foreign goods at lower prices. And the existing volume of exports brings more yen and euros than they would if the dollar were more competitive.

But then in April of 1985 the dollar began a sharp decline. The dollar's trade weighted value fell 23 percent in just 12 months and by a total of 37 percent by the beginning of 1988.

I think that over the last few decades, we have seen better economic outcomes than in the past.

Although economists have studied the sensitivity of import and export volumes to changes in the exchange rate, there is still much uncertainty about just how much the dollar must change to bring about any given reduction in our trade deficit.

First, I think the science of monetary economics has clearly gotten better.

But the primary reason for wanting the dollar to become more competitive in the near future is that we may need an increase in exports this year and in 2007 to sustain the economy's current pace of expansion.

The more competitive value of the dollar turned around the trade deficit.

Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.

A second reason why science cannot replace judgement is the behavior of financial markets.

But because we in the United States finance our current account deficit by borrowing in our own currency, we can move to a more competitive dollar without the adverse effects that followed currency declines in other countries.

The price of imported oil in the US doubled between summer 2003 and summer 2005, reducing consumers' purchasing power by more than 1 per cent of gross domestic product.

The good news is that a competitive dollar in the global market and a strong dollar at home are compatible in both the long run and during the transition to a more competitive dollar.

A rise in the level of saving can reduce aggregate activity temporarily but only a sustained high level of saving makes it possible to have the sustained high level of business investment that contributes to the long-run growth of output.

Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumer durables, home improvements and the like.

And finally, no matter how good the science gets, there are problems that inevitably depend on judgement, on art, on a feel for financial markets.

An increase in the relative price of products from the low wage manufacturers in Asia and Latin America will also make those products less attractive to American consumers.

Thirty years ago, many economists argued that inflation was a kind of minor inconvenience and that the cost of reducing inflation was too high a price to pay. No one would make those arguments today.

To finance this trade deficit, the U.S. has to borrow from the rest of the world or sell American assets like stocks, businesses, and real estate to the rest of the world.

The only way that we can reduce our financial dependence on the inflow of funds from the rest of the world is to reduce our trade deficit.

Unless the trade deficit shrinks, the combination of the trade deficit and the interest and dividend payments to foreigners will grow ever more rapidly.

My theme this evening is that America needs a competitive dollar.

In short, both experience and economic theory imply that the US could now t to a more competitive dollar without experiencing either increased inflation or decreased economic growth.

So just as I want pilots on the planes that I fly, when it comes to monetary policy, I want to think that there is someone with sound judgement at the controls.

Inflation is lower and more stable and the real business cycle fluctuations are more modest.

If the Federal Reserve pursues a strong dollar at home while the dollar becomes more competitive in global markets, we can achieve both price stability and a more balanced path of economic growth.

Nor should we exclude the possibility that Islamic terrorism may begin to make common cause with Western political extremists of the far Left and far Right.

In addressing a task, one almost always has several possible options, sometimes only a few, and they may all be practical and functional. But they lack the aesthetic aspect that raises it to architecture.

All enterprises that are entered into with indiscreet zeal may be pursued with great vigor at first, but are sure to collapse in the end.

Entropy theory is indeed a first attempt to deal with global form; but it has not been dealing with structure. All it says is that a large sum of elements may have properties not found in a smaller sample of them.

Journeys, like artists, are born and not made. A thousand differing circumstances contribute to them, few of them willed or determined by the will-whatever we may think.

The good parts of a book may be only something a writer is lucky enough to overhear or it may be the wreck of his whole damn life and one is as good as the other.

We're all like children. We may think we grow up, but to me, being grown up is death, stopping thinking, trying to find out things, going on learning.

That a peasant may become king does not render the kingdom democratic.

This means that to entrust to science - or to deliberate control according to scientific principles - more than scientific method can achieve may have deplorable effects.

It may be shocking to some people in this country to realize that, without meaning to do so, they hold views in common with Hitler when they preach discrimination against other religious, racial or economic groups.

A man may be in as just possession of truth as of a city, and yet be forced to surrender.

In relation to a writer, most readers believe in the Double Standard: they may be unfaithful to him as often as they like, but he must never, never be unfaithful to them.

Lives of great men oft remind us as we o'er their pages turn, That we too may leave behind us - Letters that we ought to burn.

Yes, and I can sit down on a white piece of paper and work because I don't believe too much into inspiration, only I'm waiting for inspiration, work and then inspiration may come. It's a little too easy to say that.

When families observe a later, deeper stage of cult involvement they may find it necessary to consider the involvement of a professional such as myself in an intervention effort.

Life is intrinsically, well, boring and dangerous at the same time. At any given moment the floor may open up. Of course, it almost never does; that's what makes it so boring.

Do not free a camel of the burden of his hump; you may be freeing him from being a camel.

Some gods may cross your path, but why should gods be beautiful? They could also be frightening.

A writer may tell me that he thinks man will ultimately become an ostrich. I cannot properly contradict him.