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.

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.

There's more than a few remnants left in German welfare policy today. Many Germans eagerly condemn Hitler's fascism but won't examine the other reasons why the Third Reich succeeded for a season.

From now on it is only through a conscious choice and through a deliberate policy that humanity can survive.

It was also during my tenure of office that the Japanese Government agreed to the conclusion of a Nuclear Non-Proliferation Treaty and signed it, pursuing a policy in harmony with the avowed desire of the people.

As a member of this court I am not justified in writing my private notions of policy into the Constitution, no matter how deeply I may cherish them or how mischievous I may deem their disregard.

To me our bombing policy appears to be suicidal. Not because it does not do vast damage to our enemy, it does; but because, simultaneously, it does vast damage to our peace aim, unless that aim is mutual economic and social annihilation.

It was an idea we had when Al was in the Senate - to organize and moderate an annual conference that would look at government policy through the lens of the family to help identify ways that the family can be supported and strengthened.

Handcuffing the ability of states and localities to develop clean fuels in the cheapest possible way, using local resources, is not sound or sensible policy.

I'd like to do policy and I'd like to do philosophy, I'd like to be able to get into the depth, into the meat of the argument - that's the kind of stuff I want to do.

While Kuwait is not a democracy, giving only half the population a voice in their government is not a policy this Congress should support and one that I am glad that Kuwait's leaders are changing.

I have a policy that I get to spend as much on myself as I give away.

We have the most flexible and adaptive economy. Making sure we sustain the ability of the American economy to perform well is really the priority of economic policy.

The increase of territory and power of empires by force of arms has been the policy of all great powers, and it has always been possible to get the approval of their state religion.

From this experience we have learned that in a big party it is important to have the necessary and often controversial discussions on policy issues such as the health system while in opposition.

And in Iraq we tried to implement the same policy that was so successful in Saudi Arabia, but Saddam Hussein didn't buy. When the economic hit men fail in this scenario, the next step is what we call the jackals.

During the past few years I have led a sometimes hard battle for German foreign policy.

Soon we saw that money going to women brought much more benefit to the family than money going to the men. So we changed our policy and gave a high priority to women. As a result, now 96% of our four million borrowers in Grameen Bank are women.

The people who make policy decisions should damned well know what they are talking about before they make the decisions. There is nobody who is an expert on cloning who would be afraid after seeing Attack of the Clones.

For the past several years, the Meth Caucus has worked to engage the Office of National Drug Control Policy on this issue. We have tried to get their attention that meth requires a strong, comprehensive Federal policy.

I think it's a lovely idea, but it will not pass the Congress. I live in a world of realities. The policy of our country is that we can drill our way to independence. I think that's a march to folly.