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.

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.

I mean the only thing that is hopefully good about us is after the arguments we can actually still face each other the next day or the day after and talk about something else and sort of get over it.

A novel should be an experience and convey an emotional truth rather than arguments.

Lutherans, whose arguments and mistakes will not be difficult to contest or discover, do not want to attribute any value to works, and they do not understand enough the scope of the justification.

A handful of soldiers is always better than a mouthful of arguments.

Even if I was a bad right wing guy, to the extent of whether my arguments are right or wrong, they're right or wrong independently if I'm right or left.

Arguments, like children, should be like the subject that begets them.

A major source of objection to a free economy is precisely that group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.

I believe that President Clinton considered the legal merits of the arguments for the pardon as he understood them, and he rendered his judgment, wise or unwise, on the merits.

I should have known better. Pro-life arguments are now based on scientific evidence and the pro-choice arguments are not. That is a cultural, historical fact.

My wife was too beautiful for words, but not for arguments.

Nothing requires a greater effort of thought than arguments to justify the rule of non-thought.

They forbade me from flying, despite all my protests and arguments. After being once in space, I was desperately keen to go back there. But it didn't happen.

If you are ignorant, you certainly can get into some interesting arguments.

I used to think that my mother got into arguments with people because they didn't understand her English, because she was Chinese.

Don't forget your great guns, which are the most respectable arguments of the rights of kings.

I do notice that when I've been away and I come back to London. People look at you. People are ready to pick arguments.

Most of our so-called reasoning consists in finding arguments for going on believing as we already do.

The Industry's at war. I think it's about control. You can make all of the financial arguments that the industry has been shooting itself in the foot, but it is an industry built on a foundation of ownership and exploitation of intellectual property rights.

Sometimes the only thing we women want is a dick and no arguments. What could make us happier?