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.

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.

He is no fool who gives what he cannot keep to gain what he cannot lose.

To say that an artist sells out means that an artist is making a conscious choice to compromise his music, to to weaken his music for the sake of commercial gain.

Skillful pilots gain their reputation from storms and tempest.

The older I get, the greater power I seem to have to help the world; I am like a snowball - the further I am rolled the more I gain.

Today, unless women gain jobs and athletic scholarships commensurate with their percentage of the population, feminists scream discrimination.

A man's moral conscience is the curse he had to accept from the gods in order to gain from them the right to dream.

Give way to your opponent; thus will you gain the crown of victory.

You must continue to gain expertise, but avoid thinking like an expert.

All myths that are something more than fancies gain rather than lose in value with time, by reason of the accretions of human experience.

One of the ways I think I gain fodder for characters is by watching people.

One of the greatest victories you can gain over someone is to beat him at politeness.

I want to do very useful buildings and I would like to find a method of producing these buildings through our technology because I think that this is the only way that we will gain wonderful environment easily in the future.

It seems to me that if Mr. Obama wins the presidential election, then Messrs. Farrakhan, Wright, Ayers and Pfleger will gain power for their need to demoralize this country and help create a socialist America.

Everyone in a complex system has a slightly different interpretation. The more interpretations we gather, the easier it becomes to gain a sense of the whole.

All tyranny needs to gain a foothold is for people of good conscience to remain silent.

Our farmers round, well pleased with constant gain, Like other farmers, flourish and complain.

Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.

As I've been able to once again gain the benefits of speed work, I'm enjoying my running more and more.

You want the story to end when it's supposed to and not be squeezed for somebody's financial gain.