We could, of course, always make the payments, simply by printing more money - we simply promise to pay people by giving them dollar bills - but that could set off inflation.

In a globally integrated economy, the biggest challenge is to make sure there is adequate global aggregate demand, achieved through spending, when countries like China feel they must save high levels of dollar reserves to protect against international currency volatility.

Much of my work in this period was concerned with exploring the logic of economic models, but also with attempting to reconcile the models with everyday observation.

There is a clear and strong link between the economy's present woes and the Iraq war. The war was at least one of the factors contributing to rising oil prices - which meant Americans were spending money on imported oil, rather than on things that would stimulate the american economy. Hiring Nepalese contractors in Iraq, moreover, doesn't stimulate the American economy in the way that building a school in America would do - and obviously doesn't have the long term benefits.

The striking thing about America is - it's historically, extraordinary unusual, I don't of any other instance - is that productivity of workers and wages have not moved in tandem.

When you think of policies that are going to address inequality of wealth, you have to be very thoughtful about what economists call "incidence of taxes." If most of the savings is being done by capitalists, and you tax the return on capital, then they will have less to invest. That would mean, over the long run, that the rate of interest would go up. That would therefore undo some of the intent to lower the income of capitalists.

Most poor people earn more than minimum wage when they are working; their problem is not low wages. The problem comes when they are not working.