On the likelihood that we can't keep getting richer, and have peace of mind...

That's what I'm saying. That's what I believe the evidence very conclusively indicates.

On his own culpability in not warning of financial crises until it's too late...

I have always argued that particular point, because we have never really successfully been able to forecast significant turning points in the economy. One of the reasons is that they have to be unexpected...

On shock absorption in the markets...

...what we need to do, as we are in fact doing...[in the US and UK]...is increasing the degree of flexibility of our successes, so that we may not be able to anticipate shocks...[but]...we can absorb them.

On 9/11...

...a type of shock which would have destabilised the American economy, we found that in four or five weeks [it had been] absorbed and turned around.

On Gordon Brown...

I think he's referring largely to the fact that Britain has not had a recession as long back as you can remember. Employment is stable, and the economy in general has been doing exceptionally well.

I think the point that he is making, with which I fully agree, is that the critical issue in economic policy should not be the financial system. The financial system is a means to an end. The end of course is the level of material well-being, the levels of employment, and the types of jobs a country creates.

On inflation...

I'm not arguing that inflation is about to emerge right now, I was referring to the longer term.

I'm reasonably confident that the inflation tranquility that we have experienced throughout the world actually for the last 20 years is not something we can hope to readily replicate as we move into the future.

On housing bubbles...

I think that if you wait long enough it [the housing bubble] will burst.

The issue here remember is that the end of the Cold War created a fundamental shift in the way the world's economy was run, moving away from central planning towards market-based capitalism. The effect was huge growth, especially in the developing world, in income and savings.

This has driven real, long-term interest rates down very considerably and spawned stock market bubbles, residential housing price bubbles, all forms of real estate bubbles.

It’s the consequence of what one would think is a good not a bad thing, namely a dramatic decline in real interest rates.

This has driven real, long term interest rates down.

It's really not something which central banks any longer have control over.

On the danger of a recession...

I think that the probabilities have risen but I'm scarcely at a point where I'm forecasting that we are about to experience significant recessions in the United States or this country.

The danger of a recession has obviously risen. It's still less than 50/50.

It's less optimistic than one would like.

On hedge funds and financial turmoil...

Hedge funds presumably are the largest culprits.

I don't have considerable concern about their net worth going from 40 million to 5 million.

In the broader scheme of things are these markets with a very complex structures useful to the economy, and I would argue very strenuously yes, because one of the aspects of finance - the key aspect of finance, is to create movement of the nation's savings into productive, physical assets which produce productivity.

On economists' predictions...

Economists make judgements about everything...all we can realistically know is whether probabilities are increasing or decreasing. We have no capability of looking into the future and knowing whether things are going to happen.

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