 Mario, thank you for those generous words. As you were saying them, it occurred to me that this evening would be rather more fun if you gave me a full-length speech-length introduction and I sat and listened. Nothing I say will give me nearly as much pleasure as you just did. It is a great privilege to be here at the ECB's annual conference. This is a remarkable and extraordinary institution. There are countries without central banks, but until now, there has never been a bank without a country. And it occurred to me as I was thinking, and this is a serious comment, that the ECB is almost certainly the most operational, supranational institution that has ever been invented by human beings in terms of the ongoing work that it does that is central to the lives of citizens of so many countries. And it's a privilege also to be introduced by my friend Mario Draghi, who I first got to know well when we were G7 deputies more than 25 years ago. I have known people who are consummately effective bureaucratic and political operators. And I have known people who stand out for their intellectual capacity, curiosity, and creativity. But I have not known anyone who equals Mario Draghi in standing out on those two dimensions. And so it is a great privilege for me to be here with him. And I think the world has been remarkably fortunate to have him as the head of the ECB through these last challenging years. I judge that Mario's decision to invite me to speak here was not of deft politics. It is unlikely that he thought that inviting me would be a way of forging a successful connection with the Trump administration. And so I judge it more likely that he thought it appropriate that there be some intellectual provocation on this occasion, and at least some attempt to challenge orthodoxy. And so I shall oblige. My remarks are going to build on and extend and revise, in some ways, the observations I made some years ago about secular stagnation. And its importance for thinking about macroeconomic policy. And in particular, the major structural changes that have affected normal or neutral real interest rates. In particular, I want to argue five propositions this evening. First, relative to the magnitude of the event and the many respects in which it has surprised, the financial crisis has led to remarkably little revision in basic monetary theory as practiced by the world's central banks. Second, the neutral real interest rate of the pure neutral real interest rate has declined by substantially more than is generally accepted and is substantially more likely to be trending downwards over time than is generally recognized. Third, the BIS is not withstanding. It is far more plausible to attribute this to deep structural factors in our economies than it is to attribute it to monetary policy choices. Four of all moments in the last 70 years, we are at one when economically, politically, and socially the world is least able to withstand a recession or significant economic downturn. And fifth, that the objective of monetary policy should no longer be conceptualized purely in terms of inflation targeting, but in terms of achieving the dual goals of price stability and maximum sustainable employment. Let me take each of these propositions in turn. There have been three epochal monetary events in the last century, the Great Depression, which was followed by the Keynesian Revolution, the great inflation of the 1970s, which was followed by the move to independent central banks, the emphasis on rules rather than discretion, the emphasis on dynamic consistency theory from an academic perspective, the adoption of inflation targeting from a policy perspective, and the abandonment of the view that monetary policy could affect the average level of output over time in favor of the view that nominal authorities could affect only nominal things. And the financial crisis of the post-2008 period, which led to a decade of stagnation that judged in terms of beginning to end growth, was comparable to the Great Depression in the United States and Europe, that judged in terms of its impact on economic welfare was almost certainly greater than any costs associated with the inflation of the 1970s. And that judged in terms of the magnitude of the surprise to economic models was at least comparable to those events. And yet, while there has been extraordinarily skilled improvisation, extraordinarily adept tactics, tactics, and I think of the phrase, whatever it takes, among many other examples, that I believe literally changed the monetary fate of the world, we leave the financial crisis period with the same paradigm with which we entered it. Central banks explaining that they can't affect real things, that they can affect inflation, and so that needs to be their sole focus, even as their ability to affect inflation is in substantially more doubt than it was some years ago. And it's quite evident that they have had substantial effect on real variables. So I leave you first with the thought that there's something surprising about the fact that the paradigm has changed so little. Second, neutral real rates. There are a familiar set of calculations. The econometrics would be most prominently associated with Lawback and Williams, though it's been replicated by many others, suggesting that neutral real rates have declined by two to three percentage points over the last generation or so. There have been calculations that differ between different countries. There have been attempts at calculating this on a global basis. It is hard to escape the conclusion that the neutral real rate has declined by two to three percentage points. What has not been emphasized, however, is that while the real rate has been declining by two to three percentage points, the ratio of government debt to GDP in the industrial world has increased by 50 or more percent, the magnitude of prospective budget deficits has increased by two to three percentage points as a share of GDP. The calculation that I would submit is natural to do is to construct what one might call the pure neutral real interest rate. Imagine that fiscal policy, structural fiscal policy, had not changed over time. What would then have happened to the real interest rate? We're to put it slightly more harshly. Imagine that central bankers had gotten their policy preferences with respect to fiscal policy on a consistent basis over the last 25 years. What would then have happened to the real interest rate? There are many ways of doing that calculation, a rough survey of the literature suggests that a 1% of GDP increase in the deficit raises real interest rates by 50 basis points. And so a 3% increase in prevailing deficits raises real interest rates by 150 basis points. An alternative, probably better in the idiom of modern economics, way of doing the calculation is to focus on stocks. And there one would conclude that a 1% increase in GDP in the debt to GDP ratio raises real interest rates by about 4 basis points. And so the 50% increase in debt to GDP ratios that we've seen has raised real interest rates by some 200 basis points or 2 percentage points. This, of course, is an underestimate of the impact of fiscal policies, because it takes no account of the generosity of retirement benefits, which have operated to reduce savings and therefore to raise real interest rates. It takes no impact, takes no account of the increased generosity of health care benefits, which have operated in the same direction. And so I would suggest to you that the decline in real interest rates that we have observed and that we usually estimate as the neutral real interest rate is about half as large as the pure market decline in the neutral real interest rate. And that the expansionary fiscal policies that we have seen around the world have obscured what otherwise would be a much more precipitous decline in real interest rates. And one that, if observed, would represent a much stronger trend, and therefore one would be more likely to extrapolate forward. That this view is correct, or at least plausible, is confirmed by the variety of studies that actually over-explain the 200 basis point decline in neutral real rates. It's not hard to find estimates that attribute 75 basis points to demography. Not hard to find estimates that attribute 50 to 75 basis points to inequality. It's not hard to find estimates that attribute at least that to declines in the price of capital goods or increase in the profit share. Not hard to find estimates that attribute a significant amount to rising current account surpluses of emerging markets. And so I would suggest that the right way to understand the global economy is that there are major structural changes that have led to sharp declines in the neutral real rate that have been significantly obscured by the movements to expansionary fiscal policy that we have seen around the world. And that without the buildup of substantial increases in debt to GDP ratios, we either would have had to contrive ways to bring about much larger declines in real interest rates that we have observed, something that quite likely would have been difficult, given the zero lower bounce. Or we would have had to accept significantly more sluggish growth than we have observed. Next, observation. I do not relate to the suggestion that somehow this is all driven by some kind of debt supercycle. I would note that all of the indicia of a debt supercycle would be a predictable and indeed predicted consequence of the kind of structural decline in neutral real rates that I have described. After all, if the master criteria were appropriate when real interest rates were thought to be 2% to 3%, presumably some different criteria is appropriate when real interest rates are thought to be 0% or negative 1%. If it makes sense to say that people can take out a mortgage that's equal to six times their income when the interest rate is at a high level, it's presumably appropriate for that ratio to be higher when interest rates are at a low level. Or equivalently, when debt service costs are reduced, if debt service costs are linked in any way to income, then one would expect to see substantial increases in the ratio of debt to income. Similarly, when discount factors are reduced, asset prices go up. So increases in asset prices are a natural consequence of a discovery that neutral real rates have declined. And indeed, it is precisely through that mechanism that returns are pulled forward. And so it seems to me that, on the one hand, what we observe in terms of debt and financial aggregates is exactly what one would expect in the face of an exogenous decline in interest rates. And those who tell us that that is the wrong way to think about it and that it instead reflects the actions of irresponsible central banks creating excess liquidity show us an explanation for the counterfactual path. If interest rates were significantly higher, if term premiums were substantially larger, if risk premiums were not distorted downwards, if corporations and households were more effectively discouraged from spending, if governments were more effectively discouraged from running deficits, where would the demand to support even the relatively limited growth that the global economy has observed come from? And I do not believe that such an answer has provided. And I have too much faith in the energy, the entrepreneurial capacity of our economies to believe for one second that they are in some sense producing more than they are potentially capable of producing, even if one grants, which I think is somewhat problematic, that that is a meaningful construct. My fourth observation, the world can ill afford an economic downturn. That is true as an economic observation and it is true as a political observation. As an economic observation, ponder this, there is a playbook for responding to recession. It is the playbook that has been used in the United States and it has been used in Europe multiple times and it has one central element, the reduction of interest rates by 500 basis points. That has been the elixir that has stopped recessions in the past. When the recession is really serious as it was in 2008, that's actually been an insufficient elixir for stopping the recession and that's part of why it went on so long. On the path we are on, it is not envisioned by markets that any time in Mario's successor's term that we will be anywhere near with room to reduce interest rates by 500 basis points in Europe, in the United States, or in Japan. Our ability, if one reads the paper here about inflation expectations and forward guidance, the capacity to supercharge monetary policy, starting from a scenario where we have an economic downturn, would I suspect be rather limited? The 10-year German interest rates is, I believe, under 50 basis points. If there's a downturn, it will, of its own volition, fall substantially further than below its current level of 50 basis points. How much further can QE, can manipulating expectations bring it? So the world will have great difficulty in responding economically if there is a downturn. This is not the forum for an extensive meditation on the forces which brought to power the current president of the United States. Suffice it to say that it is far more troubling that this happened at a moment when the unemployment rate was in the low fours than it would have been if the unemployment had been in the eights. And that nothing about an economic downturn will do anything other than magnify the pressures for populism, for protectionism, and for systemic breakdown and a return to economic nationalism. And so I would suggest forth that it is a matter of the most extraordinary urgency to avoid in the foreseeable future for as long as possible another economic downturn. That the consequences of another economic downturn dwarf and massively exceed any adverse consequences associated with inflation pushing a bit above 2%. Indeed, in reflecting on a 2% target, there's different history of a 2% target in different countries, but it seems to me the story always has to be something like this. We want price stability so that we want inflation to be low, but we want the zero lower bound not to be a serious problem, and we want wage flexibility through declines in real wages without declines in nominal wages to be possible. Whatever the right trade-off was 20 years ago when we thought the neutral real rate was 2% or 2.5%, it must surely be different when the neutral real rate is negative 1%. Whatever the right trade-off was when we thought normal productivity growth would give people a 2% a year increase, it must surely be different when we no longer expect such a dividend from normal productivity growth. Whatever the case with a symmetric target was for concern about inflation above 2%, it must surely be different when inflation has for a decade been below 2%. So I would conclude, fifth, that given the demonstrated fact that monetary policies, in fact, have consequences for real outcomes that last over long periods of time. By the way, anyone who wants this in a more technical and a conometric form should just look at the research by Robin Greenwood and Sam Hansen that's been verified by many others, showing that monetary policy surprises affect forward real rates 15 years in the future, entirely inconsistent with the idea that money is just effective in the short run. Reality is that monetary policy does have impacts not just on the variability, but on the level of output. Reality is that responsible monetary policy should recognize those effects. And the goal of monetary policy, I submit, should therefore be the goal that all our fellow citizens have for monetary policy, which is price stability, yes, but also maximum sustained full employment. And that is going to be an increased challenge for us in the years ahead. Because the truth is that the apparent success and functioning of our economies has not been a reflection of the miracle of the market. It has been a reflection of an extraordinary period in fiscal policy and an extraordinary period in monetary policy. And that, I would suggest, is the challenge that is before monetary policy as we look to the future. Thank you very much.