well given the demographics of the second half of the twentieth century. but as i have argued previously, the system is ill - suited to address the unprecedented shift of population from the workforce to retirement that will start in 2008. much attention has been focused on the forecasted exhaustion of the social security trust fund in 2042. but solving that problem will do little in itself to meet the imperative to boost our national saving. raising national saving is an essential step if we are to build a capital stock that by, say, 2030 will be sufficiently large to produce goods and services adequate to meet the needs of retirees without unduly curbing the standard of living of our working - age population. unfortunately, the current social security system has not proven a reliable vehicle for such saving. indeed, although the trust funds have been running annual surpluses since the mid - 1980s, one can credibly argue that they have served primarily to facilitate larger deficits in the rest of the budget and therefore have added little or nothing to national saving. in my view, a retirement system with a significant personal accounts component would provide a more credible means of ensuring that the program actually adds to overall saving and, in turn, boosts the nation's capital stock. the reason is that money allocated to the personal accounts would no longer be available to fund other government activities and - barring an offsetting reduction in private saving outside the new accounts - would, in effect, be reserved for future consumption needs. the challenge of medicare is far more problematic than that associated with social security. a major reason is the large variance of possible outcomes mentioned earlier coupled with the inadequacy of the current medical information base. some important efforts are under way to use the capabilities of information technology to improve the health - care system. if supported and promoted, these efforts could provide key insights into clinical best practices and substantially reduce administrative costs. and, with time, we should also gain valuable knowledge about the best approaches to restraining the growth of overall health - care spending. crafting a budget strategy that meets the nation's longer - run needs will become ever more difficult the more we delay. the one certainty is that the resolution of the nation's unprecedented demographic challenge will require hard choices and that the future performance of the economy will depend on those choices. no changes will be easy, as they all will involve setting priorities and, in the main, lowering claims on resources. it falls to the congress to determine how best to address

inflation targets widened following fluctuations, inflation and inflation expectations were to a great extent brought under control, owing to the measures taken. in the period covering 2007 and onwards, the main factors impeding the disinflation process were sharp increases in oil and other commodity prices in the international markets along with adjustments in administered / directed prices. the significant weight of food prices within the consumer price index ( cpi ) in turkey – as is the case in many developing countries – increased the volatility of inflation. in 2007 and onwards, rapidly increasing food and energy prices in the international markets caused inflation to display an upward trend on a global scale. as a matter of fact, by november 2008, inflation rates in all developing countries – apart from brazil – implementing inflation - targeting regimes exceeded inflation targets by a significant margin ( chart 2 ). this observation confirms the fact that the relatively high inflation figures of 2007 and 2008 in our country should be assessed mostly as a reflection of global factors. chart 2. inflation targets and realizations in the developing countries n o vem b er 2008 inflation t arget b and iceland * south africa * the philippines * guatemala turkey chile colombia romania * brazil peru mexico israel * slovak rep. korea * czech rep. hungary poland * * as of october 2008 source : central banks, ifs, turkstat, and cbt. as inflation remained significantly above targets for a protracted period, it entailed the central bank to pursue an efficient communication strategy. in this context since 2007, when supply shocks became more apparent, the central bank has highlighted core inflation indicators excluding energy and food prices and has frequently referred to them. it was emphasized in this period that, despite the upward trend of inflation, there was no pressure on core inflation indicators and that prices, which were not directly affected by supply shocks, did not display high increases. under the assumption that the hike in energy and food prices is temporary, and thus inflation shall resume its downward trend, the aim was to direct the focus of economic agents to the medium - term in order to avoid undesired fluctuations in economic activity. at first, this approach was successful in containing inflation expectations. however, the fact that shocks were more persistent than expected caused the rise in food and energy prices to influence prices in general and an increase was observed in core inflation indicators. in early 2008, when turbulence in the global markets that started in summer 2007 was combined with domestic political uncertainties, significant depreciation was observed in the turkish lira