President Carter offered these views in a conversation Thursday at the White House with Meg Greenfield, editor of the editorial page.

Q: What do you think the people in Connecticut and New York were telling you the other day? You must have a theory of that case.

A: I do. First of all, I don't think they looked upon the election as a contest between me and Sen. Kennedy. I think that unwarranted press reports that the election was over convinced them that they needed not to decide between two candidates necessarily, but to send me a message about the things that they did not like.

The inflation rate has been extraordinarily high. The problem with the on the Mideast question, the stock market uncertainty, the announcements of major reductions in the budget that might adversely affect some of the people in those two states -- all were causes of concern.

I don't underestimate the popularity of Sen. Kennedy, and I don't completely discount the fact that it was a choice between us. But I think that would partially explain it.

Q: A large political fact right now is the growing public frustration, exasperation, which I am sure you share, with the situation in Tehran. It goes on an on . . .

A: I have exactly the same feeling, maybe even in an exaggerated way. And we've discovered in the post-election analysis, referring to New York and Connecticut, that the shah's departure from Panama was also a very negative factor.

We tried as best we could to induce the shah to stay in Panama and to have his treatment there. He decided even before any of our people got to Panama that he was going to go to Egypt and maintained that position. But the key problem of the hostage question is that there is no government that can act with authority in Iran. When, in the past, we have had assurances from them, the same assurances being relayed to the United Nations, those assurances have not been honored simply because the terroritsts there created an obstacle that no one was willing to confront and overcome. I can't predict an early end to it.

Q: Do you think if the shah had stayed, there was some definite connection, it might have facilitated the hostages' release?

A: No.

Q: Our reason for wishing him to stay there was what, then?

A: I was primarily concerned no with where the shah was living but with the possible adverse effect in Egypt ad in the Arab world against Sadat. I talked to Sadat last Saturday morning. He again told me his invitation to the shah to come to Egypt had been constant, sincere, that there was no adverse effect that he could envision of any significance if the shah came to Egypt.

It may be that over a period of time, I hope not too long a time, the Iranians, even the militants, will recognize that there is no possibility now for extradition or another move by the shah that might create expectations in them. That's on the bright side of the scene.

Q: Did the shah violate understandings with us?

A: No. None at all. And neither did we violate any understandings with the shah.

Q: On this idea of an end date, is there any calendar on this, some point on which yuou have to provide a date by which you have to undertake some new policy departure if the hostages haven't been released? And second, some date in terms of the political campaign, when you would leave the White House?

A: Well, there's one time schedule initiated by Khomeini himself and that is at the time the Majlis, their parliament, is constituted. I don't know of anyone who has contradicted that statement by Khomeini. But there is an internal political struggle apparently going on between Beheshti and his forces on one side and Bani-Sadr, Ghtbzadeh and others on the other side. Earlier, before Bani-Sadr was elected president, Beheshti was one of the most forthcoming members of the Revolutionary Council when he was chairman. He called for an early release, or an early resolution of the issue. But since he has seen Bani-Sadr as his major domestic political opponent, he has taken the opposite line.

But to answer your question specifically, I don't know of a final date. What we have done since the very beginning is to exercise political and economic options in a phased way of increasing severity to avoid an appearance that the status quo is acceptable.And at the time we began discussions with the Iranian leaders on using the U.N. as an avenue for transfer of the hostages and their release, we stopped that progressive economic and political series of moves. But we have to retain the option to initiate it again.

Q: In terms of the campaign, the campaign is a hostage in some sense. Can you imagine at some point you'd get out on the road before they release the hostages?

A: I think in a general election period, if I'm the nominee, that I would certainly participate in campaign activities.

Q: After August?

A: Certainly then. Yes.

Q: But you don't at the moment foresee anything before?

A: No. I've never foreclosed the option of going out into the nation as a president to visit the scene of a catastrophe or to participate in a forum that was a non-partisan in nature. I've reserved that right. But what I've said is that as long as the hostages are there that I would not participate as a candidate in the primary season.

Q: The question of the hostages is part of something larger in the campaign arguments now of both the Republicans and Ted Kennedy. There is a general perception that things seem to be out of control on the economic side, in our relationships with other countries, that there are a lot of unfamiliar, hard to manage forces swirling around affecting our money, our power, our interests and that the administration does not seem able to exercise any control over them. What's your evidence that your administration is at least making some headway on these things?

A: When I came in office, NATO was extremely weak and dispirited; I think we have rejuvenated it. And on the Mideast, nobody would have dreamed that there would be diplomatic relations between Israel and Egypt, peace assured between the two, a return of substantial portions of the Sinai, tourism back and forth between the two countries and prospects for assuring a permanent peace there. I think the role that we are now playing in Africa was almost non-existent, and we have seen a successful resolution hopefully of the Rhodesian question, which will soon be Zimbabwe.And the western Pacific -- for the first time in my memory we now have friendly relaitonships with both Japan and China; we've opened up new avenues of trade and consultation, cooperation with a fourth of the people on earth who formerly were very close allies of the Soviet Union.

We've had a common problem with all other nations on earth who are oil consumers, of uncontrollable prices and with decisions basically made by the OPEC countries. And in the last few months the inflation rate in other major trading countries is almost as bad, sometimes much worse than our own.

We have addressed under very difficult circumstances the absence of any policy on energy from which our country has suffered many years. We've already reduced oil imports, which were going up steadily before I became president by more than a million barrels a day. By the end of this year we hope to reduce that another 300,000 or 400,000 barrels per day, which results in considerable savings.

I think we have aroused the awareness in the country that there is a genuine energy crisis which must be addressed together. We have extraorinary, maybe almost an unprecedented degree of cooperation between myself and congressional leadership in dealing with the present inflation problem, and I don't have any doubt that we will have a balanced budget for 1981. We have only had one in the last 20 years.

We have in addition made major strides forward in almost every measurable social area, reconstituting the vitality of the cities.

We've increased aid for education by about 75 percent since I've been in office. We've turned around an extremely high unemployment rate, added over 9 million new jobs, and so forth.

We have to accommodate inevitable energy shortages and inevitable energy price increases. The country's just got to change its style of living, and it's a very difficult transformation for Americans even to acknowledge limits, much less live within them. When I made my speech three years ago, saying that the energy crisis was going to reach us in the mid-80s, that we were going to have equality of demand and supply then, that this was extremely important, the moral equivalent of war, the speech was ridiculed by The Washington Post and many others. The thing that we thought would happen in 1985 happened in 1979.

In a campaign year there's always a temptation to postpone solutions or to avoid controversial issues, particularly immediately preceding important primaries. I've tried not to do that. We have suffered severely because of it.

Q: I think people tend to feel that they'll go through any amount of hardship or anxiety if they have some sense that there is that end date, if they feel it is going to turn around, that the economy wil stabilize, the money markets will get a hold of themselves. Do you suppose in the next six pre-election months it will be possible to give people some assurance of this?

A: I don't want to mislead anyone, but all of my economic advisers think that the inflation rate will be attenuating toward the end of this year, hopefully in time for the November election. Food prices are pretty well stabilized. The price of housing has dropped lately, the actual house. Financial costs are still high of course. We do not anticipate at all any such price increase on oil in 1980 as we have had in 1979, when we had a 115 percent increase in the price of oil in one single year. We've got adequate supplies of food grains and feed grains on hand to help stabilize the markets. Our balance in trade has been substantially improved. The value of the dollar's gone up a great deal in the last few months, and I think there is a realization in the business community being mirrored in the stock market.

People are not going to have as much free credit -- revolving credit has more than tripled in the last two years -- and therefore sales of consumer goods may go down somewhat; the business profits are not going to be as high and this naturally depresses the stock market.

But I don't want to raise any false hopes for a resolution. It's going to take a long time and I think the American people have got to rally to it and I think the federal government's got to set an example.

My own judgment is that the anti-inflation package that we put forward is adequate and is about severe enough and not too severe. I think I would not change it.

We've had much greater success with the voluntary wage and price controls than has been generally recognized. Last year we had an inflation rate running at 11 and 12 percent. The average wage increase was 8 1/2 percent -- lower than it was in 1978 because of voluntary restraints. We have the same target this year -- 8 1/2 percent, established by the labor leaders themselves and also by business representatives and also by representatives of the public.

Our nation is stronger now than it was three years ago militarily. There's much more support for a sustained commitment to strong defense than we've had before, not just in the White House but also in the Congress and the general public, which I think is a good move in the right direction. And the fact that our nation has been at peace for three years is something that is an important factor, and the fact that our allies and our potential adversaries all know that we are going to stay strong, not only economically and politically but also militarily, is aconducive factor to the maintenance of peace.

Q: I would like to hear your views on what strikes me as a psychological dilemma: that to the extent that you exercise restraint, prudence, in dealing with foreign crises, it seems that people lose some of the sense of urgency. Afghanistan is the example -- people were all revved up in January, but now we hear the athletes want to go to the Olympics and the French want to trade and the Paks don't want help and so on.

A: It's a dilemma in that we are a free nation where people have a right to express themselves and do as they please under the constitutional guarantees, and we do not have control over foreign countries.

I have a very real political awareness that at least on a transient basis the more drastic action taken by the president, the more popular it is. When President Ford expended 40 American lives on the Mayaguez to save that many people who had already been released, it was looked upon as a heroic action, and his stature as a bold and wise leader rose greatly.

This is always a temptation. But all of the action we have taken in answer to some very severe provocations like those in Iran and Afghanistan have been peaceful in nature. We have options: political, military and economic. I've decided to use political and economic options and forgo the military options altogether. We've not had any loss of live during this administration because of people being sent into combat. It happens to be the first time in 53 years that that has happened.

My actions and my decisions on the grain embargo, fishing rights, high technology and so forth are not based on whether other people support them or not. We're giong to stand resolved, steady if we stand alone. ssteady, even if we stand alone.

But my guess is that we'll have adequate support. Some of the reluctance on the part of our European allies was based on their special dependence on Soviet trade and the profits to be derived from it. Some of their decisions were made on the basis of the proximity to the Soviet Union and the vulnerability of some of our treasured resources, like Berlin in the case of West Germany. Some of it is based on a desire to show independence from the United States, independence from us, as is indicated in the case of France. Some of it is based on timidity and I think some of it is based on domestic political considerations and some on a genuine expectation that the Soviets didn't mean business and would immediately get out of Afghanistan without accomplishing their purposes.

Q: Speaking of the Soviets, when I asked for this interview a while back -- things kept intervening -- you had made the remark that was very arresting, astounded people, about how Afghanistan had drastically changed your view of them. I was and am keenly interested in hearing how your perceptions have changed, have developed, in relation to the Soviets while you have been in office.

A: It would be good to go back and read the quote to see if you have it accurate. I didn't insinuate or say that my assessment of the Soviet policy or ultimate goals had been changed at all. What did change was my assessment of the Soviets' tactics and the means that they would use to achieve their goals. This was the first time since the Warsaw Pact was formed that the Soviets have used their own military forces to invade a country not a member of the Pact. The last time Gromyko was over here, he told me, drawing a comparison between our forces in Korea and Vietnam, that Soviet forces had not been used in combat since the Second World War.

Obviously, he overlooked Hungary and Czechoslovakia. I guess he draws some distinction that only he could understand, but this invasion with 75,000 to 80,000 Soviet troops being heavily involved inside another country and another 25,000 to 30,000 troops being on the borders of Afghanistan is a radical departure from anything the Soviets have been doing in the past 25 years or more.

And I have had to reassess my own attitude toward the Soviets and the prospects of working out problems between us. We have been careful not to violate any government-to-government agreements.

This applies to grain shipments, SALT treaties and other things, and I hope that eventually if the Soviets will withdraw from Afghanistan that we can restore normal trade relationships and other relationships with the Soviets. In the meantime, we want to maintain as best we can the principles of detente, we want to stay at peace with the Soviet Union and not have any sort of armed conflict, and we want to work for arms control. We want to alleviate tension between us. But they have to recognize that we will not accept their invasion of Afghanistan as an accomplished fact.

Q: On Nov. 3, things looked a certain way, today they look different. Do you have reflections on how long things have changed for you? What do you know today that you didn't know on Nov. 4?

A: It's hard to say. Back in November, the generally accepted premise was that I had no chance to be reelected and now that's changed. I had then a growing belief that we could get SALT ratified, although it has never been easy, but that has changed. We've still got that commitment in the long run.

We were making some halting progress with the Soviet Union in other areas. The theater nuclear force decision had been made by the NATO partners and the Soviets had refused to discuss any restraint on medium-range nuclear weapons so that hasn't changed. We were already deeply concerned about Iran's attitude in the future, although we were working to accomodate the revolution and to accept it and accept the new government.

I think that with the Soviet invasion, the Soviets were surprised. My best information is that they underestimated Afghan resistance, the adverse reaction among the Moslem countries, the reaction of the rest of the world and the reaction from our country.

We've learned, I think surprisingly, how to be patient. I've been patient. I've been gratified, pleasantly surprised at the patience exhibited by the American people. I feel no political pressure on me to do anything drastic in Iran.

I think the American people want a careful, measured effort to get the hostages free but not to endanger their lives by abrupt or radical action. I think the American people want our own nation's principles to be preserved, and I think we have accomplished both those desires.

Q: Just at a human level, when you open the paper and you read that people say, "Oh my God Carter versus Reagan. I'm moving to Australia." How do you deal with that?

A: Obviously, I would rather have accolades than condemnations, but it genuinely does not bother me much. I have probably as much equanimity as anyone around me concerning adverse comment. And I think that I am able to discount criticisms adequately. I never lose sleep over crises or problems.

I read the criticisms and I hope that I have the ability, I think I do, to reexamine positions from somebody that I trust.

But in general I think you detect that I am fairly well pleased with what we have done. I met with about 50 or 60 senior citizens yesterday. They've been through two world wars, the Korean War and the divisiveness of Vietnam, racial upheavals which led to the civil rights acts, and the greatest depression in the history of our country. And compared to any of those events, right now is a very calm and peaceful time where people are prosperous and at ease.

But we still look on an increase in gasoline prices that will make us pay almost half as much as they do in Europe as a startling challenge to the American style of life and a need to shift to smaller automobiles and to insulate homes as being king of a shock that will change the quality of our lives, and there's really not anything to be fearful about and for.

Q: I think it's the inflation that people fear.

A: But when I came in office, it wasn't inflation at all. It was unemployment. We had 8.5 percent unemployment, 8 percent unemployment.

There's always enough to fill up the headlines in a newspaper, the evening news broadcasts. I'm always grateful when I get the weekly news magazines on Monday morning and don't see my picture on the front.

I am a deeply religious person and sometimes when I feel really bad I sit down and list all the things that concern me: hostages in Iran, Soviets in Afghanistan, high inflation rate, problems with energy, and so forth. And I think about how they relate to a nation in despair or a nation divided or a nation at war or catastrophic circumstances in the economy -- our standard of living, our level of energy reserves, our relationship with other countries, the new friends we have made compared to the ones we have lost, and the stability of our government and the freedom that we have. It is just a kind of reassuring thing, just an inventory of what our country is, what we've got.

Q: Are you satisfied with the way the Republican nomination process if going?

A: I've never had an easy election and I sure don't look forward to one. In November I think that Reagan is going to be a formidable opponent if he gets the nomination. I don't discount him at all and never have. I personally thought that Howard Baker would be the most difficult opponent, but some others I have always thought would be much easier than Reagan.

Reagan is a very good person on the media. He's shown an excellent ability to organize and conduct a campaign in California twice in an overwhelming Democratic state. He's got his arguments, and his relatively simplistic approaches to issues have been tailored to match the inclinations of audiences, and he could recite answers to the question concerning current events almost by rote. I doubt he will make any serious mistake.

So I think he's going to be formidable, and the longer our own campaign goes on with me being the target of attack on every issue, a political free-for-all.I don't know how debilitating it is going to be to me and to the Democratic Party. I'm no suggesting Kennedy ought to get out. No matter what I do, Sen. Kennedy deplores it and attacks it and condemns it and I would do the same thing if I were working against an incumbent president. But I'm the one who has to say we're going to balance the budget and then say what we are going to cut and to advocate cutting revenue sharing in New York a few days before the election.

To advocate a 10-cent gasoline tax a few days before the New York primaries is obviously damaging. And to have the shah leave Panama when I couldn't control it disturbs the people who are concerned about the hostages a few days before the New York primary. And then to make a mistake like we did on the U.N. vote and have a secretary of state testify a few days before the election -- these are some of the consequences of being an incumbent that don't affect a candidate at all.

In addition, New York is particularly sensitive to the stock market going down, disturbances in the bond market. I think of all the states of the nation, New York is senstitive to questions of federal aid. In Georgia no politician would run on the platform of getting more federal aid for his constituents. You fight for more, but to predicate a campaign on that premise is considered to be embarrassing.

Q: Sen. Moynihan didn't seem to come out for anybody.

A: He knocked hell out of me all the time. He gave me hell up there. Gee, he really did.

Q: But he also didn't come out for Sen. Kennedy.

A: No, he didn't. I understand, in fact, there were frequent news stories around at the time that he and the governor importuned Kennedy to run but then didn't support him, backed off.

I've got to go; I've got another appointment. I've enjoyed it.