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22 april 2014

Nobelpristagarens attack: "Sweden Turns Japanese"

 Läs nu Paul Krugmans åsikter

Nobelpristagarens attack: Han har sänkt Sverige
 Utdrag från Min Blogg i september 2012 --
"Reporäntan. Okunskap eller ovilja, hur är det med Riksbanksdirektionen?

Två ledamöter, tillika professorer i ekonomi, råder en annan väg, större sänkning. En av dessa ledamöter har dessutom uttryckt i ganska tydliga ordalag att en kompetenshöjning skulle vara positiv i Riksbanken då man "saknade goda kunskaper om makroekonomi, penningpolitik och finansiell stabilitet", och gärna fler professorer (med rätt bakgrund).
I DN 8 september, verkar det som denne ledamot tvingas ta tillbaka och släta över det han uttryckt i tidigare, många "det innebär inte..." och att det "vinklas och tolkas". Vad som kvarstår är "att det saknas en ordentlig och utförlig diskussion om argument för/emot olika beslutsalternativ" men att det är fullt möjligt att genomföra. Frågan man kan ställa sig är "varför" gör man inte det då?

Är det ovilja eller okunskap, om hur allvarligt läget verkligen är. I båda dessa fall skulle det rådas att Riksdagsfullmäktige behöver ta en funderare på vilken kompetens som egentligen ska sitta i Riksbankens direktionen."

Sverige har gått från en stark ekonomi till att i dag mer likna Japan med stagnation och deflation. Det skriver ekonomiprofessorn och Nobelpristagaren Paul Krugman i New York Times och pekar ut vem i Sverige som är den "skyldige".
Fram till 2010 utvecklades Sveriges ekonomi  bra. Men Riksbankens strama penningpolitik har sedan dess agerat sänke, skriver Paul Krugman.
Stefan Ingves borde ha fört en mer expansiv penningpolitik mer lik den som tidigare vice riksbankschefen Lars E O Svensson förespråkade

"Sweden Turns Japanese"

APRIL 20, 2014


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Three years ago Sweden was widely regarded as a role model in how to deal with a global crisis. The nation’s exports were hit hard by slumping world trade but snapped back; its well-regulated banks rode out the financial storm; its strong social insurance programs supported consumer demand; and unlike much of Europe, it still had its own currency, giving it much-needed flexibility. By mid-2010 output was surging, and unemployment was falling fast. Sweden, declared The Washington Post, was “the rock star of the recovery.”

Then the sadomonetarists moved in.
The story so far:
In 2010 Sweden’s economy was doing much better than those of most other advanced countries. But unemployment was still high, and inflation was low. Nonetheless, the Riksbank — Sweden’s equivalent of the Federal Reserve — decided to start raising interest rates.

There was some dissent within the Riksbank over this decision. Lars Svensson, a deputy governor at the time — and a former Princeton colleague of mine — vociferously opposed the rate hikes. Mr. Svensson, one of the world’s leading experts on Japanese-style deflationary traps, warned that raising interest rates in a still-depressed economy put Sweden at risk of a similar outcome. But he found himself isolated, and left the Riksbank in 2013.

Sure enough, Swedish unemployment stopped falling soon after the rate hikes began. Deflation took a little longer, but it eventually arrived. The rock star of the recovery has turned itself into Japan.

So why did the Riksbank make such a terrible mistake? That’s a hard question to answer, because officials changed their story over time. At first the bank’s governor declared that it was all about heading off inflation: “If the interest rate isn’t raised now, we’ll run the risk of too much inflation further ahead ... Our most important task is to ensure that we meet our inflation target of 2 percent.” But as inflation slid toward zero, falling ever further below that supposedly crucial target, the Riksbank offered a new rationale: tight money was about curbing a housing bubble, to avert financial instability. That is, as the situation changed, officials invented new rationales for an unchanging policy.

In short, this was a classic case of sadomonetarism in action.

I’m using that term (coined by William Keegan of The Observer) advisedly, not just to be colorful. At least as I define it, sadomonetarism is an attitude, common among monetary officials and commentators, that involves a visceral dislike for low interest rates and easy money, even when unemployment is high and inflation is low. You find many sadomonetarists at international organizations; in the United States they tend to dwell on Wall Street or in right-leaning economics departments. They don’t, I’m happy to say, exert much influence at the Federal Reserve — but they do constantly harass the Fed, demanding that it stop its efforts to boost employment.

for their policy views, they don’t change their policy views in response to changing conditions — they just invent new rationales. This strongly suggests that what we’re looking at here is a gut feeling rather than a thought-out position.

Indeed, the Riksbank’s evolving justifications for rate hikes were mirrored at international organizations like the Switzerland-based Bank for International Settlements, an influential bankers’ bank that is a sadomonetarist stronghold. Just like the Riksbank, the bank changed its rationale for rate hikes — It’s about inflation! It’s about financial stability! — but never its policy demands.

Where does this gut dislike for low rates come from? At some level it has to reflect an instinctive identification with the interests of wealthy creditors as opposed to usually poorer debtors. But it’s also driven, I believe, by the desire of many monetary officials to pose as serious, tough-minded people — and to demonstrate how tough they are by inflicting pain.

Whatever their motives, sadomonetarists have already done a lot of damage. In Sweden they have extracted defeat from the jaws of victory, turning an economic success story into a tale of stagnation and deflation as far as the eye can see.

And they could do much more damage in the future. Financial markets have been fairly calm lately — no big banking crises, no imminent threats of euro breakup. But it would be wrong and dangerous to assume that recovery is assured: bad policies could all too easily undermine our still-sluggish economic progress. So when serious-sounding men in dark suits tell you that it’s time to stop all this easy money and raise rates, beware: Look at what such people have done to Sweden.

A version of this op-ed appears in print on April 21, 2014, on page A21 of the New York edition with the headline: Sweden Turns Japanese.