I got a couple of emails asking me whether I agreed or disagreed with the passage from the Riksbank’s philosophy of money that I quoted yesterday. I agree. I guess that makes me a tough customer too—a hard-money Marxist, you might say.
Several people have commented that my characterization of the Swedish central bank—Sveriges Riksbank—as a pretty tough customer is wrong. They point to a rapid response to the 2008 financial crisis, more dramatic than that of the U.S. Federal Reserve. Yes, the Bank moved quickly to counteract the implosion. It flooded the system with liquidity—and briefly resorted to negative interest rates (though this was a largely symbolic gesture, since Swedish banks rarely borrow from the Riksbank). This is exactly what a central bank should do in the midst of a crisis. It also… Read More