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We were not in a liquidity trap back then. Printing lots and lots of money instead of borrowing it abroad would have resulted in considerable inflation. This was not at all wanted as massive inflation during the 70's and 80's had resulted in price-wage spirals, falling competitiveness and stagnating real wages. And lo and behold, since the crisis passed we have had real wage increases of a magnitude not seen since the golden years of the 50's and 60's. I think it's important to remember that the 70's and 80's were very dark years for the Swedish economy, which culminated in the credit bubble and real estate crash of the early 90's. Since then we've been back on track.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Dec 15th, 2011 at 10:29:57 AM EST
[ Parent ]
Why the need to borrow from abroad? Sweden had a positive Current Account Balance from 1994 and onwards (I am uncertain which year the famous trip was, but the soc-dems returned to power in 1994 so it is a starting point).

When it comes to the 70ies and 80ies I think the standard explanation overlooks factors like oil dependence, RoW catching up (Sweden did not have its industrial base destroyed in wwII) and demographics - Sweden avoiding wwII meant  more people born in 10's and 20ies working in the 50ies and 60ies and retiring in the 70ies and 80ies. I also object to stagnation causing the property bubble of the late 80ies, I see that as caused by the deregulation of 1985:

Novemberrevolutionen (Sverige) - Wikipedia

Novemberrevolutionen är det informella namnet på Riksbankens beslut att avreglera den svenska kreditmarknaden den 21 november 1985.[1] Beslutet innebar bland annat att bankerna fick låna ut obegränsat med pengar utan att Sveriges riksbank lade hinder i vägen.

Nationalekonomen Lars Jonung har skrivit om novemberrevolutionen: "Detta är den s.k novemberrevolutionen som markerar den mest genomgripande omläggningen av Riksbankens penningpolitiska strategi under hela efterkrigstiden.".[2]

But we are getting into a very broad topic and of the imho interesting topic in relation to the ongoing euro crisis - did Persson need to borrow abroad and if so why?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Dec 15th, 2011 at 02:45:21 PM EST
[ Parent ]
Note of Caution:

Have to be very careful when making conclusions based on Economic History.  It's easy, with the best will in the world, to fall into "Correlation-as-Causation" fallacies.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Dec 15th, 2011 at 03:07:13 PM EST
[ Parent ]
Well, that credit bubble was certainly caused by credit deregulation, but it was something of a crescendo of the mad 25 years after 1968. It's important to note that with the exception of the oil crises, all the Swedish economic problems of 1968-1993 were homegrown.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Dec 15th, 2011 at 04:07:30 PM EST
[ Parent ]


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