Yes, Svensson was vindicated but the better part is that he showed that he could change his mind

Sweden is in the news:

As Scott Sumner has posted:

In any case, it can now be said that Lars Svensson’s critique of Riksbank policy has been proven “true” in the sense that his opponents have now recognized it as true (the following is from the excellent Ambrose Evans-Pritchard):

Sweden’s Riksbank has torn up the rulebook of global central banking, cutting interest rates to zero even though the economy is in the grip of a credit boom.

The extraordinary step is intended to stave off deflation but it comes at a time when the Swedish economy is growing at almost 2pc and property prices are rising briskly. The bank has abandoned earlier efforts to curb asset bubbles by “leaning against the wind”.

The Riksbank cut the deposit rate to -0.75pc in what looks like a preparatory move to drive down the krona. Governor Stefan Ingves said the bank has a toolkit of extreme measures in reserve, including use of the exchange rate.

If the Riksbank was caught off guard, it’s because they weren’t paying attention to the only world class monetary expert on their committee.

The Riksbank has in effect washed its hands of the credit boom, leaving it to government regulators to control household debt with mortgage curbs, liquidity limits for banks and other “macro-prudential” tools as best they can.

No one is perfect. My appreciation of Svensson is that although he was present at the moment of the “original sin”:

This is what we read from the minutes of the Riksbank Meeting of September 2008!!!:

The Executive Board of the Riksbank has decided to raise the repo rate to 4.75 per cent. The assessment is that the repo rate will remain at this level for the rest of the year… It is necessary to raise the repo rate now toprevent the increases in energy and food prices from spreading to other areas [oil and commodity prices had peaked 3 months earlier].

Inflation targeter Lars Svensson was in favor. But he later recanted and was all for more expansionary monetary policy. Unfortunately in late 2010 the Riksbank started to fret about house prices. Svensson dissented and went on dissenting until he resigned in disgust last year.

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