The focus on price stability, as well as considerable efforts to develop norms and regulations within the field of supervision have undoubtedly reduced the risk of imbalances being able to accumulate over a long period. The question, however, is whether a monetary policy that is normally governed by forecasts of inflation in the short or medium term will be able to prevent the kind of imbalances that I have discussed from building up? If not - is there then any other way to improve the operationalisation of the target for a monetary policy aimed at achieving price stability without abandoning the goal that the decisions be rule-based and transparent? In countries that have experienced long periods of high, fluctuating inflation, discretionary stabilisation policy has been greatly discredited. First, we must point out that even if it is possible with hindsight to say that equity prices, debt levels and investment have been fuelled by over-optimistic expectations of future growth, the central bank cannot possess perfect knowledge of the future. Rising asset prices and a sharp expansion in private credit could be a sign of increased confidence in the economic policy aim of achieving price stability, as well as of reduced risks in the future. Lower public debt, which has been part of this policy, could in that case be reflected in higher private debt and in rising asset prices. Technological advances can also contribute to increasing expectations of future profits and income, and is mirrored in rising asset prices and high debt levels.
Just imagine a company that has no long-term strategy and experiences management reshuffles every few years, including board members, department directors and often unit heads. Every department within this company has its own budget, sets its own priorities and pursues its own often obscure goals (so as to maximize the available budget), which are frequently inconsistent with the overall purpose of the company. Can such a company compete in the global economy against companies with clear and consistent vision and strategy, companies where all departments’ activities are subject to this vision? This is a rhetorical question, as after using up all simple reserves of growth, such company would be doomed to bankruptcy unless it changed. The same applies to entire countries. While others continue to paint and fulfil daring visions, for example 11 iN2015 (Intelligent Nation 2015) in Singapore, we are still unable to join our efforts and are stuck in a business model where each department silos keeps pursuing its own goals. The ability to capitalize on knowledge will be crucial to Poland’s success in the 21st century. The country’s economic strength will be built with the power of mind, not muscle or machinery. For the time being, we have lost a million of minds that have increased the growth potential of other  9  A Venables, Shifts in economic geography and their causes, paper presented at an annual symposium of Federal Reserve Bank of Kansas City in Jackson Hole on 25 August 2006.