But it is, at least, a job that requires very little investment in training or equipment: the only “capital” a rag collector will need is a pushcart, which might sell for $ Yet, despite saying they’d very much like to own their own, nearly all these rag collectors instead rent their pushcarts, at a cost of $ a month. They therefore spend in a matter of 3-6 months what it would cost to own the thing outright. This is an enormous, and self-imposed, effective rate of interest – an annual rate of somewhere between 200 and 400 per cent.3  1  Gathergood (2013). Laibson (1997). This would cover any depreciation costs, which the owner of the cart would have to bear. But these are likely to be only a small part of the rental cost. 2 3  4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  Mullainathan and Shafir document many such examples. And they go further: they claim, supported by the result of interesting experiments, that the tendency to over-weight the present, at the expense of the future, is itself increased by financial stress. The more cash-strapped people feel, the more prone they are to taking decisions that make the situation worse. Financial distress isn’t just the partial result of wanting things sooner rather than later: according to Mullainathan and Shafir it can also be the cause of it. The result can be what the authors describe as a “scarcity trap”.
Svein Gjedrem: Economic perspectives Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the meeting of the Supervisory Council of Norges Bank, Oslo, 15 February 2007. Please note that the text below may differ slightly from the actual presentation. * 1  *  *  Introduction  The poet Rolf Jacobsen would have been 100 years old this year. He was particularly interested in geography. In an interview with Telemark Arbeiderblad in 1971, he stated that the Bible was a work of substantial importance, but that the same could be said about the comprehensive guide to public transport in Norway.14 In one of his geography poems, he writes: “When the sun is shining on China the stars are twinkling here. And the reverse. Asia is vast. Half the earth’s land mass [...]15 Yes, Asia is vast. The rapid expansion in China and other Asian countries is of growing importance to Norway. These countries are a major source of cheap consumer goods and services and demand for our raw materials. 14  Ole Karlsen (editor) (1993): Frøkorn av ild (Seeds of Fire). Om Rolf Jacobsens forfatterskap, Landslaget for norskundervisning, Cappelen Fakta. 15  Source: From the poem ”Når solen skinner på kinesere” (When the sun is shining on China) in Rolf Jacobsen’s collection of poems ”Nattåpent”. Gyldendal Norsk Forlag A/S 1985. BIS Review 15/2007  1  2  Interest rates, inflation and the business cycle  The Norwegian economy is now booming following the pronounced upswing since summer 2003.