The third challenge is that we are currently living with genuine uncertainty. Who could have imagined in autumn 2019 that spring 2020 would turn out the way it did? * I would like to thank Mårten Löf, who has helped me with this speech. Moreover, I have received valuable comments from Charlotta Edler, Mattias Erlandsson, Rebecka Hallerby, Peter Kaplan and Marianne Sterner. 1 [6]  Monetary policy has pushed down market rates During the spring, the Riksbank has decided on a number of monetary policy measures. When financial markets do not function as normal, the credit supply in the economy is threatened. Here, I wish to highlight four measures that the Riksbank has implemented.1 The first has concerned buying government bonds, mortgage bonds and municipal bonds, as well as commercial paper for a total of SEK 300 billion. The Riksbank has, secondly, decide to give the banks the opportunity to borrow from the Riksbank so they can in turn offer loans to companies, SEK 500 billion has been allocated for this purpose. The third measure gives the banks the opportunity to borrow an unlimited amount from the Riksbank. And the fourth measure is the Riksbank's decision to lend up to 60 billion US dollars to banks that need foreign currency. These measures have two effects. They facilitate credit supply as the Riksbank in this way supplies more money to the financial system. When the volume of money increases, there is also downward pressure on market rates.
Being poor taxes the mind every bit as much as the wallet. It does not end there. Financial scarcity is also shown by MS to damage decision-making over time. The mind-absorbing effects of making ends meet can lead to an excessive focus on the present at the expense of the future – that is, financial insecurity generates impatience or myopia. This, too, can have damaging implications for life choices. As MS demonstrate, it may lead people to under-invest in education and skills and to over-borrow at high interest rates and short maturities. MS call this a scarcity or myopia trap. It is a trap because it is self-fulfilling. Scarcity generates myopia and myopia is the enemy of human capital accumulation. For individuals, this means that scarcity traps may, over time, create poverty (lack of income) or unemployment (lack of skills) traps. And at the level of the aggregate economy, it means that scarcity traps, by taxing human capital accumulation, may generate lower growth and productivity. Physical capital accumulation, such as research and development, also relies on patient decision-making. It requires a willingness to defer gratification, either on the part of managers of firms (for example, through lower salaries and bonuses) and/or shareholders in those firms (for example, through lower dividends and share buybacks). Unfortunately, the evidence suggests neither have found it easy to do so. Public companies suffer from “short-termism” (Kay (2012)).