In economic terms, the early debt systems and the debts themselves, painstakingly recorded in the ledger systems of the temples of bronze age Mesopotamia, appear to be primarily about what we would now call working capital and overdraft facilities in agrarian societies that produced little economic surplus – credit to tide farmers over until the harvest or through bad harvests with the debt repaid in standardised units of agricultural produce.2 1  See chapter 4 of Hudson (2018) See Graeber (2011). An interesting example is Mesopotamian alehouses which seem to have been run on a seasonal credit system that would put to shame the average pub’s willingness the run a tab. See also, Item 15, ‘clay writing tablet’ in MacGregor (2010). 2  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  This stock of debt periodically got beyond society’s willingness or ability to repay.3 We know this because of the practice of Mesopotamian rulers declaring debt amnesties to wipe the debt slate clean.4 Much has been written on the debt amnesties and Jubilee mechanisms of ancient near eastern societies. That such reset mechanisms existed and were used is clear. The motivation may have been a moral one. It may have been a way of rulers preventing large numbers of the population falling into destitution and debt bondage and as result being unable to fulfil other necessary societal functions. Or simply a way to reset the balance of economic power in society before it was reset in a more violent way.
At the same time, productivity in Sweden has not increased as quickly as in other countries. The development of unit labour costs reflects the difference between wage increases and growth in productivity. Unit labour costs, measured in the respective currencies, are shown in the column on the far right of the table. Sweden is here on the same level as Germany, but higher than the euro area as a whole and also higher than the OECD aggregate. Inflation towards the target – in an orderly manner Let me round off. One main purpose of my speech is to show how important the inflation target has been as a benchmark for price-setting and wage formation in Sweden. It is an important task for the Riksbank to create confidence in the inflation target. This is why we are worried over the current low inflation rate. The Riksbank wishes to safeguard the inflation target. We can do this by formulating monetary policy so that the current low inflation rate rises towards the target. During the spring we have therefore cut the policy rate further on two occasions and moreover decided to buy government bonds. We are prepared to do more than this if it proves necessary. At the same time, it is important that the journey back towards the inflation target is a smooth one and does not pose any threat to production and employment. We are now on the verge of very extensive wage bargaining rounds.