presumably had consequences for assessments of swedish and international economic activity. although the effects are difficult to gauge exactly, it seems clear that cyclical developments will be altered. an upturn will be postponed and the slowdown will be accentuated in the short run. in the aftermath of the attacks there has been some uncertainty in the financial markets as well as extensive portfolio adjustments. the pattern from similar periods in the past is clear : some currencies weaken while others, large currencies in particular, appreciate, share prices fall, long bond rates are unchanged or rise, short - term interest rates fall and the price of gold moves up. in order to mitigate the negative effects on the global economy and the financial markets, the major central banks lowered their instrumental rates and the riksbank, as you know, did the same. in addition, the central banks have, for example, taken steps to contribute liquidity to the financial system. the riksbank will be presenting a new inflation report next week. as usual it will contain a main scenario and a spectrum of upside and downside risks. considering the circumstances i have outlined earlier, the main scenario is inherently uncertain. the risk spectrum will therefore be particularly important to monitor in future as new information is obtained and events unfold. which direction will cyclical activity take? how will the exchange rate develop? what are the underlying factors here? and how will inflation expectations move? these are critical questions for the riksbank ’ s future action this autumn and winter. unfortunately there are no clear answers.

and consumption rose. so did share prices. production plans were revised upwards. in time, imbalances arose in the american economy between investment and saving, as well as between current and more fundamental stock market valuations. although optimism everywhere else did not become as excessive as in the united states, decisions were no doubt made about consumption, investment and shareholdings that possibly would not have occurred if more lasting economic considerations and more realistic expectations had prevailed. importance of learning from history history teaches us that in business, euphoric phases tend to be followed by a clear change of mood. the fact is that a similar wave of over - optimism attended the era of railway - building in the nineteenth century. the invention of the electric motor and the combustion engine likewise generated a high degree of over - confidence in the early twentieth century. in sweden it was the possibilities of using the new technology to reap large profits from such natural resources as hydroelectric power, timber and ore that were exaggerated. in the late 1990s the jubilance was about the huge profits that were going to be reaped instead from computer and telecom technology. once again, the expectations of rising profits and incomes overshot the mark. we should bear in mind, however, that the major innovations did play a tremendous part in the emergence of industrialised society and the welfare state. railways have been of lasting importance, not least in sweden. without those investments in the early twentieth century, the mining and forest industries could hardly have done what they did to launch norrland and other parts of our country on the world market. sweden is one of the world ’ s best examples of the forces for growth that are generated by innovations, experimentation and creative processes. companies like ericsson, aga, skf, atlas copco and electrolux are just a number of the instances of inventions that have contributed to our country ’ s long - term growth. the old austrian school of economics, with its roots in the period before world war i, had an analytical focus on growth and the business cycle that is relevant for an understanding of the present situation. one insight is the crucial part innovations play for the path of long - term growth. this has been elucidated not least by joseph schumpeter and erik dahmen. however, the significance of innovations and technology for growth is not a straightforward matter. they often raise productivity and generate windfall profits. the new products that result from innovations give some firms a monopoly, while other firms