nonetheless not sufficient to prevent a decline in the manufacturing sector. in 1980, odd aukrust, head of research in statistics norway, stated the following with regard to developments in the norwegian economy : " unfortunately there is even less reason for optimism this time. it seems that competitiveness in norwegian manufacturing will deteriorate in the year ahead. the main problem is that no one can control price see ecklund ( 2008 ), p. 120. developments. with annual inflation at approximately 10 per cent, no one dares to invest in measures that could stop this price carousel. ” 5 high inflation showed that the economic policy framework was not functioning as intended, and the importance of providing the economy with a nominal anchor became evident. in the light of experience, it became clear that unemployment could not be permanently reduced by merely accepting higher inflation. 6 one of the first to formulate this clearly in the debate in norway was then director general at the ministry of finance per schreiner, who wrote in 1982 that : 7 " it has long been a commonly held view in the nordic countries that a policy choice can be made between price stability and full employment. there are strong indications that this choice does not exist [ … ] personally, i am no longer in doubt that controlling inflation is essential to achieving other social objectives. " in line with developments in other countries, a shift in monetary policy also took place in norway. in 1985, legislation was adopted which gave norges bank greater independence. after the last devaluation in 1986, monetary policy was oriented towards a fixed exchange rate. the fixed exchange rate was to be our nominal anchor. the fixed exchange rate regime was abandoned in december 1992 in the wake of the crisis in the european monetary system ( ems ). the uk withdrew from the ems and our neighbours sweden and finland also had to accept a floating exchange rate. the crisis revealed the built - in weaknesses of a fixed exchange rate regime in a world of free capital flows and deep financial markets. and it did indeed finally spread to the norwegian krone. when the fixed exchange rate policy was abandoned, there was a risk that the norwegian economy might again lose its nominal anchor. but the krone exchange rate showed little change, and rapidly found a new range. from 1996 the conditions necessary for exchange - rate stability deteriorated. with a strengthening of central government finances, the minority government was not able to contribute sufficiently to restraining growth in government spending. wage growth was substantially higher than in other countries. moreover,

s ” – pattern of response in their actions. 13 government spending growth can then be decided knowing the effect it will have on interest rates. we have also learned from history that financial bubbles and crises occur from time to time. even though financial crises may seem to be very different, they usually have a common feature. the us economist hyman p. minsky was of the view that this could be summed up in five stages : first a shock, often triggered by a technological breakthrough or changes in legislation and regulation of the business sector, followed by a period of growth – a boom – where new technology and opportunities are applied. this turns into euphoria – people get carried away. at some point some people wake up and take out their profits by selling. this triggers a fall in asset prices and equity prices and ultimately leads to panic and a crash. 14 this is referred to as the minsky moment. we are now in the midst of a global financial crisis, which originated in the us housing market. combined with new financial instruments that were intended to spread risk – but that did not prove to be viable – the us housing crisis has spread to many parts of the world and whose outcome is still unknown. seven or eight years ago, we experienced a similar situation, although not as severe, when the dotcom bubble burst. many also recall the crises in the emerging market economies in asia, central europe and south america ten years ago and the downturn in the japanese economy in the 1990s. nor will we forget the banking crises in the scandinavian countries in the early 1990s. however, financial crises are nothing new. we also find parallels to today's crisis if we go back to the great depression in the 1930s. if we go much further back in history, to the 1600s, the same phenomenon occurred with speculation in the tulip trade. in holland, they discovered at an early stage that a virus could give tulips stripes and beautiful colour. a forward market for bulbs developed in the 1630s. in 1636 market prices rose sharply and in a short time that winter bulb prices increased 25 - fold. this did not last. the market collapsed in february 1637 and prices fell to 5 per cent of earlier levels in the course of few days. auction lists a hundred years after the crisis show prices from one per cent to 0. 005 per cent of the level before the collapse. 15 moving depictions of financial crises and their effect on people can also be found in imaginative literature