to corporate profit growth being essentially higher than what would follow from an increase in gdp ’ s potential growth. and even then it would probably not be a matter several percentage points. but smaller figures than that are still sufficient to generate a major improvement in a country ’ s prosperity after one or two decades. the acceleration of sweden ’ s annual gdp growth from 2 per cent around the turn of the nineteenth century to between 3 and 4 per cent for a couple of decades, was crucial for our economic development. diagram 4 : sweden : gdp and profits share average 3, 2 % gdp average 32 % profit share 190 0 194 0 sources : osten johansson and karl jungenfelt. another argument in the same direction is that the new economy refers to the breakthrough for computer and telecom technology. these innovations should make it easier to obtain information and, if anything, make consumers more knowledgeable. if that happens, perhaps such factors as past reputations and brand familiarity will have less influence on purchasing decisions in the future. consumers may attach more importance instead to the inherent qualities of goods and services and to their price in relation to these qualities. that would more likely lead to stronger competition and increased downward pressure on prices and profit margins. the new technology would then turn out to benefit consumers rather than shareholders. diagram 5 : real return on equity 1900 - 98 trend 7 % per year 0, 1 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 sources : frennberg & hansson, affarsvarlden and riksbank calculations returning to the comparison with the united states at the turn of the nineteenth century, we find that the profits of electricity producers were not higher than normal. the increased competition pushed prices and profit margins down. all this means that there are many reasons for supposing that even in the future the long - term real annual return on equity will probably continue to be in the vicinity of the historical trend of around 7 per cent, though it is liable to vary. that has been the case in sweden throughout the twentieth century ( diagram 5 ) and in the united states for virtually two hundred years. major technological breakthroughs occurred in this period. this long historical perspective shows that over considerable periods the real return on equity has been fairly constant. conclusion in conclusion it can be said that my argument basically points to a positive finding. the technological breakthrough, based on the microchip and the computer, that together with the new information techniques has come to be known as the “ new economy ” is

institutions, other than the regular discount window, is the term asset - backed securities loan facility ( talf ), which has supported the market for asset - backed securities, such as those backed by auto loans, credit card loans, small business loans, and student loans. reflecting notably better conditions in many markets for asset - backed securities, the talf is scheduled to close on march 31 for loans backed by all types of collateral except newly issued commercial mortgage - backed securities ( cmbs ) and on june 30 for loans backed by newly issued cmbs. 2 the exit from these programs is substantially complete : total credit outstanding under all programs, including the regular discount window, has fallen sharply from a peak of $ 1 – 1 / 2 trillion around year - end 2008 to about $ 71 billion last week. the talf extends three - and five - year loans, which will remain outstanding after the facility closes for new loans. the later scheduled closing of the cmbs portion of the facility reflects the board ’ s assessment that conditions in that sector remain highly stressed, as well as the fact that cmbs securitizations are more complex and take longer to arrange than other types. in addition, the federal reserve has been normalizing the terms of regular discount window loans. we have reduced the maximum maturity of discount window loans from 90 days to overnight for nearly all loans, restoring the pre - crisis practice. in mid - february the federal reserve also increased the spread between the discount rate and the upper limit of our target range for the federal funds rate from 25 basis points to 50 basis points. we have emphasized that both the closure of our emergency lending facilities and the adjustments to the terms of discount window loans are responses to the improving conditions in financial markets. they are not expected to lead to tighter financial conditions for households and businesses and hence do not constitute a tightening of monetary policy, nor should they be interpreted as signaling any change in the outlook for monetary policy. the second part of the federal reserve ’ s response to the crisis and recession, besides the provision of liquidity to the financial system, involves both standard and less conventional forms of monetary policy. after reducing short - term interest rates nearly to zero, the federal open market committee ( fomc ) provided additional monetary policy stimulus through largescale purchases of treasury securities, agency mortgage - backed securities ( mbs ), and agency debt. all told, the federal reserve purchased $ 300 billion of treasury securities and will conclude purchases of $ 1. 25