in if people have to sell their organs to survive? but while a ban on organ sales may make us feel better, does it really make society better off? possibly, if it makes society work harder to make sure people are never driven to the circumstances that would make them contemplate a sale. possibly not, if it allows society to turn its back on the underlying problem, either moving the trade underground, or forcing people in dire circumstances to resort to worse remedies. but i also think part of our unease has to do with what we perceive as an unequal exchange. the seller is giving up part of her body in an irreversible transaction. the buyer is giving up only money – perhaps earned on a lucky stock trade or through an overpaid job. if that money was earned by selling a portion of a lung, or by painful savings accumulated after years of backbreaking work, we might consider the exchange more equal. but the central virtue of money is precisely its anonymity. we need know nothing about the rupee we get to be able to use it. but because money ’ s anonymity obscures its provenance, it may be socially less acceptable as a medium of payment for some objects. professor sandel makes us think. but he seems to move too quickly to prescribe banning monetary transactions, when his real concern is perhaps with the unfair distribution of money. what he also seems to ignore are the virtues of anonymity. in a free market, all it takes to buy what you want is money. you do not need a pedigree, a great family history, the right table manners, or the right fashionable clothing or looks. it is because money has no odour, because it is the great equalizer, that so many people across history have been able to acquire resources and invested them to make the world we live in. indeed, making it easy for dalits to start businesses may do more for their social status because money empowers than many other forms of affirmative action. rather than prohibiting the use of money and wealth, let us think about increasing society ’ s tolerance for its use. what can you take away from all this? first, that it helps to question everything, including my interpretation of sandel, for only with questioning comes clarity. second, if you believe my interpretation, there is a strong link between society ’ s support for free markets and the fairness with which wealth and opportunity is distributed among

the united states, for example. in sweden savings are also high to start with, unlike the united states where they have fallen to historically low levels. there is always a risk that house prices, and also other asset prices such as shares, which have been pushed up by exaggerated optimism or speculation, could plummet. it would appear that swedish price movements can be explained by fundamentals, and that the speculative element has happily been conspicuous by its absence. as property often functions as collateral for loans, a large fall in prices would affect the banks. in addition, developments in the property market affect demand in the economy. rising house prices mean that households can take on new loans to increase their consumption. correspondingly, falling house prices can contribute to subduing demand in the economy. an imf study of twenty property crises in different countries shows that they entailed a fall in prices of 30 per cent. the countries ’ gdp was on average four per cent lower three years after a property crisis had started than it would have been without the fall in prices. 1 the scars in the real economy may well be considerable and given this it is interesting to discuss how a central bank should react to changes in asset prices. in the international debate on asset prices and monetary policy there are several different points of view. a common view is that monetary policy should only react to changes in asset prices to the extent that these affect the central bank ’ s inflation and growth forecasts. one should thus not have a separate strategy for dealing with changes in property prices. others think that a central bank can improve the outcome for inflation and production by reacting to changes in asset prices over and above their consequences for the inflation forecast. two main arguments have been put forward. firstly, monetary policy can alleviate the effect of the price change on the real economy. secondly, the actual knowledge that the central bank will react should reduce the probability of exaggerated price movements occurring. the difficulty lies in determining whether or not prices are increasing at an exaggerated rate. it is not necessarily so that a central bank is better qualified to make such an assessment than the market participants. in addition, there is uncertainty over how monetary policy affects asset prices. the riksbank conducts what is known as flexible inflation targeting. the objective is that the annual change in the consumer price index ( cpi ) shall be 2 per cent, but we also attach some importance to attaining a balance in production and employment. asset price movements are normally included within the scope of flexible inflation targeting