Weak krone, inflation, energy crisis and shortage of goods – Document

The debate is underway about what will happen to the fatherland in 2024. We recognize some of the symptoms: Inflation, commodity shortages and the energy crisis. We have seen it all before, – these are characteristic features of a socialist planned economy. We are not only short of electricity, – so far we are also short of eggs and, in a little while, potatoes, and we will be short of much more if the course is not changed.

Investor Anders Onarheim believes that the krone’s weakening reflects falling confidence in Norway and the economic policy being pursued. The political governance of the country is becoming more and more worrying. The situation is very serious, says Anders Onarheim and points out that “extremely weak management, irrational and populist priorities, a tax policy that undermines long-term value creation, and political scandals in a row, significantly increase the risk of investing in Norway or Norwegian kroner.»

These are observable conditions in today’s Norway, but it is not the whole explanation. Much of the misery is due to inept management, but some of it is also deliberately created by politicians with a cunning goal in mind to look after their own political interests and the financial needs of their own electorate. The weak krone did not become weak simply because the Government chose to spend the Norwegian people’s wealth on irrational and populist investment objects. The weakening of the value of the krone also has the socio-economic purpose of safeguarding the immediate commercial interests of central district industries such as agriculture, the aquaculture industry, the forestry industry and the tourism industry.

All these industries are typical district industries with a particularly sensitive relationship to the conditions for Norwegian foreign trade. Norwegian agriculture is to a large extent a marginal business that can only compete with large-scale European farming. Short-travelled vegetables are all well and good for the neighbourhood, but have marginal importance for the farmer’s overall economy and remuneration. For years, the agricultural industry has fought for the introduction of higher customs barriers and import protection, but this conflicts with the prerequisites for our access to the EU’s internal market, and the demand has regularly been rejected. The fact that the agricultural authorities are now once again trying to create import protection by means of increased customs duties on agricultural goods reveals that this is a critical issue for the agricultural industry. For us consumers, the measure will lead to even more expensive food and more inflation.

The forestry industry is struggling with another problem. The industry is export-dependent and must compete on the European market with countries such as Sweden and Finland – both EU members with a particularly large and well-developed forestry industry. The possibility of selling timber to the EU’s internal market is therefore strongly influenced by the exchange rate. The weakened krone opens up new opportunities for the Norwegian forestry industry on the European market. Correspondingly, a weakened krone exchange rate means a strengthened competitive advantage for the aquaculture industry and the tourism industry, both of which are typical rural industries.

It is no coincidence that the weakening of the Norwegian krone with a subsequent rise in the export conditions for central district industries is happening while the Center Party manages the Ministry of Finance. Because the Norwegian currency overall represents a very small volume of money compared to the major currencies in world trade, the exchange rate of the Norwegian currency in relation to dominant currencies such as the dollar and euro will be easily influenced by relatively small changes in the currency trade.

With Norway’s extensive and value-dominant exports of oil and gas to Western markets, which are mainly paid in dollars and euros, we have a unique opportunity to regulate the value of our own currency by price-regulating purchases and sales of Norwegian kroner in the market. On the authority side, it is primarily Norges Bank which, with its interventions in the foreign exchange market, regulates the international value of Norwegian kroner. With the access Norway has to foreign currency, Norges Bank has a very favorable opportunity to regulate the value of the krone as our financial authorities wish at all times based on consideration for Norwegian foreign trade and internationally oriented business in Norway.

When the krone exchange rate strengthens or weakens, this will mainly occur as an unintended effect of Norges Bank’s intervention or absence of intervention in the foreign exchange market. With Norway’s unique foreign accounts and the ample access the Norwegian economy through dominant export-oriented industries has to foreign currency, the country’s authorities have a completely unique opportunity to choose the level of the krone’s exchange rate in relation to currencies such as the dollar and euro. That is exactly what they have done.

We can therefore draw the conclusion that while investor Anders Onarheim quite rightly points out that the krone’s weakening reflects falling confidence in Norway and the economic policy being pursued, with extremely weak management, irrational and populist priorities and a tax policy that undermines long-term value creation, the krone’s weakening also reveals that it has been carried out deliberately by our financial authorities in order to create more favorable conditions for very central district industries.

Norges Bank’s director Ida Wolden Bache has been asked on a couple of occasions recently whether the strong contribution to inflation we are now experiencing as a result of a long-term and significant weakening of the krone exchange rate could not be countered by limiting the sale of Norwegian currency. Her answer is always that Norges Bank’s mission is to counter inflation by means of the key interest rate. While this in and of itself is correct, she fails to answer the question and at the same time fails to explain that her mission, which she has been given by the Minister of Finance, is to put the main burden of combating inflation in Norway on young families with children who have to struggle with increased loan interest rates and inflated prices of imported foodstuffs. It should not be hidden that it is Finance Minister Vedum who gives Norges Bank this assignment.

The short-term winners in this inflationary gallop are the Norwegian district industries, which politically are also close to the Minister of Finance. When Norway’s extremely weak leadership is to be singled out, we should particularly focus our attention on the finance minister, who has not only contributed to giving us the energy crisis, commodity shortages and inflation, but who, in well-known Norwegian politician style, seeks to shield himself and his people from the evil that affects the people. In the long run, perhaps he too will have to realize that planned commodity shortages and other examples of socialist planned economy have never created lasting value for any people in the world.

By Per Antonsen