William White was quoted in an article in the National Post (Canada) on 20 March. He expressed concern that a global recession linked to the pandemic could expose underlying fragilities that would aggravate the downturn. He expressed the hope that policymakers had learned lessons from history as to how to mitigate the damage.
On 19 March, William White was interviewed by BNN, the Canadian business network associated with Bloomberg. He pointed out how this prospective economic downturn differs from that experienced in 2008-9, and laid out some alternative scenarios as to how events might unfold. While generally praising the prompt and significant response of central banks and governments to date, he noted that unfolding events might yet call for more action. The interview can also be found on the website of the C D Howe Institute, where Mr. White is a Senior Fellow.
William White was interviewed on March 16 (see 4 minute mark) by “7:30”, Australia’s TV News and Current Affairs flagship. He suggested that the global economy had been an accident waiting to happen, due to the many “imbalances” that had been allowed to build up over many years. If the prices of financial assets were to fall significantly, it was very likely that house prices would also be affected. It was unrealistic to think that marginally lower interest rates could suffice to sort out these deep seated problems.
http://www.abc.net.au/7.30/governments-and-the-reserve-bank-working-on-new/12065060
In the “Big Read” column in the Financial Times of March 4, 2020, John Plender refers to my concern that post-crisis monetary policy has been “intensely morally hazardous”. Low interest rates and unconventional monetary policies have “set the stage for the next boom and bust cycle, fueled by ever declining credit standards and ever expanding debt accumulation”. COVID-19 could well be the trigger for the eventual “bust” phase to begin. If so, the magnitude and duration of the downturn might well exceed that expected from the economic consequences of the pandemic viewed in isolation.
https://giftarticle.ft.com/giftarticle/actions/redeem/adce4f38-0826-4fdc-8bdf-cfceea795b5d
In an interview in early December 2019, William White suggested that central banks had given too much importance to the pursuit of price stability in recent decades. There are no costs associated with declining prices when the underlying cause is increases in productivity. Moreover, resisting disinflationary pressures with monetary easing, cycle after cycle, leads to a buildup of debt and other economic imbalances that do more to threaten sustainable growth than to sustain it. Accordingly, more reliance should be put on fiscal policy in the next economic downturn. Indeed, it was a mistake not to have done so earlier.
MNIGregQuinnInterviewpdf
On 13 December, William White made a presentation on this topic in the final panel of a two day conference at Imperial College Business School in London UK. Other panelists were Jose Manuel Campa, Nicholas Veron and Martin Wolf. Mr White spoke first about the effects of ultra low rates, both desired (generally ineffective) and undesired (generally unintended) and then about negative rates. The distinction reflects the possibility that there could be a “phase shift” at the Zero Lower Bound. He concluded by talking about alternatives to ultra low rates, and stressed the need for efficient processes to facilitate the orderly restructuring of debt loads that have grown very heavy.
LondonCAEGLatestpdf
Jonathan Roth, an associate of John Mauldin, interviewed William White and Grant Williams (a co-founder of Real Vision) on October 9, 2020. Both agreed, for a whole host of reasons, that negative policy rates were not a good idea. They were unlikely to stimulate aggregate demand as desired, and could have undesirable and unintended side effects.
On December 10, 2019, William White participated in a luncheon panel addressing this question at the C D Howe Institute in Toronto. Other panel members were Dawn Desjardins, Deputy Chief economist of the Royal Bank of Canada, and Mark Zelmer, former Deputy Superintendent of Financial Institutions at OSFI. Mr. White began the discussion with an overview of global developments. He concluded that growing stresses in the global economy, not least rising debt levels, could trigger a recession but would certainly aggravate one arising from other causes. Since our macro instruments to respond were now much constrained, serious thought should be given by governments as to how orderly debt restructuring might be facilitated.
CDHoweToolsfortheNextRecessionpdf
On November 18, 2019, William White made the introductory presentation for a three day conference sponsored by UNCTAD in Geneva, Switzerland. He focused on how ultra easy monetary in the advanced market economies had led to capital inflows into emerging markets (a “boom”) and increased their vulnerability to a subsequent outflow (a “bust”). Inadequate domestic policies and changes in the sources of funding (not least corporate issues of dollar denominated bonds) have increased both the likelihood of a forthcoming crisis and its possible severity. The policies needed to help prevent such a crisis, to manage such a crisis and to help resolve such a crisis (orderly restructuring and forgiveness) remain highly inadequate.
UnctadGeneva2019pdf
William White was interviewed, along with Grant Williams, by Jonathon Ross of Mauldin Economics. The interview was part of a series entitled the “Seven Deadly Sins” directed to identifying vulnerabilities in the global economy and to shortcomings in the policy responses to these vulnerabilities. This particular interview focuses on the undesirable implications of introducing negative interest rates to stimulate aggregate demand. They will not work as intended and will have unintended consequences.