William White was interviewed on 15 September by Paul Buitink of “Reinventing Money”. They covered current concerns including the sustainability of sovereign debt service in a number of advanced countries. White also reflected on the dymanics of “boom bust” cycles and how debt overhang problems might be dealt with. In this latter regard, he concluded there were currently only bad options available. A fuller description of the contents is provided at the beginning of the recording.
William White and Douglas Laxton, director of the Better Policy Project, had a discussion on 3 September focussed on how money is created in a modern economy. White stressed his strong support for the school of endogenous money that recognizes that banks create money out of nothing by making loans (a bank asset) and then crediting the borrowers deposit account with an equivelant amount of money (a bank liability). This capacity underlies the recurrent observation of costly boom and bust credit cycles, and the cumulative build up of debt and other economic imbalances that now threaten economic and financial stability. Laxton then led a discussion of how AI might, or might not, lead to significant increases in productivity that might alleviate such problems.
William White recently gave an interview to Gold Republic Global, who summarized the conversation as follows. “Former top central banker at BIS William White breaks down the dangerous consequences of decades of ultra-easy money. From exploding debt and central bank paralysis to inflationary threats, financial repression, and the return of gold—this conversation reveals why the global financial system is reaching a breaking point. White breaks down the growing risks of financial and fiscal dominance, the fragility of the current debt-laden system, and the historic forces driving us from an “age of plenty” to an “age of scarcity.” From malinvestment and financial repression to the rising role of gold and the BRICS monetary pivot, this episode offers a rare insider perspective on where the global economy is heading.”
On March 26, 2025, William White gave the final lecture in the Macroeconomic Policy series sponsored by the Global Risk Institute in Toronto. He began by noting some of the undesirable outcomes associated with flexible inflation targetting in the advanced market economies; rising price levels, very high levels of private and public debt, rising inequality and slower potential growth. These outcomes could end in a serious crisis, an unintended consequence arising from the fact that the inflation targetting framework rests on false assumptions about how the economy actually works. It is not a simple, static, linear, deterministic system seeking “equilibrium” but a complex, adaptive system (CAS) with potentially dangerous “tipping points” and no equilibrium. Embracing this fact immediatly leads to practical lessons about how to prevent crises, how to manage the buildup of systemic stress and how to manage crises when they do arise. White then looked at many of the changes already proposed for how the current framework might be improved. He concluded that the proposals recently made by Claudio Borio (OMFIF) and the BIS (Annual Report) best reflected what an explicit CAS framework would recommend
William White made a Zoom presentation to a group of central bank econometric model builders on 23 January, 2025. The presentation was organized by the Better Policy Project which is collaborating with the Central Bank of Armenia in devising a new “Prudent Risk Management Approach to Price Stability”. White began by noting that a new approach to monetary policy is required because the approach followed over recent decades has created ever larger financial bubbles. The Prudent Risk Management Framework reflects many recent suggestions for improving the monetary policy framework. It recommends reliance on alternative scenarios, incorporating uncertainty and non-linearities, recognizing endogenous money and financial spillovers, and the importance of supply side developments. There are links below to White’s slides and presention.
LaxtonCBEJan2024A Colloquium was held on 22 November, 2024, at the Bank for International Settlements in Basel, in honour of Claudio Borio who retired from the BIS at the end of the year. The BIS will in the near future be posting the comments made by a large number of participants who came from all over the world to honour the many contributions made by Claudio to “the art of central banking” over many decades. William White was honoured to be asked to Chair the last panel of the day on monetary policy. His opening comments are attached.
BISClaudioPanel3
This question was adressed by a number of economists in the Summer 2024 edition of The Internationl Economy. William White (page 25) noted that the global economy is a complex, adaptive system and such systems often break down. We have had three major, global recessions since 1990 and they have all arisen from the financial sector. In each case, a sharp easing of monetary policy led to a debt buildup that then contributed to the next financial crisis as interest rates rose again. Moreover, the credit granted as a counterpart to this debt has increasingly been granted by non-regulated entities. We do not know who has lent to whom. Against this backdrop, we now seem likely to encounter a number of inflationary pressures arisisng from secular forces; demographics, deglobalisation, climate change etc. A future, global debt crisis now seems more than likely.
InternationalEconomyTIE_Su24_GlobalDebtSymp
In his FT article of 1 November, 2024, John Plender made favourable reference to my most recent publication “Why the monetary framework in advanced countries needs fundamental reform”. It has been published as a chapter in the book “The age of debt bubbles”, edited by Max Rangely and published by Springer. Plender concludes that we urgently need debate on excessive monetary easing and the neglect of credit and debt developments. I totally agree, and would add (see my recent AEI presentation) that central banks have essentially ignored supply side developments as well.
https://www.ft.com/content/72b48b7d-ec17-4135-aa40-98b96eec2e64
A panel of economists responded to this challenge in the Spring Edition of “The International Economy”. The panelists assessment were almost evenly divided between “A” and “F” with an equal balance of division across all the letters in between. William White aligned himself with those giving an “F” ranking. While negative rates did not lead to the catastrophic outcomes suggested by some, they constituted an extension of the ultra-easy monetary policies in place since the Great Financial Crisis. White believes these policies were fundamentally misguided, leaving us exposed to both “financial dominance” and “fiscal dominance”.
InternationalEconomyGrading the Negative Rate ExperimentJune 2024
On 8 October the American Enterprise Institute hoste a panel, chaired by Alex Polack, featuring (in order) Don Kohn, William White, Nathan Sheets and Desmond Lachman. White first evaluated the issue from the shorter-term perspective seemingly preferred both by analysts and the Federal Reserve itself. He concluded that the arguments for easing cautiously, if at all, dominated those for easing aggressively. He then went on to assert that a longer term perspective was required in this evaluation because, in Hyman Minsky’s words, “short term stability breeds longer term instability”. The Fed and central banks more generally have always been behind the curve because they have paid chronic inattention to supply side issues and to the longer term implications of thier policies for financial stability. Looking forward, negative supply shocks will increase the risks of a “tipping point” into either deflation (arising from excessive private debt) or high inflation (arising from excessive public debt).
https://www.aei.org/events/is-the-federal-reserve-behind-the-curve/