This paper was published on 3 August 2023 by INET as  Working Paper No 210. It is argued in the paper that monetary policy should be guided much more by financial sector developments (credit and debt) and much less by near term targets for inflation. This argument is first supported by an empirical review of the negative outcomes produced by the inflation targeting framework. In particular, it has led to financial bubbles that have created ever larger bubbles that now seriously threaten future growth prospects. Second, support is provided through questioning the need for and the effectiveness of easy money  (deemed necessary by the inflation targeting framework) and through pointing out its many unintended  consequences. The search for an alternative monetary policy framework would begin with the observation that an economy is a complex, adaptive system like many others in nature and society. From this perspective, arguments for introducing a “narrow money” regime need more attention.

http://www.ineteconomics.org/uploads/papers/WP_210-White-Monetary-Policy.pdf

On 22 November, William White was honored to present the 2023 Sylvia Ostry lecture as a webinar for the CD Howe Institute in Toronto, Canada. He began by noting that he shared Sylvia Ostry’s view that the economy was a complex, adaptive system nested within other such systems. He then proceeded to show that this insight had important lessons for policy makers. White then provided evidence that we were moving from an age of plenty (disinflation) to one of scarcity (inflation), and that pressure for higher real rates would be significant. This pressure would arise from the conjuncture of  lower growth potential with the need for higher investment to meet such challenges as climate change. White finished by suggesting a number of “unpalatable” supply side and fiscal reforms that might lower the danger of “disastrous” outcomes.

William White’s January 2023 INET Working Paper, “What next for the global economy: Could negative supply shocks disrupt other fragile systems?”, has just been published by Palgrave Macmillan as the Introductory essay in a book. The book’s title is “Fault lines after covid-19: Economic challenges and opportunities”,  edited by R Z Aliber, M Gudmundsson and Gylfi Zoega. A link to the publisher can be found below.

https://www.amazon.co.uk/Fault-Lines-After-COVID-19-Opportunities-ebook/dp/B0C3X2315N/ref=sr_1_2?crid=3SVSDVG9ZX8M6&keywords=aliber+zoega&qid=1697368141&sprefix=aliber+zoega%2Caps%2C105&sr=8-2

The Global Risk Institute in Toronto has just posted the paper linked below. It suggests that at least three conditions will have to be satisfied to meet the global challenge of mitigating climate change. We need to know what we should do. We need to have the power to actually do what needs to be done. Finally, we need the will to act, to do what we should do. The paper focuses on current impediments to meeting each of these three challenges. The paper finishes by discussing the possibility that we are inadvertently (“sleepwalking”) towards a polycrisis; that is, the possibility of a cascade of tipping points in a number of systems (economic/financial, political and environmental) that are each fragile and are also nested within each other. The second link is to a video recording of my session at the GRI Summit 2023.

https://globalriskinstitute.org/publication/mitigating-global-warming-is-not-our-only-problem-are-we-sleepwalking-towards-a-global-polycrisis/

https://globalriskinstitute.org/event/sleepwalking-towards-a-global-polycrisis-gri-summit-2023/