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.”
Wiliam White was interviewed by Ed D’Agostino of Mauldin Economics on August 2, 2024. The conversation was centered around White’s view that a combination of negative supply shocks, and the need for massive expenditures to confront national security, environmental and other requirements, would in the end have to squeeze consumer expenditures. Higher interest rates would be part of the process for doing this. Transitioning to an Age of Scarcity will create formidable political challenges to the democratic order. The interview itself, and the transcript, are attached below.
EdD'Agastino(!)240808-gmu-transcript-william-white
Chris Sheridan, host of FS Insiders Podcast, recently interviewed William White about his most recent INET Working Paper. White reviewed the various shortcomings of the current framework; not least, how it has contributed to ever bigger credit bubbles and and ever higher stocks of both public and private debt. In spite of these developments, central banks showed no willingness to reassess either the framework itself or the set of false beliefs on which it rested. White expressed the hope that the conduct of monetary policy could be improved while maintaining the current institutional structure. However, he felt that it was also appropriate to assess seriously alternative and more radical options like the introduction of a “narrow money” regime. The widespread introduction of central bank digital currencies might facilitate such a change
INET recently posted a short article by William White in which he stated that the failure of Lehman Brothers should not be treated as an isolated event. Its ultimate cause was a longer-term process through which a combination of monetary, regulatory and safety net policies were steadily increasing systemic risks and making significant financial crises almost inevitable.
MNI Market News posted on 3 March a podcast with William White, conducted by Greg Quinn of the Ottawa bureau. White listed a variety of reasons for expecting future aggregate supply to be constrained, and for future investment needs to strengthen. This implied a sustained need for higher real and nominal interest rates, raising fears of both financial instability and fiscal unsustainability. White suggested that fiscal restraint, directed primarily to reduce consumption, could aid in the battle against inflation and would also help ensure longer run fiscal sustainability.
https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5tZWdhcGhvbmUuZm0vbW5pZmVkc3BlYWs/episode/ZGE4NGQzY2UtYjlkNy0xMWVkLWI2NDAtMGYzZGMzZWZkMDY5?sa=X&ved=0CAUQkfYCahcKEwjA6Nu8jsD9AhUAAAAAHQAAAAAQAQ
An interview given by William White to Mark Dittli of “The Market” was posted on 23 February. Faced with secular forces likely to lead to a more inflationary future, central banks should raise nominal rates to allow real rates to adjust upwards. However, high levels of both private and public debt (encouraged by earlier monetary easing) imply that higher rates bring significant risks of financial instability as well as the unsustainability of public finances. White suggests measures to help avoid these risks, but they imply pain for consumers. Political authorities might rather choose policies of “financial repression”. After World War II inflation rose, but interest rates were held down and the real burden of debtors was reduced over a number of years at the expense of savers. In todays world, the political implications of such redistributive policies could be important.
On December 15, William White had a “Deep Dive” discussion with Danielle Martino Booth on Hedgeye TV. White suggested that central banks had used the wrong analytical framework to guide their monetary policy and that, as a result, the global economy suffered from many sources of instability – not least unexpected inflation. He added that a number of impending, negative supply shocks would worsen inflationary pressures over the medium term and make policy choices still more difficult. The discussion ended by reverting back to flawed analytical frameworks and efforts to make the economic curricula at universities more relevant to real world problems.
William White and Joseph Wang (“Fed guy”) were recently interviewed by Jack Farley on Blockworks Macro. Both provided an assessment of the Fed’s recent policy moves and the balance of risks looking forward. White was particularly concerned about a series of prospective, negative supply side shocks that would worsen all of the policy tradeoffs facing central banks. To complement monetary restraint, he suggested that governments in advanced economies should rely more on reducing consumption through fiscal measures. As well, better procedures to facilitate orderly debt restructuring would be required for an emerging “era of shortages”.