Escaping the Debt Trap

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”.