Black Gold or Devil’s Excrement?

This article was William White’s response to the question posed by the editors of The International Economy to a panel of economists. It was published in the Fall 2023 edition of the magazine. White notes (page 6) that a country endowed with natural resources is “blessed” but that poor governance can turn that blessing into a resource curse. Similarly, the whole world has been blessed until recently with ample natural resources, especially fossil fuels, but going forward very different circumstances will prevail. Adapting to climate change implies threats to production capacity, of food in particular. Mitigating climate change implies restricting the use of otherwise available energy sources and their costly replacement. Adapting to these changed circumstances poses threats to both economic and political stability.





Posted by williamw in Articles, Press

Why the monetary policy framework in advanced countries needs fundamental reform

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

Posted by williamw in Interviews, Press

Reflections on the 15th Anniversary of the Failure of Lehman Brothers

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.

Posted by williamw in Articles, Interviews, Press

Bonds are no longer the safe option

John Plender of the Financial Times wrote an article, published on 12 August 2023, in which he referred at length to my thesis that the world is moving from an “Age of Plenty” to an “Age of Scarcity”. This was the transition referred to by Keynes and which prompted him to write “How to Pay for the War” in 1940. My use of Keynes’ words was intentional and was intended to suggest that we might  be facing similar economic and financial challenges in the near future.

Posted by williamw in Press, References

Era of shortages forcing rates up

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.

Posted by williamw in Interviews, Press

A number of inflationary forces will remain in place for a long time

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.

Posted by williamw in Interviews, Press

Transitioning from an era of plenty to an era of shortages

This article by William White was  published on 20 December  in “The Market” a Swiss financial newspaper. It suggests that the global economy faces such a transition and that there will be, as a result, persistent upward pressure on prices and on interest rates. Similar  to suggestions made by Keynes in “How to pay for the war?”, governments must find ways to scale back unnecessary consumption to finance investments, both public and private, that now offer (think environmental) a very high social rate of return. Politically, this will not be easy.

Posted by williamw in Articles, Press

A conversation with a candid central banker

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.

Posted by williamw in Interviews

Korean debt crisis is a cautionary tale as era of easy money ends

William White was quoted in a Bloomberg article focused on recent problems in Korea’s financial markets that eventually required forceful intervention by the authorities to restore order. White felt that many other countries might face similar problems as monetary policy tightened after many years of unusual ease which had invited leverage and imprudent behaviour.


Posted by williamw in Press, References