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.
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.
https://themarket.ch/english/transitioning-from-an-era-of-plenty-to-an-era-of-shortages-ld.8077
A letter from William White was printed in the Financial Times on 2 December 20 2022. White wrote in support of an earlier article by Martin Wolf called “How to think about policy in a polycrisis”. A number of interacting systems, each essential for human survival and progress, are currently and simultaneously under threat. Policy solutions that focus on only one system, without thinking about the effects on other systems, could well prove counterproductive.
https://www.ft.com/content/0472dc81-2b47-46bb-9f07-fd747796e4bf
William White and Sunil Sharma coauthored an article that was posted by OMFIF on 21 April, 2022. They argue that we could be one serious economic crisis away from significant political turmoil that might threaten our democratic traditions. After decades of slow growth, stagnant real wages, and the many costs of covid, a restless public is increasingly inclined to see political structures as “rigged” and “unfair”. We must cease relying on macroeconomic stimulus (especially monetary policy) to paper over structural problems, while inadvertently making them worse. Instead, policymakers should address those structural issues more directly: not least, rising inequality, market concentration, environmental degradation and the need for debt restructuring.
https://www.omfif.org/2022/04/structural-reforms-required-to-safeguard-democratic-future/
William White, along with others, answered a question posed by the editors of The International Economy for their Winter 2022 edition: “To what extent is today’s massive global ocean of liquidity breaking all the rules in US financial markets?” White suggests (page 10) that nominal bond rates have stayed low, in part, because the Fed has convinced the bond markets that real rates are “naturally” low, and that higher inflation is only transitory. Should either of these arguments be contested, and White notes there are good grounds to believe they might be, then nominal rates might rise sharply. In this case, ” the effects on an overleveraged global economy would not be pretty”.
InternationalEconomyLiquidityWinter2022Along with twenty other economists, William White answered the question posed by The International Economy. White advised that the negative effects of ultra-easy monetary policy extend well beyond overpriced assets and that another economic downturn could be triggered by a variety of sources. A new focus on facilitating “orderly” debt restructuring would be unpalatable but still preferable to a “disorderly” and potentially disastrous alternative.
InternationalEconomySummer2021The Financial Times published a letter from William White on 28 June. In it, he points out a puzzling inconsistency between Fed rhetoric and Fed actions. On this basis, White suggests that the Fed’s “real framework is anything that justifies not tightening”.
https://www.ft.com/content/d313dc26-b87c-459d-86db-ac27f652693d
William White, along with a number of others, answered this question in the Summer Edition of The International Economy. He concluded that the agreement of member countries of the EU to allow a significant expansion in community issued debt was a remarkable and welcome development. However, it fell far short of being a “Hamiltonian Moment”. Not least, there was no assumption of state debts by some higher political order. Nor was their agreement on a dedicated source of funds to ensure the future servicing of centrally issued debt.
InternationalEconomyHamiltonianSummer2020This question was posed by the editors of The International Economy to a symposium of over thirty analysts, including William White. White responded that the world will likely languish in “an extended low growth funk” unless the problem of ever growing public and private sector debt is adequately addressed. The “headwinds” of debt were already exerting an undesirable influence on the global economy prior to the pandemic, and the policy response (however necessary, short term) has made this underlying problem worse. White suggests that, absent any credible alternative policies, cooperative agreements between debtors and creditors to restructure debts might be the least costly and least risky solution.
InternationalEconomySpring2020Japanificationpdf
This article was published on 22 April 2020 in “The Market” a Swiss digital business paper associated with NZZ. It argues that governments need to clarify the criteria they will use to determine when to relax the current “lockdown”, which is helping to save lives (by taking the pressure off hospitals), but also has enormous economic (lost jobs) and social costs. “Flattening the curve” by social distancing should be complemented as soon as possible by all the government expenditures (and legislation) needed to allow the hospitals to cope. Then, social distancing, with all its costs, can be relaxed. Much improved antigen and antibody testing will also support earlier relaxation.
https://themarket.ch/meinung/how-long-should-lockdown-measures-to-fight-covid-19-continue-ld.1915