Articles

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

William White wrote an Intelligence Memo for the C D Howe Institute on 26 March 2020. He notes that the pandemic has certainly caused a recession, hopefully one followed by a “V” shape recovery, but it might also trigger a deeper and more prolonged downturn. In recent decades, global monetary policy has focused too much on short term effects and too little on the longer term consequences – like the continued build up of debt. Macroeconomic policies designed to support the economy in the face of the pandemic should balance off “urgency” with longer run “effectiveness”.

This article was published as an OMFIF Commentary on 23 March. It expresses concern that the recession sparked by the pandemic might turn into something deeper and more long lasting.  While recognizing the associated need for policy to lean urgently against the current slowdown, to support a “V” shaped recovery, White notes that some ways of doing so are more effective than others. Policy choices should also “take a thought for the morrow” so as to avoid unintended longer term consequences.

This article was recently published in German and English by “The Market” , a leading online Swiss financial journal. It argues that, in some respects, we have actually been engaged in a kind of currency war for many years. Countries are not actively trying to depreciate against the dollar, but they are actively trying to prevent their currencies from appreciating. Should the Trump administration now respond, be trying unilaterally to lower the value of the dollar, this could result in a decline in faith in the value of all fiat currencies. In short, another battle in the currency war would be a very bad idea.

https://themarket.ch/meinung/why-we-should-worry-about-a-new-global-currency-war-ld.1107

This letter to the editor was published in the April 27th edition of  “The Economist”. It refers briefly to policy insights suggested by embracing the concept of the economy as a complex, adaptive system. A much fuller presentation of those insights, for the conduct of monetary policy in particular, can be found under the category “Presentations” on this website. Posted on 22 April, 2018, the article is entitled “Recognizing the Economy as a Complex, Adaptive System: Implications for Central Banks”.

https://www.economist.com/letters/2019/04/27/letters-to-the-editor

This article was published on 25 April in a new, on-line  Swiss business journal called “The Market”. It suggests that our collective efforts at “crisis prevention” have not been successful and that future economic and financial crises can by no means  ruled out. Moreover, the effectiveness of the instruments we have available to attenuate such problems (“crisis management”) have seriously diminished over time. In such circumstances, many debts will not be serviced or repaid. To avoid a disorderly outcome, like the Debt/Deflation described by Irving Fisher in 1936, many debts will have to be restructured or forgiven. We should be focusing now on improving our legal and administrative procedures to ensure that these debt problems can be resolved  (“crisis resolution”) in as orderly a way as possible.

https://themarket.ch/meinung/william-r-white-are-we-prepared-for-the-next-financial-crisis-ld.213

Along with others, Mr White was invited to provide an answer to the question, posed by the magazine The International Economy, of how the Fed’s mandate might be changed. He suggested that efforts to raise inflationary expectations by changing the mandate were doomed to failure. Rather, the Fed should pay less attention to decimal point deviations from inflation targets and focus more intently on avoiding credit driven “busts” in financial markets. The article was published in the Spring 2019 edition.

Reforming the Fed

The editor of The International Economy magazine asked a number of well known economists “What to make of the global dollar shortage?” The answers were published in the Summer 2018 edition. Bill White’s contribution emphasized systemic exposures linked to the major increase in dollar denominated liabilities issued (largely by corporations) by entities whose revenues were not generated in dollars. Should we pass through another phase of “Risk Off” investing, liquidity support in dollars from the Federal Reserve would likely be required. Whereas swap lines exist for European and some other central banks, no such lines currently exist for some emerging market economies likely to be on the firing line in the future.