The Great Reversal into a higher inflation environment

In a Financial Times article written on September 8, John Plender made a favorable reference to the Forward, written by William White, to an essay prepared for the New Zealand Initiative by Graham Wheeler and Bruce Wilkinson. White suggested that central banks have systematically underestimated the importance of supply side shocks when setting monetary policy.

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Edward Chancellor and “The Price of Time”

Edward Chancellor’s recent book “The Price of Time” traces the history of interest rates from their first use in Mesopotamia to modern times. He convincingly documents how low interest rates generally lead to financial instability, low growth and economic insecurity. In the book, and in an interview with Mark Dittli of “The Market” (linked below), he refers very favorably to earlier papers of William White and Claudio Borio of the BIS whom he generously describes as “the heroes in this story” who, in the end, will ” have the last laugh”.

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Debt dangers hang over the markets

John Plender, on 9 January in the Financial Times (FT Money), made favourable reference to some of my earlier work. I have suggested that  central bank efforts to restore the functioning of financial markets during crises, while absolutely necessary, might also sow the seeds of still bigger crises in the future.  As a society, we need to think more about the longer term implications of  our efforts to avoid shorter term problems.

Posted by williamw in Press, References

Economic Dominoes Are Starting to Drop

In a Forbes magazine article published on 1 May, John Mauldin referred to William White as “the former chief economist at the Bank for International Settlements and my favorite central banker”. In the article, Maudlin refers to the massive and dangerous growth in global debt since 2009 (pre pandemic) and the enabling role played by monetary easing.

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How bad could the coronavirus get for the economy?

William White was quoted in an article in the National Post (Canada) on 20 March. He expressed concern that  a global recession linked to the pandemic could expose underlying fragilities that would aggravate the downturn. He expressed the hope that policymakers had learned lessons from history as to how to mitigate the damage.


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“The seeds of the next crisis”

In the “Big Read” column in the Financial Times of March 4, 2020, John Plender  refers to my concern that post-crisis monetary policy has been “intensely morally hazardous”. Low interest rates and unconventional monetary policies have “set the stage for the next boom and bust cycle, fueled by ever declining credit standards and ever expanding debt accumulation”. COVID-19 could well be the trigger for the eventual “bust” phase to begin. If  so, the magnitude and duration of the downturn might well exceed that expected from the economic consequences of the pandemic viewed in isolation.

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China’s renmimbi and the global ring of fire

In a 29 August article in the Financial Times, Paul Hodges and Daniel de Blocq van Scheltinga refer to an earlier interview that William White gave to the Daily Telegraph. The general concern he raised was that a growing level of global debt could trigger or exacerbate another global recession. More particularly, White stated his concern about the growing level of dollar denominated debt, issued by non residents of the United  States. This exposed the issuers to dangerous currency mismatch problems should the US dollar continue to strengthen. The recent depreciation of the renmimbi was worrisome in that regard, particularly if it sparked renewed capital flight from China, as was the possibility of another “Risk Off” phase in international capital flows.


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How the long debt cycle might end

Martin Wolf, in his article of 14 May, 2019 in the Financial Times, made reference to some of my earlier publications that warned of a renewed financial crisis. He notes my concerns about a constantly growing ratio of non-financial sector debt to global GDP and the incoherence between the near term implications of monetary policy (expansionary) and financial regulation (contractionary) for aggregate demand. These problems, along with many other “imbalances” in the global economy arising from policy actions, might trigger a renewed crisis. Should exogenous forces, like a trade war, provide an alternative trigger for a new downturn, these “imbalances” will surely worsen it s magnitude and duration.

Posted by williamw in Press, References