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Wlliam White was recently interviewed by Alan Dunne for the podcast “Top Traders Unplugged”. White spoke of his concern that markets and policymakers were underestimating the impact of future negative supply shocks on both inflation (higher) and interest rates. Given high levels of existing debt, both private and public, higher rates could trigger a financial or fiscal crisis. Dunne’s observation, that policy rates  had risen in 2022 without great incident, led on to a discussion of the factors that might yet lead to a crisis. The interview finished with a discussion of the international monetary system and the possibility of Chinese led competition for both SWIFT as an international payment system and for the US dollar as the global reserve currency.

https://www.toptradersunplugged.com/podcast/the-calm-before-a-systemic-reckoning-ft-william-white/

On January 16 the FinancialTimes published a letter submitted by William White. In commenting on two previous articles in the FT, White drew attention to the buildup of debt, both private and public, in many countries. The “original sin” in the 1990s was leaving interest rates so low that debt was encouraged to rise quickly. Subsequently, central banks had little choice but “to ease dra­mat­ic­ally in sub­sequent cycles to fore­stall the burst­ing of the debt bubble that they them­selves had cre­ated”. Many countries now have a debt overhang that needs to be addressed in a serious way.

https://www.ft.com/content/0cb2d571-14b2-4b9a-b7db-8e102e5195dc

INET posted this Working Paper on 14 August 2023. It is argued that monetary policy should be guided much more by financial sector developments (credit and debt) and much less by near term targets for inflation.  This argument is first supported by an historical review of the negative outcomes produced by the current policy framework. A second level of support is provided through questioning the theoretical arguments underpinning the current framework. The search for an alternative monetary policy framework would begin with the observation that an economy is a complex, adaptive system like many others in nature and society. From this perspective, arguments for introducing a “narrow money” regime need more attention than they have thus far been given.

https://www.ineteconomics.org/research/research-papers/why-the-monetary-policy-framework-in-advanced-countries-needs-fundamental-reform

The C D Howe Institute in Toronto published an Intelligence Memo by William White on 14 April. He suggests that at least four of the global systems needed for human survival and progress are showing signs of extreme stress. Our market based economic system, the environmental system, our democratic political systems and our public health systems are all in danger. Since the underlying problems must be dealt with urgently and simultaneously, “build back better” seems inadequate as a clarion call for action. Canada has certainly contributed to the development of these global problems but, by taking appropriate measures to address them speedily at the national level, Canada might encourage other nations to do the same.

https://www.cdhowe.org/intelligence-memos/william-white-%E2%80%93-build-back-better-may-not-be-sufficient

Charles Goodhart and Manoj Pradhan recently published a book called “The Great Demographic Reversal: Aging societies, waning inequality and an inflation revival”. William White’s review of this book was published in “The Market” on 1 December 2020. White strongly recommends reading this book, both for the clarity and force of the arguments it contains but also its bravery. Contrary to informed opinion that deflation looms, the book suggests that demographic changes at the global level might be leading to both slower real growth and more inflation. Goodhart and Pradhan then spell out some of the unpleasant side effects of such developments. White generally concurs, but presents some arguments for expecting even more inflation thanGodhart and Pradhan seem to suggest.

https://themarket.ch/meinung/will-the-next-decade-see-the-return-of-inflation-ld.3096