Credit, Debt, & Policy (w/ William White) | Grant Williams | Real Vision™

Описание: Grant travels to Toronto to meet Bill White, whose experience at the Bank of England, Bank of Canada, BIS and OECD spans five decades. The two talk about the changes in central banking that Bill has witnessed over his career, the potential for an unruly outcome, the dangers unleashed when unfairness erodes trust, and how central banks really think about gold.

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Credit, Debt, & Policy (w/ William White) | Grant Williams in Conversation | Real Vision™
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Transcript:

GW: The entire global monetary system has been built around the constant expansion of credit, something which mandates inflation be generated and prices rise. With monetary policy options all but exhausted, however, focus is shifting towards other options.

We've spoken incredibly eloquently about this dynamic between the central banks and the governments. Because I don't if it was new math, but you've talked about the need for fiscal responses to this problem. But they're all hard decisions.

WW: Yeah.

GW: And as long as the governments think the central banks have got it all under control, they're not going to make those decisions. But we've started to see at the very edges the central banks kind of nudge and say, guys, it's your turn, that we're almost out of ways to do this. Do you sense that tension between the governments and central banks starting to escalate? And if so, what does that portend. Because I got to think it can't be particularly good.

WW: To go back on the fiscal thing, just to make one thing clear, I was banging on a lot a number of years ago about perhaps the necessity to rely more on use of fiscal space when you've got it. But today, of course, the situation, you know, the situation has evolved. They've used up so much of the fiscal space, to say nothing of the recent sort of fiscal expansion in the US. It's not so clear that there's so much room there for anybody. Well, the governments, I think, over the course of years, have desperately wanted the central banks to sort it out, or perhaps better, they've desperately wanted to believe that the central banks can sort it out. Because then they don't have to do the hard things. And the hard things are things like structural reform, better insolvency laws, making it easier to repudiate and restructure debt. Nobody likes to do that kind of stuff. But the honest truth is that it seems to me that many of the debts that are now out there, particularly sort of corporate debt and sort of lower quality corporate debt, these debts won't get serviced in anything like normal interest rates, whatever normal means. And so it would be far better to sort of face up to that and do it in an orderly way through the bankruptcy courts, and the various ways of dealing with these sorts of problems, than to just simply wait until the whole thing sort of comes unstuck. But you alluded to it rightly earlier on, there there's something in human nature-- and particularly in the human nature of politicians-- that says, look, and I know that there's a problem, but fixing it is going to be really difficult. So let's-- as long as we go through my watch, OK, what's the phrase, "not on my watch".

GW: Yeah.

WW: And that's just a way of kicking the can down the road. And I'm sympathetic with these people because the character of the problem is very difficult.