Yves here. William White (along with Claudio Borio), then of the Bank of International Settlements, is best known for having warned starting in 2003 of frothiness in numerous housing markets around the world and of being blown off by Greenspan.
What is interesting about this short talk isn’t simply the particulars of what White says but the degree of his intellectual migration. White has tended to think like an orthodox economist despite being willing to push at the margins. For instance, even after the crisis, he was a budgetary scold, warning of the dangers of too much government debt. As we’ve stressed repeatedly, excessive private debt, particularly household debt, is the big hazard; government debt is troublesome in and of itself only when the government does not control its own currency and when an economy is at full employment.
This video illustrates how empirically-based economists like White are starting to reject significant elements of mainstream thinking. White at the very top of his short remarks repudiates the over-relliance on monetary policy, and later on, as politely as a Serious Economist can, waves big red flags about the current enthusiasm for negative interests rates. White points out they could result in the perverse result of banks charging more, not less, to borrowers. He still can’t quite stop worrying about government debt, but you’ll see his recommendations at the end, to a very large degree, are for foursquare “fix the real economy” measures to stimulate demand and raise worker incomes.