Long-time favorite of this blog former BIS head William White (see William White Channels His Inner-Austrian along with the embedded links) shares some thoughts about central bank policies in a financial world that increasingly looks like it’s about to become unhinged.
At about the 2:20 mark, the discussion turns to a subject that few other economists ever mention in public – that combating economic difficulties that were fueled by a reckless expansion of debt with even more debt might not be a good approach:
As debts become too large to be serviced, then they have to be restructured or forgiven because the alternative … the longer you put this whole thing off, the smaller the proportion of the money you’re going to recover.
So, the question is, do you want 50 cents on the dollar or do you want nothing, because one dollar on the dollar is not on the table.
White has similarly grim news for anyone thinking negative interest rates will save us.