Bill White is a former BIS chief economist and now chairs the OECD Economic Development and Review Committee.
He famously pushed Alan Greenspan to raise interest rates in 2003 so the Fed would have a cushion to use in the next crisis – which Bill thought would come along in a few years. Sure enough, he was right.
Bill told us last year that the world’s central banks were making a mistake with their single-minded focus on monetary policy.
He noted, correctly, that monetary solutions have not helped, and he stated emphatically that more of the same won’t help, either.
Interest rates have an important signaling function.
What happens when the signals are wrong? People make bad decisions, of course.
And, for at least the last six years (perhaps more), the signals have been very wrong indeed.