William White & Mohamed El-Erian

Here are a couple of articles readers may find of interest. One is by William White (former BIS) and the other by Mohamed A. El-Erian. Below are links to these articles with a brief excerpt from each. The first link was suggested to me by a reader.

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William White - Ultra Easy Money - Digging the Hole Deeper?

(from the concluding paragraph)

"We should be under no illusions as to how hard it will be politically for governments to carry out the policies suggested here, even if the G20 provides an organizing framework for coordinated action. That is why they have come to rely so heavily on central bank stimulus in the first place. As suggested above, absent these government policies that could work, central banks are destined to ‘‘just keep digging.’’ Moreover, as the hole deepens, still broader risks arise. Future economic setbacks tied to ultra-easy money could threaten social and political stability, particularly given the many signs of strain already evident worldwide. In short, the policy stakes are now very high."



Mohamed A. El-Erian - An Unstable Economic Order (Project Syndicate)

. . . . 

"Whether by choice or necessity, the vast majority of the world’s economies are part of a multilateral system that gives their counterparts in the advanced world – especially the United States and Europe – enormous privileges. Three stand out.

First, because they issue the world’s main reserve currencies, the advanced economies get to exchange bits of paper that they printed for goods and services produced by others."   . . . . . . . . .


"The Bretton Woods organizations, instituted after World War II to maintain stability, risk losing their influence, and the countries with the clout to bolster them seem unwilling at this stage to press ahead boldly with the needed reforms."  . . . . .
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Added note: Tomorrows blog article will include an email quote from Jim Rickards about the China currency situation. He tells me that issue is a subset of an even bigger issue that people need to keep an eye on.