White believes in a dark interregnum that will happen eventually or ‘soon,’ meaning in a few years because the central banks are manned by well-meaning fools who think in a limited, formulaic way. Having been a top CB for decades, he should know.
His view of the macro economy as an unpredictable, evolving beast unsuited to prediction by a set of equations seems consistent with reality. By implication, he is a pragmatist who would deal with issues as they become apparent, rather than through some flawed doctrinal lens that mistakenly believes in ‘equilibrium.’
The major problem is that governments have ignored the fiscal function, relying entirely on debt and money supply as the means to deal with problems. This has resulted in dangerously low interest rates and huge debt, both private and public, not to mention serial bubbles. Historically, this state of affairs cannot continue. Governments cannot now rely on the fiscal function to reduce debt as it is too high, making it politically impossible to regain economic balance. And, of course, the CBs cannot work the fiscal angle. So, we are screwed. Anytime a major CB takes even tiny steps to correct its mistakes, the stock markets swoon, making corrective work (tightening) impossible. So we are on a train to hell with the CBs’ hands tied and government unable to do the necessary taxing work.
We’re going to have a huge deflation or a huge inflation, he doesn’t know which, but he is ready for either by having bought ‘property’ (which he does not define, but I think means hard assets such as gold and real estate) and being long in cash. He is ready for either eventuality.
He does not like BTC because it is surrounded by competitors that destroy the notion of a truly limited in number currency/asset. I’m not sure I agree as first-mover advantage is significant. But note the progress of ETH. The idea of two or three major cryptos ultimately surviving in my view is very likely. |
