Mr. White's response is somewhat tautological: a lack of demand.
So let me re-phrase the question: what is holding back demand in the global economy in a world awash in money?
Regular readers know that it is the policies adopted at the start of the bank solvency led financial crisis and still being pursued by politicians and central bankers that are holding back demand in the global economy.
It was completely predictable that these policies would result in a lack of demand and a Japan-style economic slump. I know it was completely predictable because your humble blogger predicted the failure of policies like those that have been adopted and are still being pursued in December 2007.
What is needed to restore demand in the global economy is for politicians and central bankers to stop protecting banker bonuses.
Ok, it is not that simple.
However, stopping protecting banker bonuses is the necessary first step as it implies that politicians and regulators are done listening to the bankers and their lobbyists and are finally serious about protecting the real economy and society.
As for what has to be done to restore demand, .... (hint: look at Iceland and its imperfect implementation of the Swedish Model).
But [Liam] Fox is a mid-Atlantic politician, in impressionable thrall to plausible US Republican ideologues (if you like that sort of thing) as well as to their Ukip fringe, the Tea Party.
As it shows with every utterance the Tea Party (its foot soldiers as sincere as the average Ukip activist) is busy helping them to become unelectable to the White House, despite their strength in conservative strongholds where folk don't get out much.
Just look at ex-VP nominee and bogus populist Paul Ryan's latest prescriptions for budget-balancing at the expense of the old and poor.
So Fox's similar sentiments matter here because a lot of people out there believe his claim that the problem is a supply-side one....
No, where Liam Fox goes badly wrong is where he thinks we need to freeze public spending for three or even five years to help cut borrowing and thereby free up scope for tax cuts.
Our problem, he says, is that we are over-taxed, over-regulated and that we spend and borrow too much. That's true for some people, who are over-taxed (many of them very poor) or over-borrow (those credit cards, eh!), as it is for some firms – small firms, those most likely to create new jobs and wealth. They do carry a big burden of tax and paperwork.
But overall, it's not true at all.
Big firms and investors are awash with funds – they don't invest them because they don't see a return.They also don't pay taxes. Witness how much money the big firms hold off shore as a result of their efforts to minimize what they pay in taxes.
What is holding us back from a stronger recovery is that there isn't enough demand in the economy.
Companies and individuals are paying down debt – de-leveraging is the fancy word – yet the government, which has much deeper pockets, is doing the same instead of leaning against the bust (just as Labour failed to lean against the boom)....
It's not that Fox is entirely wrong. There is a case for not ring-fencing certain types of spending, including overseas aid, the NHS and defence equipment, because such exceptions distort spending and distort cuts elsewhere in the system. There a case too for cutting the perks of well-off pensioners – bus passes and winter fuel money – which I have made before on behalf of such people, including myself.
But the assertion that cutting progressive taxes – abolishing capital gains tax for five years as well – and placing most of the consequent burden on the poorest (who at least spend what they get and thereby put demand into the high street) is both immoral and economically wrong....
But when demand is low and interest rates are exceptionally low, we could spend more money on worthwhile projects – the usual infrastructure stuff, Vince Cable's ideas about investment strategies for productive enterprise, familiar ideas with which the Treasury flirts half-heartedly.
Britain has a more disciplined budget mechanism than the US where the Bush Republicans promised to cut taxes and spending but mostly cut taxes: a supply side remedy that fails and is slowly crippling the federal system....
UK austerity might be a more plausible option if everyone else in Europe – and increasingly beyond it – were not playing the same game. Via export drives or currency devaluation we now risk the beggar-my-neighbour tactics which bedevilled the recovery in the 30s.
Yet the world is awash with capital – try this (subscription) analysis in the FT, which paints a startling contrast between struggling real economies and a mountain of money searching for safe and sensible places to park it.