Steven Kelly on the Financial Stability Implications of the Discount Window

Travis Hill is the Vice Chairman of the FDIC Board of Directors, and he joins David on Macro Musings to talk about discount window and bank liquidity, receivership funding, and the tokenization of financial assets. Specifically, David and Travis also discuss the push for pre-positioning at the discount window, how the FDIC funds receiverships, the impact of tokenization on the future of banking, and much more.   Transcript for this week’s episode.   Travis’s FDIC profile   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *Reflections on Bank Regulatory and Resolution Issues* – Remarks by Vice Chairman Travis Hill at the American Enterprise Institute   *Banking’s Next Chapter? Remarks on Tokenization and Other Issues* – Remarks by Vice Chairman Travis Hill at the Mercatus Center   Timestamps:   (00:00:00) – Intro   (00:02:36) – The Unique Role of the FDIC and the Vice Chair   (00:10:58) – The Push for Pre-Positioning at the Discount Window   (00:20:19) – Addressing the Current Issues Relating to the Discount Window   (00:28:44) – How Does the FDIC Fund Receiverships?   (00:35:41) – Breaking Down the Federal Financing Bank   (00:40:10) – Discount Window Stigma and Uncollateralized Fed Funding   (00:45:44) – Tokenization and Its Impact on the Future of Banking and Cross-Border Payments   (00:54:40) – Outro

Catherine Pakaluk is an Associate Professor of Social Research and Economic Thought at the Bush School of Business at the Catholic University of America. Catherine is also the author of a new book titled, *Hannah’s Children: The Women Quietly Defying the Birth Dearth,* and she joins David on Macro Musings to talk about it. Catherine and David also specifically discuss the facts of demographic decline, the women who are pushing back against this trend, its broader implications for the economy and society, and more.   Transcript for this week’s episode.   Catherine’s Twitter: @CRPakaluk Catherine’s website Catherine’s CUA profile   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *Hannah’s Children: The Women Quietly Defying the Birth Dearth* by Catherine Pakaluk   *Why Americans Aren’t Having Babies* by Rachel Wolfe   *No One Left: Why the World Needs More Children* by Paul Morland   *Promises I Can Keep: Why Poor Women Put Motherhood Before Marriage* by Kathryn Edin and Maria Kefalas   Timestamps:   (00:00:00) – Intro   (00:03:16) – *Hannah’s Children: The Women Quietly Defying the Birth Dearth*   (00:08:30) – The Facts of Demographic Decline   (00:12:48) – The Implications of Demographic Decline   (00:20:28) – Breaking Down the “Chain of Infinity”   (00:23:15) – The Forces Driving Demographic Decline   (00:32:18) – The Influence and Impact of Paul Ehrlich   (00:38:16) – The Motivation and Background for *Hannah’s Children*   (00:43:29) – Why Are Women Having Larger Families?   (00:52:18) – Exploring Pronatal Policy Recommendations   (00:57:03) – Outro

Stephen Miran is a former senior advisor to the US Treasury Department, a senior strategist at Hudson Bay Capital, and a fellow at the Manhattan Institute. Stephen is also a returning guest to the podcast, and he rejoins David on Macro Musings to talk about his recent paper with Nouriel Roubini titled, *Activist Treasury Issuance and the Tug-of-War Over Monetary Policy,* as well as his thoughts on what a second Trump presidential term would mean for the Fed and financial markets.   Transcript for this week’s episode.   Stephen’s Twitter: @SteveMiran Stephen’s Manhattan Institute profile   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *ATI: Activist Treasury Issuance and the Tug-of-War Over Monetary Policy* by Stephen Miran and Nouriel Roubini   *Trump Wants a Weaker Dollar But Wall Street Doubts He’ll Get One* by Saleha Mohsin and Carter Johnson   *Trump Allies Draw Up Plans to Blunt Fed’s Independence* by Andrew Restuccia, Nick Timiraos, and Alex Leary   Timestamps:   (00:00:00) – Intro   (00:01:49) – Breaking Down *Activist Treasury Issuance and the Tug-of-War Over Monetary Policy*   (00:21:33) – Responding to Criticism from Janet Yellen and Others   (00:28:21) – Addressing Trump’s Push for a Weaker Dollar   (00:38:24) – Can We Weaken the Dollar While Still Ensuring Its Use?   (00:43:07) – What a Second Trump Term Would Mean for Fed Independence and Crypto   (00:49:19) – Outro

Carola Binder is an associate professor of civic leadership and economics at the University of Texas at Austin, and she is the author of a new book titled, *Shock Values: Prices and Inflation in American Democracy.* Carola is also a returning guest to the podcast, and she rejoins David on Macro Musings to talk about this book and some recent work she has done on the Fed’s framework review. David and Carola specifically discuss the history of inflation in the US, the advantages of adopting a nominal GDP targeting regime, what to expect from the Fed’s upcoming framework review, and more.   Transcript for this week’s episode.   Carola’s Twitter: @cconces Carola’s website   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *Shock Values: Prices and Inflation in American Democracy* by Carola Binder   *Why Do We Dislike Inflation?* by Stefanie Stantcheva   Timestamps:   (00:00:00) – Intro   (00:03:42) – *Nominal GDP Targeting: Lessons from Recent History*   (00:12:18) – NGDP Level Targeting: Looking Through Supply Shocks and Policy Communication   (00:17:16) – *Shock Values: Prices and Inflation in American Democracy*   (00:21:44) – The History of Inflation and Deflation in the US   (00:30:30) – Key Lessons from the Revolutionary War and Civil War Periods   (00:35:37) – The Impact of Price Controls During World War II   (00:40:42) – The Emergence of Price Stability: From the Great Inflation Period to the Present   (00:46:24) – The Direction of the Fed’s Framework Review   (00:49:22) – Outro

Samim Ghamami is an economist at the Securities and Exchange Commission (SEC), where he has been working on reforming the US Treasury market, and he joins David on Macro Musings to talk about these efforts. Samim and David also discuss the long run path of interest rates, the basics of the Treasury market, Samim’s outlook for Treasury market reform, and much more.   DISCLAIMER: Samim’s views are his own and do not represent those of his SEC colleagues, the commissioners, or the Chair.   Transcript for this week’s episode.   Samim’s Twitter: @GhamamiSamim Samim’s website   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Timestamps:   (00:00:00) – Intro   (00:00:58) – Samim’s Journey to the SEC   (00:05:47) – Breaking Down the Size and Composition of the Treasury Market   (00:10:25) – Explaining the Long Run Path of Interest Rates   (00:18:48) – The Key Segments of the Treasury Market   (00:28:25) – Central Clearing as a Treasury Market Reform   (00:34:40) – Picking the Most Effective Treasury Market Reform   (00:37:39) – Samim’s Future Outlook for Other Treasury Market Reforms   (00:43:46) – Addressing Risk Concentration Concerns   (00:48:26) – Outro

Kyla Scanlon is the founder of Bread, a financial education company where she brings economics to a wide and often younger audience, and is also the author of the book, *In This Economy? How Money and Markets Really Work.* Kyla joins David on Macro Musings to talk about a wide range of economic issues, including the case nominal GDP targeting, the basics of the “Vibecession” and the vibe economy, how to further build American wealth, and more.   Transcript for this week’s episode.   Kyla’s Twitter: @kylascan Kyla’s website   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *In This Economy? How Money and Markets Really Work* by Kyla Scanlon   *Less Than Zero: The Case for a Falling Price Level in a Growing Economy* by George Selgin   Timestamps:   (00:00:00) – Intro   (00:01:06) – Kyla’s Academic and Professional Path   (00:15:20) – Flipping the Macro Musings Script: David’s NGDP Targeting Pitch   (00:30:52) – Breaking Down the “Vibecession” and the Vibe Economy   (00:34:41) – The Housing Side of a Vibe Economy   (00:38:54) – The Path to Growing American Wealth   (00:41:40) – The Issue of Population Growth   (00:44:15) – Gen Z’s Interest in Macroeconomics   (00:47:52) – How Should We Think About Labor Market Indicators?   (00:50:51) – Outro

Sam Schulhofer-Wohl is the Senior Vice President and the Senior Advisor to the President of the Dallas Fed, Lorie Logan. Sam is a longtime veteran of the Federal Reserve System and has also previously served at the Minneapolis and Chicago Federal Reserve banks. Sam joins David on Macro Musings to talk about Treasury market resiliency issues, the floor system, the Friedman Rule, bank deposits, the monetary policy implications of labor migration across the United States, and much more.   Transcript for this week’s episode.   Sam’s Dallas Fed profile Sam’s website   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *The Customer Settlement Risk Externality at US Securities Central Counterparties* by Sam Schulhofer-Wohl   *Deposit Convexity, Monetary Policy, and Financial Stability* by Emily Greenwald, Sam Schulhofer-Wohl, and Joshua Younger   *Understanding the Long-Run Decline in Interstate Migration* by Greg Kaplan and Sam Schulhofer-Wohl   *Is a Treasury Central Clearing Mandate the Path to Increased Central Clearing?* by Marta Chaffee and Sam Schulhofer-Wohl   *The Netting Efficiencies of Marketwide Central Clearing* by Michael Fleming and Frank Keane   *Ample Reserves and the Friedman Rule* - A speech by Dallas Fed President Lorie Logan at the 2023 European Central Bank Conference on Money Markets   Timestamps:   (00:00:00) – Intro   (00:01:31) – Sam’s Wide-Ranging Career Path   (00:11:08) – The Customer Settlement Risk Externality   (00:14:30) – Breaking Down the Treasury Market   (00:18:38) – The Importance and Effectiveness of Central Clearing   (00:26:50) – The History and Role of FICC   (00:32:27) – All-to-all Trades as a Path to Reforming the Treasury Market   (00:36:52) – The Future Timeline for Central Clearing   (00:39:07) – *Ample Reserves and the Friedman Rule*   (00:46:52) – *Deposit Convexity, Monetary Policy, and Financial Stability*   (00:52:21) – The Importance of Labor Migration for Monetary Policy   (00:59:42) – Outro

Nicholas Anthony is a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives, a fellow at the Human Rights Foundation, and is also a returning guest to the podcast. Nick rejoins David on Macro Musings to talk about a new book he has authored titled, *Digital Currency or Digital Control: Decoding CBDC and the Future of Money.* Specifically, Nicholas and David discuss the history of CBDCs, their challenges and drawbacks, Nick’s recommendations for the future, and a lot more.   Transcript for this week’s episode.   Nick’s Twitter: @EconWithNick Nick’s Cato profile   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *Digital Currency or Digital Control: Decoding CBDC and the Future of Money* by Nicholas Anthony   *Nicholas Anthony on the Current Prospects and Legislative Developments Surrounding CBDC* by Macro Musings   *Macroeconomic Modelling of CBDC: A Critical Review* by Ulrich Bindseil and Richard Senner   *Ulrich Bindseil on Central Bank Operating Systems* by Macro Musings   Timestamps:   (00:00:00) – Intro   (00:01:50) – The Future Prospects of CBDC: From Congress to the White House   (00:07:35) – The History of CBDCs   (00:11:19) – Breaking Down the Three Types of CBDCs   (00:17:22) – The Challenges and Drawbacks of CBDCs   (00:25:42) – The Buffer Between CBDCs and Privacy   (00:31:00) – Wholesale CBDCs, Real-time Payments, and Cross-border Payments   (00:41:06) – The Potential Destabilizing Effects of CBDCs   (00:46:12) – The Pros and Cons of a CBDC for the Fed   (00:53:23) – Responding to Pro-CBDC Arguments   (00:59:05) – Recommendations for the Future of CBDCs   (01:01:92) – Outro

James Bullard was the president and CEO of the Federal Reserve Bank of St. Louis from 2008 to 2023, and he is currently the dean of the Mitchell E. Daniels Jr. School of Business at Purdue University. James is also a previous guest of the show, and he rejoins David on Macro Musings to talk about his time at the Fed, FAIT, and the upcoming Fed framework review. Specifically, James and David also discuss how to improve the FOMC’s economic reporting, the case for implementing nominal GDP targeting, the future of R-star, and much more.   Transcript for this week’s episode.   James’s St. Louis Fed bio James’s Purdue University profile   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *R-Star Wars: The Phantom Menace* - A presentation by James Bullard at the 34th Annual National Association for Business Economics (NABE) Economic Policy Conference   *Demand Shocks as Technology Shocks* by Yan Bai, Jose-Victor Rios-Rull, and Kjetil Storesletten   Timestamps:   (00:00:00) – Intro   (00:03:10) – Defining the St. Louis Fed and Bullard’s Fed Tenure   (00:09:58) – Comparing FAIT and Nominal GDP Targeting   (00:15:55) – Assessing the Current FAIT Framework   (00:25:37) – Evaluating the Recent V-Shaped Recovery   (00:29:28) – What to Expect from the Upcoming Fed Framework Review   (00:33:31) – Improving the FOMC’s Economic Reporting   (00:37:46) – The Case for Nominal GDP Targeting   (00:50:24) – The Future of R-Star   (00:53:52) – Outro

Josh Lipsky is the senior director of the Atlantic Council’s GeoEconomics Center. Josh joins David on Macro Musings to talk about the tools of financial statecraft, how they have evolved over the years, and their implications for digital currencies moving forward. Specifically, David and Josh also discuss how financial statecraft would be applied to a possible conflict with China, the current state of the cross-border payments system, the future of wholesale CBDC in the US, and much more.   Transcript for this week’s episode.   Josh’s Twitter: @joshualipsky Josh’s Atlantic Council profile   David Beckworth’s Twitter: @DavidBeckworth Follow us on Twitter: @Macro_Musings   Check out our new AI chatbot: the Macro Musebot! Join the new Macro Musings Discord server!   Join the Macro Musings mailing list! Check out our Macro Musings merch!   Related Links:   *Sanctioning China in a Taiwan Crisis: Scenarios and Risks* by Charlie Vest, Agatha Kratz, Juliana Bouchaud, Josh Lipsky, Kimberly Donovan, Charles Lichfield, and Niels Graham.   *The Geopolitical Imperative to Upgrade the Dollar* by Jordan Bleicher and Josh Lipsky   *Stablecoins and National Security: Learning the Lessons of Eurodollars* by Timothy Massad   Timestamps:   (00:00:00) – Intro   (00:04:02) – The Russia Sanctions as an Example of Financial Statecraft   (00:10:14) – The Financing of the Russia-Ukraine War   (00:14:08) – The Delicacy of Legal Precedents and the REPO Act   (00:19:10) – Breaking Down the Tools of Financial Statecraft   (00:22:08) – Applying Financial Statecraft to a Possible China Conflict   (00:28:52) – Cross-border Payments and the Global Status of the US Dollar   (00:34:05) – Breaking Down the Development and Geopolitical Importance of mBridge   (00:38:34) – The Future and Importance of Wholesale CBDC in the US   (00:43:28) – Private Sector Alternatives to CBDCs   (00:45:05) – Where is the CBDC Conversation Headed?   (00:49:25) – Closing Thoughts: The 80th Anniversary of Bretton Woods and the Future of Dollar Dominance   (00:52:48) – Outro