Macro Musings with David Beckworth

Jeffrey Lacker is a senior affiliated scholar at the Mercatus Center, and he previously worked at the Federal Reserve Bank of Richmond, where he served as its president from 2004 to 2017. Jeff is also a returning guest to the podcast, and he rejoins David on Macro Musings to talk about the history of the Federal Reserve’s credit policy, as well as a recent Shadow Open Market Committee conference.   Transcript for this week’s episode.   Jeffrey’s website Jeffrey’s Mercatus 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:   *A 50-Year Retrospective on the Shadow Open Market Committee and its Role in Monetary Policy* — A conference hosted by the Hoover Institution   *From the “Lender of Last Resort” to “Too Big to Fail” to “Financial System Savior”: Federal Reserve Credit Policy and the Shadow Open Market Committee* by Jeffrey Lacker   *Last Resort Lending: Classical Thought vs. Modern Federal Reserve Practice* by Jeffrey Lacker   Timestamps:   (00:00:00) – Intro   (00:01:47) – The Shadow Open Market Committee and its Contributions Throughout Time   (00:05:32) – Highlights from the Recent Shadow Open Market Committee Conference   (00:10:17) – From FAIT Back to FIT?   (00:14:07) – *Federal Reserve Credit Policy and the Shadow Open Market Committee*: Motivation and Summary   (00:16:05) – Breaking Down the Difference Between Credit Policy and Monetary Policy   (00:22:10) – The Four Doctrines of Fed Lending: The Monetary Stability Doctrine   (00:28:56) – The Four Doctrines of Fed Lending: The Real Bills Doctrine   (00:34:49) – The Four Doctrines of Fed Lending: Warburg’s Mercantilism   (00:39:11) – The Four Doctrines of Fed Lending: Too-big-to-fail and the Reluctant Samaritan   (00:47:45) – Solutions for Improving the System Moving Forward   (00:55:25) – Outro

Zachary Mazlish is an economist at the University of Oxford, and he joins David on Macro Musings to explain some recent and important macroeconomic developments, specifically the inflation linkages to the 2024 presidential election and the macroeconomic implications of transformative AI. David and Zach also discuss transformative AI’s impact on asset pricing, optimal monetary policy in world of high growth, the causes of the slowdown in trend productivity, and more.   Transcript for this week’s  episode.   Zach’s Twitter: @ZMazlish Zach’s Substack Zach’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:   *Yes, Inflation Made the Median Voter Poorer* by Zachary Mazlish   *Transformative AI, Existential Risk, and Real Interest Rates* by Trevor Chow, Basil Halperin, and Zachary Mazlish   *Decomposing the Great Stagnation: Baumol’s Cost Disease vs. “Ideas Are Getting Hard to Find”* by Basil Halperin and Zachary Mazlish   *The Unexpected Compression: Competition at Work in the Low Wage Labor Market* by David Autor, Arin Dube, and Annie McGrew   Timestamps:   (00:00:00) – Intro   (00:04:03) – Inflation Made the Median Voter Poorer: Comparing Periods of Wage Growth   (00:15:26) – Inflation Made the Median Voter Poorer: The Median Change in the Wage   (00:22:19) – Assessing the Feedback to Zachary’s Article   (00:25:05) – The Significance of Transformative AI and its Double-Edged Sword   (00:27:02) – The Impact of Transformative AI on Asset Pricing and its Policy Challenges   (00:38:07) – The Broader Macroeconomic Effects of Rapid Growth   (00:41:05) – Optimal Monetary Policy in a World of High Growth   (00:43:19) – Exploring the Causes of the Productivity Slowdown   (00:49:21) – Outro

Ellen Correia Golay is an advisor in the Markets Group at the Federal Reserve Bank of New York, focusing on the US Treasury market. She also helped lead an interagency working group report and a recent conference on the Treasury market. Ellen joins David on Macro Musings to talk about these and other Treasury-related developments. Ellen and David also discuss her career journey and role at the New York Fed, the current and future challenges in the Treasury Market, necessary areas for reform, and more.   DISCLAIMER: Ellen Correia Golay’s views are her own, and they do not represent those of the Federal Reserve Bank of New York or the Federal Reserve System.   Transcript for this week’s episode.   Register now for Building a Better Fed Framework: The AIER Monetary Conference.   Ellen’s LinkedIn 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:   *Enhancing the Resilience of the U.S. Treasury Market: 2024 Staff Progress Report* by the Inter-Agency Working Group on Treasury Market Surveillance (IAWG)   *The 2024 U.S. Treasury Market Conference* — An event hosted by the Federal Reserve Bank of New York   Timestamps:   (00:00:00) – Intro   (00:03:09) – Ellen’s Career Journey and Role at the New York Fed   (00:17:13) – Breaking Down the Treasury Market   (00:20:38) – Current and Future Challenges in the Treasury Market   (00:29:54) – How Would Central Clearing Impact the Fed and the Treasury Market?   (00:31:47) – Explaining the Treasury Department Buyback Program   (00:36:12) – Commencement of Data Dissemination on Individual Nominal Coupon Treasury Transactions   (00:38:29) – Requiring the Reporting of Non-Centrally Cleared Bilateral Repos   (00:41:26) – The 2024 U.S. Treasury Market Conference   (00:43:50) – Future Areas for Reform in the Treasury Market   (00:46:43) – Outro

Emil Verner is an associate professor of finance at MIT Sloan and is a research fellow at the National Bureau of Economic Research. Emil has written widely on financial stability, banking panics, and credit booms, and he joins David on Macro Musings to talk about these issues. Specifically, David and Emil also discuss the causes and policy implications of bank failures, the shortcomings of the Diamond-Dybvig model of bank runs, how financial crises spur the rise of populism, and much more.   Transcript for this week’s episode.   Register now for Building a Better Fed Framework: The AIER Monetary Conference.   Emil’s Twitter: @EmilVerner Emil’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:   *Failing Banks* by Sergio Correia, Stephan Luck, and Emil Verner   *Banking Crises Without Panics* by Matthew Baron, Emil Verner, and Wei Xiong   *Financial Crisis, Creditor-Debor Conflict, and Populism* by Gyozo Gyongyosi and Emil Verner   *Fragile by Design: The Political Origins of Banking Crises and Scarce Credit* by Charles Calomiris and Stephen Haber   *Going to Extremes: Politics After Financial Crises, 1870-2014* by Manuel Funke, Moritz Schularick, and Christoph Trebesch   Timestamps:   (00:00:00) – Intro   (00:03:45) – Why Do We Care About Banking Panics and Financial Stability?   (00:05:42) – Breaking Down the Causes of Bank Failures and its Policy Implications   (00:13:38) – Exploring the Historical Banking Data   (00:15:59) – *Failing Banks*: Key Findings and Takeaways   (00:24:00) – *Banking Crises Without Panics*   (00:28:05) – Responding to the Diamond-Dybvig Model of Bank Runs   (00:33:29) – Applying the Bank Solvency Story to the Great Financial Crisis   (00:36:16) – The Impact of Credit Booms   (00:40:56) – What Are the Necessary Policy Prescriptions?   (00:43:08) – Why is Diamond-Dybvig So Popular?   (00:47:01) – *Financial Crisis, Creditor-Debtor Conflict, and Populism*   (00:52:55) – How Do We Stem the Tide of Populism in the Future?   (00:54:36) – Outro

Loretta Mester was president and CEO of the Federal Reserve Bank of Cleveland from 2014 through June of 2024, and she is a 39-year veteran of the Federal Reserve System. Loretta is also currently an adjunct professor of finance at the Wharton School at the University of Pennsylvania. She joins David on Macro Musings to talk about her time as Fed president and a recent paper she delivered on the Fed’s operating system. David and Loretta also discuss the ongoing battle against inflation, what to expect from the upcoming Fed framework review, and much more.   Transcript for this week’s episode.   Register now for Building a Better Fed Framework: The AIER Monetary Conference.   Loretta’s Cleveland Fed profile Loretta’s Wharton 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:   *The Fed’s Ample Reserves Monetary Policy Operating Framework: It Isn’t as Simple as it Looks* – Remarks by Loretta Mester for the Panel on The Conduct of Monetary Policy: Evolution from Free Reserves to the Corridor and Floor Systems at the Shadow Open Market Committee 50th Anniversary Conference   *Reserve Demand Elasticity (RDE)* by the Federal Reserve Bank of New York   Timestamps:   (00:00:00) – Intro   (00:02:18) – Loretta’s Career Path and Tenure at the Cleveland Fed   (00:10:42) – The Ongoing Battle Against Inflation   (00:17:53) – Evaluating FAIT and What to Expect from the 2024-25 Fed Framework Review   (00:26:03) – Corridor vs. Floor: The Evolution of the Fed’s Operating System and its Policy Implications   (00:41:31) – Estimating the Demand for Bank Reserves   (00:45:57) – Addressing Over-reliance on the Fed in the Interbank Market   (00:52:45) – Loretta’s Thoughts on Central Clearing and Increased Use of the Discount Window   (00:55:23) – Outro

Jon Hartley is a macroeconomist and affiliated scholar at the Mercatus Center, and he is also the host of a Hoover Institution podcast titled, *Capitalism and Freedom in the 21st Century.* Jon joins David on Macro Musings to talk about the Hoover Institution’s recent monetary policy conference, *A 50-Year Retrospective on the Shadow Open Market Committee and its Role in Monetary Policy* as well as some of his own related work. Specifically, Jon and David also discuss the origins, purpose, and influence of the Shadow Open Market Committee, the tension between the fiscal theory of the price level and Fed policy, the significance of government debt management, and more.   DISCLAIMER: The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management.   Transcript for this week’s episode.   Register now for Building a Better Fed Framework: The AIER Monetary Conference.   Jon’s podcast: Capitalism and Freedom in the 21st Century Jon’s Twitter: @Jon_Hartley_ Jon’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:   *A 50-Year Retrospective on the Shadow Open Market Committee and its Role in Monetary Policy* - An event hosted by the Hoover Institution   *The International Public Debt Valuation Puzzle: Testing the Fiscal Theory of the Price Level Across Countries and Time* by Jon Hartley, Matyas Farkas, and J.R. Scott   *Does Government Debt Management Matter? High Frequency Identification from U.S. Treasury Quarterly Refunding Announcements* by Jon Hartley and Lorenzo Rigon   *The U.S. Public Debt Valuation Puzzle* by Hanno Lustig, Zhengyang Jiang, Stijn Van Nieuwerburgh, and Mindy Xiaolan   *The Real Effects of Monetary Expansions: Evidence from a Large-scale Historical Experiment* by Nuno Palma   *Chronicle of a Deflation Unforetold* by Francois Velde   Timestamps:   (00:00:00) – Bumper   (00:00:41) – Intro   (00:04:50) – The Origins, Purpose, and Influence of the Shadow Open Market Committee   (00:13:18) – Why Has Money Fallen Out of Favor?   (00:22:31) – How Well Does the Fiscal Theory of the Price Level Hold Up?   (00:34:58) – The Tension Between the Fiscal Theory of the Price Level and Fed Policy   (00:40:58) – Does Government Debt Management Matter?   (00:51:10) – The Floor System, Quantitative Easing, and the Keys to Economic Growth   (00:59:41) – Outro

Tara Sinclair is a professor of economics and international affairs at George Washington University, where she also directs the George Washington Center for Economic Research. From 2022 to 2024, Tara also served as the Deputy Assistant Secretary for Macroeconomics in the Office of Economic Policy at the US Department of Treasury. Tara joins David on Macro Musings to talk about her time at Treasury, real-time economic analysis, the Fed framework review, and much more.   Transcript for this week’s episode.   Tara’s Twitter: @TaraSinc Tara’s website Tara’s GWU 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:   *Real Time Economics: Tales from the Trenches* - Remarks by Tara Sinclair at the 2024 RTE Conference   *Labor Shortages and Job Mismatch* - Remarks by Tara Sinclair at the 66th NABE Annual Meeting   *The Fed’s Strategic Approach to Monetary Policy Needs a Reboot* by Mickey Levy and Charles Plosser   *The Inflation Surge of the 2020s: The Role of Monetary Policy* by Gauti Eggertsson and Don Kohn   *Monetary Policy Strategies to Foster Price Stability and a Strong Labor Market* by Michael Kiley   *Did the Federal Reserve’s 2020 Policy Framework Limit Its Response to Inflation? Evidence and Implications for the Framework Review* by Christina Romer and David Romer   Timestamps:   (00:00:00) – Intro   (00:01:25) – Working as a Deputy Assistant Secretary at the Treasury Department   (00:06:31) – Building a Better Economic Database   (00:10:15) – Breaking Down Real-time Economics and Real-time Data   (00:16:06) – *Real Time Economics: Tales from the Trenches*   (00:21:37) – Solving Our Current Data Challenges   (00:24:36) – *Labor Shortages and Job Mismatch*   (00:32:08) – Breaking Down the Upcoming Fed Framework Review   (00:37:56) – Addressing the Concerns and Issues Surrounding the Fed’s Framework   (00:42:50) – Unpacking the Dual Mandate and the Fed’s Broad and Inclusive Goal   (00:53:45) – Could AI Define Maximum Employment in the Future?   (00:56:13) – Outro

Joseph Gagnon is a senior fellow at the Peterson Institute for International Economics, a former senior Fed staffer, and a returning guest to the podcast. Joe rejoins David on Macro Musings to talk about the unholy trinity behind the COVID inflation surge and what history can teach us about the unusual inflation experience of that period. David and Joe also discuss the inflationary lessons from the Korean War, the Fed’s upcoming framework review, and much more.   Transcript for this week’s episode.   Joseph’s Twitter: @GagnonMacro Joseph’s PIIE 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:   *What Caused the U.S. Pandemic-Era Inflation?* by Ben Bernanke and Olivier Blanchard   *Understanding U.S. Inflation During the COVID Era* by Laurence Ball, Daniel Leigh, and Prachi Mishra   Timestamps:   (00:00:00) – Intro   (00:02:46) – Predicting the Post-Pandemic Inflation Surge   (00:06:39) – Assessing the State of the Bond Market and Inflation Expectations After the Inflation Surge   (00:16:14) – What Caused the U.S. Pandemic-Era Inflation: Breaking Down the Literature   (00:23:45) – *The Trinity of COVID-Era Inflation in G7 Economies*   (00:32:55) – *Why Did Inflation Rise and Fall So Rapidly? Lessons from the Korean War*   (00:42:06) – Inflation, FAIT, and the Upcoming Fed Framework Review   (00:49:18) – Why Should the Fed Consider Nominal GDP Targeting?   (00:53:04) – Responding to the Measurement Issue Surrounding Nominal GDP   (00:57:40) – Outro

Emilio Ocampo is a professor of finance and economic history at UCEMA. He has written widely on the Argentine economy and has advised President Javier Milei on economic policy. Emilio joins David on Macro Musings to talk about the current state of the Argentine economy, the present and ongoing reforms of President Milei, and the prospects for dollarization in Argentina.   Transcript for this week’s episode.   Emilio’s Twitter: @ocampo_emilio Emilio’s Substack Emilio’s UCEMA 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:   *Commitment Devices with Time Inconsistency Disease and Institutional Anomie: The Case of Argentina* by Emilio Ocampo   *Dollarization: A Solution for Argentina* by Emilio Ocampo and Nicolas Cachanosky   *Argentina Scrapped Its Rent Controls. Now the Market is Thriving* by Ryan Dube   Timestamps:   (00:00:00) – Intro   (00:03:58) – Assessing Argentina’s Progress on Lowering Inflation   (00:11:12) – Exploring the Causes of Argentina’s Poor Economic Performance   (00:15:20) – *Commitment Devices with Time Inconsistency Disease and Institutional Anomie*   (00:26:29) – Javier Milei’s Plan to Revive Argentina   (00:31:39) – The Next Steps for Argentine Economic Reform   (00:39:56) – Defining Dollarization and Exploring its Historical Cases   (00:49:33) – Transitioning to Dollarization in Argentina   (00:55:12) – Dollarization Concerns and the Prospects for Dollarization Moving Forward   (00:58:48) – Outro

Jonathon Hazell is an assistant professor of economics at the London School of Economics and is a returning guest to the podcast. He rejoins David on Macro Musings to talk about the costs of inflation, the Phillips curve Debate, and the lessons learned from the post-pandemic inflation surge.   Transcript for this week’s episode.   Jonathon’s Twitter: @JADHazell Jonathon’s website Jonathon’s LSE 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:   *Why Do Workers Dislike Inflation? Wage Erosion and Conflict Costs* by Jonathon Hazell, Joao Guerreiro, Chen Lian, and Christina Patterson   *Do Deficits Cause Inflation? A High Frequency Narrative Approach* by Jonathon Hazell and Stephan Hobler   *Jonathon Hazell on Phillips Curves, Wage Rigidity, and How to Measure R-Star* by Macro Musings   *The Dominant Role of Expectations and Broad-Based Supply Shocks in Driving Inflation* by Paul Beaudry, Chenyu Hou, and Franck Portier   Timestamps:   (00:00:00) – Intro   (00:05:27) – Breaking Down the Costs of Inflation   (00:08:45) – *Why Do Workers Dislike Inflation? Wage Erosion and Conflict Costs*   (00:21:12) – Outlining the Policy Implications   (00:27:24) – The Recent Phillips Curve Conversation: What Have We Learned?   (00:34:43) – *Do Deficits Cause Inflation? A High Frequency Narrative Approach*   (00:46:39) – Navigating the Alternative Macroeconomics Perspectives   (00:51:33) – Evaluating the Supply vs Demand Story for the Post-Pandemic Inflation   (00:55:09) – Outro