Macro Musings with David Beckworth Mercatus Center Podcasts

Mickey Levy is Chief Economist for the Americas and Asia for Berenberg Capital Markets, a Wall Street veteran, and a longstanding member of the Shadow Open Market Committee. He and his co-author, Charles Plosser, also have a new paper out titled, *The Fed’s Strategic Approach to Monetary Policy Needs a Reboot.* Mickey joins David on Macro Musings to discuss this paper and its implications for the upcoming Federal Reserve framework review. David and Mickey also discuss the impact and importance of a flat Phillips curve, the Fed’s policy mistakes in the wake of its new flexible average inflation targeting (FAIT) framework, recommendations for how the central bank should approach the next framework review, and much more.
 
Transcript for this week’s episode.
 
Mickey’s Twitter: @mickeylevy
Mickey’s website
 
David Beckworth’s Twitter: @DavidBeckworth
Follow us on Twitter: @Macro_Musings
 
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Related Links:
 
*The Fed’s Strategic Approach to Monetary Policy Needs a Reboot* by Mickey Levy and Charles Plosser
 
Timestamps:
 
(00:00:00) – Intro
 
(00:01:50) – Mickey Levy’s Career Path and Takeaways from the Most Recent Hoover Monetary Policy Conference
 
(00:07:24) – What Shaped the First Framework Review?
 
(00:11:56) – The Fed’s Addition of “Symmetric” Inflation
 
(00:16:32) – Price Level Drift, Deflationary Fears, and Inflation Expectations at the Fed
 
(00:23:33) – The Impact and Importance of a Flat Phillips Curve
 
(00:27:34) – Breaking Down the Elements of FAIT and the Fed’s Policy Mistakes
 
(00:42:11) – Recommendations for the Fed’s Upcoming Framework Review
 
(00:57:54) – Outro

Lars Christensen is a founding member of the market monetarist tradition, an entrepreneur in the AI space, and is also a returning guest to Macro Musings. Lars rejoins the podcast to talk about AI and its implications for the economy and for monetary policy. David and Lars also discuss the basics and implications of dynamic pricing, AI’s growing use within econometric analysis, how AI will impact the Fed and its policymaking, and much more.
 
Transcript for this week’s episode.
 
Lars’s Twitter: @MaMoMVPY
Lars’s blog
 
David Beckworth’s Twitter: @DavidBeckworth
Follow us on Twitter: @Macro_Musings
 
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Related Links:
 
*From Merchants to Quants: The Digital Revolution in Retail* by Lars Christensen
 
*Less Than Zero: The Case for a Falling Price Level in a Growing Economy* by George Selgin
 
Timestamps:
 
(00:00:00) – Intro
 
(00:01:16) – Lars’s Move from Macro to AI
 
(00:08:02) – The Basics and Implications of Dynamic Pricing
 
(00:16:17) – Using AI for Econometric Analysis
 
(00:23:54) – The Implications of AI for the Economics Field
 
(00:35:45) – How Will AI Impact the Federal Reserve and its Policymaking
 
(00:38:55) – Deflation as a Response to an AI Driven Productivity Shock
 
(00:52:08) – Outro
 
Photo Credit: Nordnet Bank

Ryan Bourne is the R. Evan Scharf Chair for Public Understanding of Economic at the Cato Institute, and he is also the editor and contributor to a new book titled, *The War on Prices: How Popular Misconceptions about Inflation, Prices, and Value Create Bad Policy.* Ryan joins Macro Musings to talk about this new book, and specifically, the history and functionality of rent and price controls, the basics of dynamic pricing, the root causes of inflation, and a lot more.
 
Transcript for this week’s episode.
 
Ryan’s Twitter: @MrRBourne
Ryan’s Cato profile
 
David Beckworth’s Twitter: @DavidBeckworth
Follow us on Twitter: @Macro_Musings
 
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Related Links:
 
*The War on Prices: How Popular Misconceptions about Inflation, Prices, and Value Created Bad Policy* by Ryan Bourne et al.
 
*I, Pencil* by Leonard Read
 
*Forty Centuries of Wage and Prices Controls: How Not to Fight Inflation* by Robert Schuettinger and Eamonn Butler
 
*Shock Values: Prices and Inflation in American Democracy* by Carola Binder
 
Timestamps:
 
(00:00:00) – Intro
 
(00:01:05) – The Background Motivation for “The War on Prices*
 
(00:06:32) – The Definition and Importance of Prices
 
(00:12:41) – The Parable of “I, Pencil”
 
(00:18:39) – Rationing on Quality or Quantity: Rent Control
 
(00:26:39) – The World War II Experience with Price Controls
 
(00:32:58) – Price and Wage Controls During the Nixon Administration
 
(00:35:48) – The Effects of a Minimum Wage
 
(00:38:38) – The Basics of Dynamic Pricing
 
(00:44:03) – Defining Inflation and Establishing its Sources
 
(00:56:08) – Was the Recent Inflation Surge Actually Optimal?
 
(00:59:51) – Outro

George Selgin is a senior fellow and director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institute. George is also a frequent guest of the podcast, and he rejoins Macro Musings to talk about some of the recent developments in the monetary and fiscal policy space. Specifically, David and George discuss recent updates regarding Fed master accounts, the problematic aspects of the Fed’s balance sheet, why a second Trump term would threaten central bank independence, and much more.
 
Transcript for this week’s episode.
 
George’s Twitter: @GeorgeSelgin
George’s Cato profile
 
David Beckworth’s Twitter: @DavidBeckworth
Follow us on Twitter: @Macro_Musings
 
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Related Links:
 
Caitlin Long’s tweet regarding the Fed’s special treatment for approving master accounts
 
*Public comments on the Proposed Guidelines for Evaluating Requests for Accounts and Services* by George Selgin
 
*Custodia Bank Inc v. Federal Reserve Board of Governors* Court documents from the Wyoming District Court
 
*Annual Report on Open Market Operations (2023)* by the Federal Reserve Bank of New York
 
*Trump Allies Draw Up Plans to Blunt Fed’s Independence* by Andrew Restuccia, Nick Timiraos, and Alex Leary
 
*Trump Advisers Discuss Penalties for Nations That Move Away From the Dollar* by Saleha Mohsin, Jennfier Jacobs, and Nancy Cook
 
*Hayek versus Keynes on How the Price Level Ought to Behave* by George Selgin
 
*The Menace of Fiscal QE* by George Selgin
 
*George Selgin on False Dawn: The New Deal and the Promise of Recovery* by Macro Musings
 
Timestamps:
 
(00:01:36) – Intro
 
(00:06:26) – Updates on Fed Master Accounts and the Custodia Case
 
(00:17:57) – Problematic Aspects of the Fed’s Balance Sheet
 
(00:22:50) – The Importance of the Overnight Unsecured Interbank Lending Market
 
(00:34:26) – Responding to the Jared Bernstein Incident
 
(00:46:33) – Donald Trump, Central Bank Independence, and Dollar Dominance
 
(00:56:54) – Outro

Roberto Perli is the manager of the System Open Market Account (SOMA) and a senior leader in the New York Fed’s Markets Group. In his role, Roberto is responsible for implementing monetary policy at the direction of the Federal Open Market Committee (FOMC). Roberto is also a returning guest to the podcast, and he rejoins Macro Musings to talk about a recent speech he made titled, *Balance Sheet Reduction: Progress to Date and a Look Ahead.* Specifically, David and Roberto discuss the Fed’s recent balance sheet activities, the basics and functionality of the overnight reverse repo facility, the importance of slowing down the Fed’s balance sheet runoff, and much more.
 
Transcript for this week’s episode.
 
Roberto’s NY Fed profile
Roberto’s Twitter: @R_Perli
 
David Beckworth’s Twitter: @DavidBeckworth
Follow us on Twitter: @Macro_Musings
 
Check out our new AI chatbot: the Macro Musebot!
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Related Links:
 
*Balance Sheet Reduction: Progress to Date and a Look Ahead* - Remarks by Roberto Perli at the 2024 Annual Primary Dealer Meeting, Federal Reserve Bank of New York
 
Timestamps:
 
(00:00:00) – Intro
 
(00:04:49) – Breaking Down the Role of SOMA Manager
 
(00:08:43) – Recapping the Fed’s Balance Sheet Activities
 
(00:11:04) – How to Think About Quantitative Tightening
 
(00:13:19) – Breaking Down the Overnight Reverse Repo Facility
 
(00:20:42) – Slowing Down the Runoff and the Future of QT
 
(00:26:48) – How to Determine the Critical Level of Reserves
 
(00:33:03) – The Structural Demand for Bank Reserves Over Time
 
(00:38:55) – The Advantages of the Floor Operating System
 
(00:47:49) – Reserve Supply Focus Moving Forward
 
(00:49:44) – Outro

Mary Daly is the president and CEO of the Federal Reserve Bank of San Francisco, a voting member of the Federal Open Market Committee (FOMC), and is also a 28-year veteran of the Federal Reserve System. President Daly joins David for this special live episode of Macro Musings to talk about her non-linear career path to the world of monetary policy, the long-term economic impacts of AI, the future outlook for Fed policy and the Fed’s framework, and much more.
 
Transcript for this week’s episode.
 
Mary’s Twitter: @MaryDalyEcon
Mary’s San Francisco Fed profile
 
David Beckworth’s Twitter: @DavidBeckworth
Follow us on Twitter: @Macro_Musings
 
Check out our new AI chatbot: the Macro Musebot!
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Related Links:
 
*Facts, Fears, and Functionality of NGDP Level Targeting* by David Beckworth
 
Timestamps:
 
(00:00:00) – Intro
 
(00:01:30) – Mary Daly’s Background
 
(00:06:09) – Recent Inflationary Trends and the Future of Fed Policy
 
(00:15:39) – The Trajectory of R-Star Over the Medium to Long-Run
 
(00:19:06) – The Long-Term Economic Impacts of AI
 
(00:29:51) – Expectations for the Upcoming Fed Framework Review
 
(00:33:35) – Prospects for Nominal GDP Targeting at the Fed
 
(00:36:58) – Fed Policymaking During an Election Year
 
(00:38:16) – Audience Q&A Period
 
(01:01:09) – Outro