The Federal Reserve Crediting Reserve Balances Hold by the Commercial Banks

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No bank is going to lend to tyler an to start a new business, or to ben freedman to buy a new house at a rate lower than it can get by leaving the reserves on deposit at the local federal reserve bank. But those interest rates are just super, super low. And so if you had had an idea for a business, and wanted to go in and get aloan, i don't think the fact that the federal reserve was crediting reserve balances would have made any difference whatsoever. So i'm not a fan of nominal g d p targeting. It's not the worst idea ever, but i would prefer to do it in a more sophisticated way....

Benjamin Friedman has been a leading macroeconomist since the 1970s, whose accomplishments include writing 150 papers, producing more than dozen books, and teaching Tyler Cowen graduate macroeconomics at Harvard in 1985. In his latest book, Religion and the Rise of Capitalism, Ben argues that contrary to the popular belief that Western economic ideas are a secular product of the Enlightenment, instead they are the result of hotly debated theological questions within the English-speaking Protestant world of thinkers like Adam Smith and David Hume.

Ben joined Tyler to discuss the connection between religious belief and support for markets, what drives varying cultural commitments to capitalism, why the rate of growth is key to sustaining liberal values, why Paul Volcker is underrated, how coming from Kentucky influences his thinking, why annuities don’t work better, America’s debt and fiscal sustainability, his critiques of nominal GDP targeting, why he wouldn’t change the governance of the Fed, how he maintains his motivation to keep learning, his next big project on artificial intelligence, and more.

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Recorded December 4th, 2020 Other ways to connect

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