Macro Musings with David Beckworth

George Selgin, a senior fellow at the Cato Institute and author of *False Dawn*, delves into the intricate history of the Great Depression and its monetary implications today. He questions common beliefs about the New Deal, revealing its limited effectiveness in economic recovery. Selgin also discusses the gold standard's restrictive role during the Depression and critiques the Reconstruction Finance Corporation and the National Recovery Administration's mixed impact on revitalization. His insights highlight valuable lessons that resonate with current macroeconomic challenges.

Daniel Bunn, President and CEO of the Tax Foundation, dives into pressing fiscal issues facing the U.S. government. He discusses the history and importance of tax models in shaping effective policies. Bunn highlights the economic threats posed by tariffs and critiques current budget reconciliation efforts. If he were president, he outlines radical reforms to the tax code. The conversation also explores the implications of entitlement spending and the urgent need for sustainable fiscal strategies to manage national debt.

Luca Fornaro, a senior researcher at CREI and a professor at UPF and the Barcelona School of Economics, dives into the intricacies of hysteresis and its impact on economic growth. He discusses how downturns can cause long-term damage to productivity, leading to stagnation traps. The conversation also explores the interconnectedness of business cycles and long-term growth, as well as the role of population growth and innovation in driving economic development. Fornaro advocates for smart macroeconomic policies to stimulate recovery and address supply shocks.

Adam Ozimek, Chief Economist at the Economic Innovation Group, shares insights on high-skilled immigration reform, emphasizing its critical role in economic growth. He discusses the inefficiencies in the current green card system and proposes a new Heartland Visa to rejuvenate struggling areas. Adam also tackles misconceptions about job scarcity linked to immigration. Additionally, he analyzes the impacts of Trump’s trade war, highlighting the disconnect between public sentiment and governmental narratives on tariffs. A fascinating dive into pressing economic issues!

Skanda Amarnath, the executive director of Employ America, dives into the Federal Reserve's intricate monetary framework. He discusses the implications of Humphrey's Executor and the Fed's ongoing Framework Review. The conversation highlights the case for nominal GDP targeting as a fresh approach to inflation management. Skanda emphasizes the vital need for the Fed's independence amidst political pressures, and explores the importance of clear communication in navigating economic challenges. A fascinating look at the future of monetary policy!

Andy Levin, a Dartmouth College economics professor and former advisor to central banks, discusses vital insights on holding the Federal Reserve accountable. He emphasizes the importance of transparency and external reviews to enhance the Fed's legitimacy. The conversation delves into the staffing debate, revealing inconsistencies in compensation compared to other federal positions. Levin also critiques the Fed's forecasting failures and its extraordinary independence, calling for reforms to improve oversight and communication with the public.

Kathryn Judge is a law professor at Columbia University and a legal scholar of the Federal Reserve and financial policy. Kathryn returns to the show to discuss the Fed’s Emergency Lending Facilities, or 13(3) and current happenings at the Federal Reserve. Check out the transcript for this week’s episode, now with links. Recorded on March 27th, 2025 Subscribe to David's Substack: Macroeconomic Policy Nexus Follow David Beckworth on X: @DavidBeckworth Follow Kathryn Judge on X: @ProfKateJudge Follow the show on X: @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! Subscribe to David's new BTS YouTube Channel  Timestamps: (00:00:00) – Intro (00:01:43) – History of Section 13(3) (00:03:55) – Increasing Use of 13(3) (00:06:55) – Unusual and Exigent Circumstances (00:08:53) – Changes to 13(3) (00:13:17) – Classification of the Facilities (00:21:13) – Should the Fed Be Doing Emergency Lending? (00:25:42) – Feature or Bug? (00:33:19) – Fed Independence (00:47:45) – Regionalism of the Fed (00:55:23) – Outro

Paul Blustein, a former journalist at The Washington Post and Wall Street Journal, shares insights from his book on the dollar's journey. He examines the historical rise of King Dollar, highlighting pivotal moments like the Nixon Shock and the influence of Paul Volcker. Blustein also discusses the dollar's strategic role in statecraft and challenges posed by emerging currencies like the euro and crypto. He delves into the complexities of dollar dominance, the impact of financial sanctions, and the evolving landscape of global economic power.

Bill Nelson, Chief Economist and Executive Vice President at the Bank Policy Institute, dives into the critical shifts in global central banking from supply-driven to demand-driven systems. He discusses the Fed's resistance to these changes and the implications for interest rates and liquidity management. Nelson also shares insights on the Bank of England's new framework and offers suggestions for the Fed's approach to policy implementation. The conversation highlights the dynamic landscape of central banking and the need for adaptability in an evolving economic environment.

Scott Lincicome, Vice President of General Economics and Trade at Cato, dives into the complexities of Trump’s trade war. He discusses the historical evolution of U.S. trade policy, highlighting a shift toward protectionism and geopolitics. Lincicome debunks myths surrounding trade deficits, emphasizing the importance of global supply chains. He also examines the interplay between tariffs and consumer prices, and the crucial role of innovation in manufacturing. The conversation sheds light on the future of globalization amidst changing political landscapes.