Samim Ghamami on the Treasury Markets Impact on the Future Path of Interest Rates and Inflation

Scott Sumner is David’s colleague and the Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center. Scott is also a returning guest to the podcast and joins David on Macro Musings to discuss his new book, The Money Illusion: Market Monetarism, the Great Recession, and the Future of Monetary Policy. Specifically, David and Scott discuss common misconceptions about the 2008-09 Recession, why bubble narratives too often miss the mark when explaining rising asset prices, whether the Fed’s adoption of average inflation targeting signals that it is moving toward a level target, and much more.   Transcript for the episode can be found here.   Scott’s Twitter: @ScottSumnerTMI Scott’s blog: https://www.themoneyillusion.com/ Scott’s Mercatus profile: https://www.mercatus.org/scholars/scott-sumner   Related Links:   *The Money Illusion: Market Monetarism, the Great Recession, and the Future of Monetary Policy* By Scott Sumner https://www.mercatus.org/publications/monetary-policy/money-illusion-market-monetarism-great-recession-and-future-monetary   *Eight Centuries of Global Real Interest Rates, R-G, and the ‘Suprasecular’ Decline, 1311–2018* by Paul Schmelzing https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3485734   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

11 Loka 202150min

Chris Russo is a post-graduate research fellow in the Monetary Policy Program of the Mercatus Center at George Mason University and is a former economist at the New York Federal Reserve Bank. He re-joins Macro Musings to talk about the growing concerns over the US debt ceiling, what it could mean for the economy, and how to fix the issue.   Transcript for the episode can be found here.   Chris’s Twitter: @RussoEcon Chris’s Mercatus profile: https://www.mercatus.org/scholars/christopher-russo Chris’s Github site: https://christopher-russo.github.io/about/   Related Links:   *Permanently Suspend the Debt Limit* by Christopher Russo https://thehill.com/opinion/finance/553827-permanently-suspend-the-debt-limit   *What the Fed Will Do if Congress Doesn’t Fix the Debt Ceiling* by Christopher Russo https://www.barrons.com/articles/inside-the-feds-playbook-for-a-dollar-default-51622055588   *America’s Need to Pay Its Bills Has Spawned a Political Game* by Jim Tankersley https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

4 Loka 202153min

Hanno Lustig is a professor of finance at Stanford University, and a senior fellow at the Stanford Institute for Economic Policy Research. Hanno joins David on Macro Musings to discuss his work on dollar safety, safe assets, convenience yields, and more. More specifically, Hanno and David discuss the dollar dominance in global financial markets, how the US’s status as the world’s safe asset provider reinforces its exorbitant privilege in money markets, whether the countercyclical demand for safe assets can help explain why US inflation has been so low this past decade, how years of low interest rate policy might have contributed to the growing wealth gap, and much more.   Transcript for the episode can be found here.   Hanno’s Twitter: @HannoLustig Hanno’s Stanford profile: https://www.gsb.stanford.edu/faculty-research/faculty/hanno-lustig   Related Links:   *Dollar Safety and the Global Financial Cycle* by Zhengyang Jiang, Arvind Krishnamurthy, and Hanno Lustig https://www.gsb.stanford.edu/faculty-research/working-papers/dollar-safety-global-financial-cycle   *Mind the Gap in Sovereign Debt Markets: The U.S. Treasury basis and the Dollar Risk Factor* by Arvind Krishnamurthy and Hanno Lustig https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3443231   *Manufacturing Risk-Free Government Debt* by Zhengyang Jiang, Hanno Lustig, Stijn Van Nieuwerburgh, and Mindy Z. Xiaolan https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3646430   *US Government Debt Valuation Puzzle* by Zhengyang Jiang, Hanno Lustig, Stijn Van Nieuwerburgh, and Mindy Z. Xiaolan https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3333517   *The Fiscal Theory of Price Level with a Bubble* by Markus K. Brunnermeier, Sebastian A. Merkel and Yuliy Sannikov https://www.nber.org/papers/w27116   *Debt As Safe Asset: Mining the Bubble* by Markus K. Brunnermeier, Sebastian Merkel, and Yuliy Sannikov https://scholar.princeton.edu/markus/publications/debt-safe-asset-mining-bubble   *The Safety Trap* by Ricardo J. Caballero and Emmanuel Farhi https://www.nber.org/papers/w19927   *Financial and Total Wealth Inequality with Declining Interest Rates* by Daniel Greenwald, Matteo Leombroni, Hanno Lustig, and Stijn Van Nieuwerburgh https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3789220   *The Saving Glut of the Rich* by Atif Mian, Ludwig Straub, and Amir Sufi https://scholar.harvard.edu/straub/publications/saving-glut-rich-and-rise-household-debt   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

27 Syys 202151min

Megan Greene is a senior fellow at the Harvard Kennedy School of Government and was formerly the global chief economist at Manulife John Hancock Asset Management. Megan is also a returning guest to the podcast and rejoins David to talk about the prospects of central bank digital currency as well as how to conduct climate change policy from a central banking angle.   Transcript for the episode can be found here.   Megan’s Twitter: @economistmeg Megan’s website: https://economistmeg.com/about/ Megan’s Financial Times archive: https://www.ft.com/megan-greene   Related Links:   *Central Banks Need to Go Slow on Digital Currencies* by Megan Greene https://www.ft.com/content/21e3affe-8c57-4bac-b9c5-21b645e93d7c   *Adapting Central Bank Operations to a Hotter World: Reviewing Some Options* by the Network for Greening the Financial System https://www.ngfs.net/sites/default/files/media/2021/06/17/ngfs_monetary_policy_operations_final.pdf   *Megan Greene and Eric Lonergan on Dual Interest Rates and the Prospects of Average Inflation Targeting* https://www.mercatus.org/bridge/podcasts/10052020/megan-greene-and-eric-lonergan-dual-interest-rates-and-prospects-average   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

20 Syys 202153min

Joseph Wang is a former senior trader on the open market desk at the Federal Reserve Bank in New York and the author of the book Central Banking 101. He also blogs at fedguy.com and is active on Twitter. Joseph joins Macro Musings to discuss what has happened at the Fed from the operational side, and we consider its implications for money markets. Specifically, Joseph and David discuss recent events from the perspective of the Federal Reserve trading desk, Joseph’s conception of a two-tiered monetary system, continued dollar dominance in global money markets, whether the Fed’s overnight repo facility is truly a temporary facility or trending towards a permanent one, and much more.   Transcript for the episode can be found here.   Joseph’s Twitter: @FedGuy12 Joseph’s website: http://fedguy.com/   Related Links:   *QE Zombifies Money Markets* by Joseph Wang https://fedguy.com/qe-zombifies-money-markets/   *The Gravitational Pull of Zero* by Joseph Wang https://fedguy.com/the-gravitational-pull-of-zero/   *RRP At The ZLB* by Joseph Wang https://fedguy.com/rrp-at-the-zlb/   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

13 Syys 202157min

Philippa Sigl-Glöckner is the director of the German think tank Dezernat Zukunft, or the Institute for Macrofinance, and was formerly a part of the German Federal Ministry of Finance. Philippa joins Macro Musings to talk about fiscal policy in Germany, as well as her new paper, *A New Fiscal Policy for Germany*. Specifically, David and Philippa discuss the historical context for German fiscal policy, the three big economic challenges for Germany, and how the country can achieve full capacity utilization in the future.   Transcript for the episode can be found here.   Philippa’s Twitter: @PhilippaSigl Philippa’s website: http://philippasigl.com/ Philippa’s Forbes profile: https://www.forbes.com/profile/philippa-sigl-glockner/?sh=383fb0233d30   Related Links:   *A New Fiscal Policy for Germany* by Philippa Sigl-Glöckner, Max Krahe, Pola Schneemelcher, Florian Schuster, Viola Hilbert, Henrika Meyer https://dezernatzukunft.org/wp-content/uploads/2021/07/A-new-fiscal-policy-for-Germany.pdf   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

6 Syys 202148min

Jennifer Murtazashvili is an associate professor of political science at the University of Pittsburgh and directs the Center for Governance and Markets. Jennifer is also an expert on all things Afghanistan, given her experience working there and advising governments and international organizations on issues related to Afghanistan. She also has a new book titled, *Land, the State, and War: Property Institutions and Political Order in Afghanistan*, and joins the show to talk about it. Jennifer and David also discuss the recent developments as well as long-term developments in the country and lessons for state capacity building.   Transcript for the episode can be found here.   Jennifer’s Twitter: @jmurtazashvili Jennifer’s University of Pittsburgh profile: https://gspia.pitt.edu/faculty-and-staff/jennifer-brick-murtazashvili   Related Links:   *Land, the State, and War: Property Institutions and Political Order in Afghanistan* by Jennifer Murtazashvili and Ilia Murtazashvili https://www.cambridge.org/core/books/land-the-state-and-war/A7B8C98CB24780A3CC0EA1CD265D888A   *Informal Federalism: Self-Governance and Power Sharing in Afghanistan* by Jennifer Murtazashvili https://academic.oup.com/publius/article-abstract/44/2/324/1873292   *The Politics of Land Property Rights* by Meina Cai, Ilia Murtazashvili and Jennifer Murtazashvili https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3393160   *Bring the Afghans to America* by Benjamin Powell and Alex Nowrasteh https://thehill.com/blogs/congress-blog/homeland-security/568964-bring-the-afghans-to-america?rl=1   *Inside Afghanistan’s Cryptocurrency Underground as the Country Plunges into Turmoil* by MacKenzie Sigalos https://www.cnbc.com/2021/08/21/bitcoin-afghanistan-cryptocurrency-taliban-capital-flight.html   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

30 Elo 202153min

Bill Nelson is a chief economist and an executive vice president at the Bank Policy Institute. Bill previously was a deputy director of the Division of Monetary Affairs at the Federal Reserve Board where his responsibilities included monetary policy analysis, discount window policy analysis, and financial institution supervision. Bill also worked closely with the BIS working groups and the design of liquidity regulations. Bill rejoins David on Macro Musings to discuss his article titled, “I Don't Know Why She Swallowed a Fly,” which looks back at the significant growth of the Federal Reserve, both in its reach and in its size, since the Great Recession of 2007-09. Additionally, Bill and David discuss steps the Fed could take to return to a reasonably sized institution, conducting policy with a light imprint on financial markets.   Transcript for the episode can be found here.   Bill’s SIFMA profile: https://www.sifma.org/people/bill-nelson/ Bill’s BPI archive: https://bpi.com/tag/bill-nelson/ Bill’s American Banker archive: https://www.americanbanker.com/author/william-nelson-ab3618   Related Links:   *I Don’t Know Why She Swallowed a Fly* by Bill Nelson https://morningconsult.com/opinions/i-dont-know-why-she-swallowed-a-fly/   *Why Do We Need Both Liquidity Regulations and a Lender of Last Resort? A Perspective from Federal Reserve Lending during the 2007-09 U.S. Financial Crisis* by Bill Nelson, Mark Carlson, and Burcu Duygan-Bump https://www.federalreserve.gov/econresdata/feds/2015/files/2015011pap.pdf   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

23 Elo 202151min