Steven Kelly is the Associate Director of Research at the Yale Program on Financial Stability and is also a returning guest to the podcast. Steven rejoins David on Macro Musings to talk about the financial stability implications of the discount window. David and Steven also discuss the issues with FHLBs, how to fix the challenge of reporting requirements, restarting the term auction facility and committed liquidity facilities, and much more.

Transcript for this week’s episode.

Steven’s Twitter: @StevenKelly49

Steven’s blog: Without Warning

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!

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Related Links:

*Domestic Liquidity Provision During Potential Crises* - a panel discussion featuring Steven Kelly, Bill Nelson, Susan McLaughlin, and Luc Laeven at the Federal Reserve Bank of Atlanta’s 2024 Financial Markets Conference

*Weekly Fed Report Still Drives Discount Window Stigma* by Steven Kelly

*The New Bagehot Project* - an initiative by the Yale Program on Financial Stability

*Forward Guidance: Something Old and Something New: Two Potential, Beneficial Discount Window Facilities* by Bill Nelson

Timestamps:

(00:00:00) – Intro

(00:01:02) – The Yale Program on Financial Stability and Steven’s Role

(00:07:04) – Building a Resilient Regulatory Framework

(00:12:45) – Addressing Issues in the Discount Window

(00:21:37) – Responding to Criticism of Liquidity Regulations

(00:27:22) – Fixing the Challenge of Reporting Requirements

(00:33:29) – Restarting the Term Auction Facility and Committed Liquidity Facilities

(00:37:24) – Addressing the Issue with FHLBs

(00:45:26) – Additional Thoughts from the Atlanta Fed Conference Panel

(00:50:59) – Could Increased Use of the Discount Window Cause a Shift in the Fed’s Operating System?

(00:54:44) – Outro

Ernie Tedeschi is the Director of Economics at the Budget Lab and is a visiting fellow at the Psaros Center for Financial Markets and Policy. Recently, Ernie was a chief economist at the White House’s Council of Economic Advisors, and he is also a returning guest to the podcast. Ernie rejoins Macro Musings to talk about the CEA and some of his recent work on the political risks to the US safe harbor premium and R-star. David and Ernie also discuss the benefits and healing properties of a high employment economy, Ernie’s favorite measures of the labor market, the current and past trends in the path of R-Star, and more.

Transcript for this week’s episode.

Ernie’s Twitter: @ernietedeschi

Ernie’s Budget Lab 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:

*Political Risks to the U.S. Safe Harbor Premium* by Ernie Tedeschi

*Recent Movements in [R-star]: The Most Important Interest Rate That You have Never Heard Of* by Ernie Tedeschi

*The 2024 Economic Report of the President* by the White House Council of Economic Advisers

*The Fed Governor Who Proved Larry Summers Wrong* by Nick Timiraos

*Summers, Blanchard Say Waller’s ‘Soft-Landing’ Paper Has Errors* by Craig Torres

Timestamps:

(00:00:00) – Intro

(00:01:49) – Ernie’s Experience at the CEA

(00:09:15) – The Benefits and Healing Properties of a High Employment Economy

(00:15:28) – Ernie’s Favorite Measures of the Labor Market

(00:20:17) – The Broader Debate Surrounding Labor Market Measures

(00:24:07) – The Basics of a US Safe Harbor Premium

(00:28:56) – Political Risk vs. Exorbitant Privilege

(00:33:46) – Debt Ceiling Crises as a Political Risk Scenario

(00:37:01) – Fiscal Dominance as a Political Risk Scenario

(00:43:25) – Outlining the Distinction Between Different R-Stars

(00:48:39) – Past and Current Trends in the Path of R-Stars

(00:54:46) – Assessing the Sources of High Productivity

(00:58:22) – Outro