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David Beckworth: latest market views
Mercatus Center at George Mason University
Summary
David Beckworth is a senior research fellow at the Mercatus Center at George Mason University, a former U.S. Treasury economist, and host of the Macro Musings podcast on monetary policy and macroeconomics.
Chorus has 6 views from David Beckworth across 2 episodes on Macro Musings since October 19, 2026.
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A tiered reserve system would revive interbank lending, bringing price discovery and counterparty discipline.
Under tiered reserves, some banks would be short reserves and others long, so they would start lending to each other. He sees this as a wonderful development. It would create price discovery and counterparty discipline, and better allocation of reserves within the banking system. He does not want the federal funds market restored to its old glory days, but wants extra price signals. He cites the Norges Bank and other central banks that explicitly want interbank lending revived, after reserves stopped flowing between banks.
“some banks may be short one day reserves, some are long, and so they start lending to each other ... That'd be a wonderful development. There's price discovery. There's counterparty discipline.”at 44:37
Macro Musings: Darrell Duffie on the Fed's Balance Sheet and the Changing Financial System ·
Stabilizing nominal dollar incomes during the pandemic averted a financial crisis, though policy then overshot into high inflation.
He argues that if nominal income growth is stabilized, borrowers can meet dollar debts fairly easily, which is what he thinks happened during the pandemic. He points out that the economy collapsed sharply but recovered without the massive financial crisis that could have followed. He credits the stabilization of dollar incomes for this outcome. He adds that policy then overdid it, producing high inflation, so the lesson is about stabilizing income growth while avoiding overshooting.
“I think one of the stories of the pandemic is we did not have a massive financial crisis, and we should have. ... part of it is we stabilized dollar incomes. Now we overdid it.”at 15:58
Macro Musings: Christina Skinner on the Financial Stability Oversight Council and Central Bank Independence ·
The Fed's large footprint is driven by global dollar system demands for swap lines and money market facilities.
Beckworth argues one reason the Fed has grown so large is the demands of the global dollar system. The Fed almost has to step in to offer currency swap lines and money market facilities, which raises questions about its role. He presents this as a reason the Fed is different from other central banks and has a harder time staying within a narrow independence framework.
“I think one reason the Fed has gotten so big is because there's these demands of the global dollar system. Like, it almost has to step in and offer currency swap lines.”at 47:58
Macro Musings: Christina Skinner on the Financial Stability Oversight Council and Central Bank Independence ·
The ECB is effectively making fiscal transfers across member states through low rates, unlike other central banks.
Beckworth says the ECB is unique because it is a currency union without a fiscal union, spanning multiple countries. It has been given a lot of responsibility, and some would argue it is effectively doing fiscal transfers across member states by keeping rates low. He presents this as a reason the ECB, like the Fed, faces demands that make the narrow time-inconsistency case for independence hard to apply.
“The ECB is also very unique because it's a currency union, not a fiscal union, multiple countries. So it's been really given a lot of responsibility to some would argue it's ... effectively doing fiscal transfers across states via ... keeping rates low and such.”at 47:58
Macro Musings: Christina Skinner on the Financial Stability Oversight Council and Central Bank Independence ·
Smaller central banks like the Riksbank can more easily preserve independence than the Fed or ECB.
Beckworth describes the Riksbank, which after QE losses set up a deposit facility at the central bank. Some banks must hold deposits there earning 0% until the bank's profit recapitalizes it, which avoids going back to the government and questioning its independence. He thinks the Riksbank can address the independence question more easily than larger banks because it has fewer distractions. That makes it a privilege that is easier for a smaller central bank than for the ECB or the Fed. He suggests the time-inconsistency argument may be easier to satisfy in some countries than others.
“they're able to think about that issue, I think, more easily because they don't have all the distractions... it's also a privilege, or it's easier for you to do that than say maybe the ECB or the Fed.”at 51:45
Macro Musings: Christina Skinner on the Financial Stability Oversight Council and Central Bank Independence ·
The Fed's independence depends on democratic accountability; without it, a future government could curtail it.
Beckworth agrees with Skinner that the Fed's quasi-fiscal activities need democratic accountability. He argues that if the Fed does not deal with that, it will undermine its own independence. Once the central bank becomes politicized, the other side of politics will come to power and try to tear it down. So the Fed's independence depends on proper democratic accountability.
“If you don't deal with that, you're gonna undermine your own independence. ... So the Fed's own independence depends upon having proper democratic accountability.”at 55:31
Macro Musings: Christina Skinner on the Financial Stability Oversight Council and Central Bank Independence ·
Shows
- Macro Musings · 2 episodes
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